Thursday, 27 November 2008

Wailing for Woolies

It is always interesting when something you know well leads the evening television news bulletins. So there I was last night, lying on the sofa (I have a cold), watching the fresh-faced BBC reporter trying to explain the collapse of Woolworths to the nation. To be fair, the reporter did a reasonable job for someone with no obvious experience and little knowledge.

Of all the various slips, I thought her claim that syndicated finance was a characteristic of the credit boom the clearest indicator that she was winging it. (Syndicated lending is the oldest and most reliable of all the credit markets, in case you were wondering.)

My assumption is that the BBC’s focus when hiring its financial correspondents (as with all others) is to prioritise generalist story-making skills and presentation manner, rather than technical knowledge such as how to read a balance sheet, or how the credit markets work.

This is understandable but rather worrying, given that for the next few months there will continue to be job cuts, companies collapsing etc and these will frequently lead the evening bulletins. I presume that many of these stories will be reported to the country by yet more enthusiastic but largely ignorant reporters, many of whom will have to perform on the national stage before their limited knowledge on the matter, hastily picked up from Wikipedia and one or two sources, has had time to dry.

I am too cynical now to be frustrated by this, but I do wish that one day standards might rise just a little.

Oh, and the prize for the least mawkish and most informative article on the Woolworths story goes to the FT, for this news article and this comment piece.

1 comment:

Anonymous said...

Well, why don't you say why Woolies failed?

That it was a crap business model that has been winging it for years?

The fact is that most of the high street has been divorced from retail reality since the early 90s. It can no longer deliver the necessary units people want when they want them.

The high street has survived because of funny money: ie. cheap money divorced from labour cost. When you don't have to work so hard for it, the spending is so much easier.

The high street is about to realise that, in a normally functioning economic environment, people cannot afford, nor do they want, say, ten pairs of trousers (or ten consumer units) every 'season' -- ie. that their business models are utterly unrealistic and have only been allowed to produce results because of a debt boom.

The ones that survive on the high street will recognise this change and adapt accordingly. Fast. Others will go to the wall.

And, to be fair, Woolies lost its way back in the 90s. It set up its stall originally as a pound shop; if it had gone back to that attitude, it could have survived ... but alas....