Author Archives: Kevin L

Recalling the wonder of my first trip to the Primark store along Oxford Street in London was rather amusing. More than 10 years ago, as I stepped into the store and looked at the price signages, I was so incredibly surprised by the low prices. Being from Singapore, with little natural resources and gone past the stage of textile manufacturing industrialisation – clothes, especially the type you can wear out of your bedroom are not cheap.

But at Primark then, I could get a hoodie for £5, a tee-shirt for somewhere between £3 and £7; shoes for just £10 or £12. Today, the prices have probably gone up by 20-40% but that’s probably just inflation. These clothes were manufactured in Asia, mostly in Bangladesh and Vietnam, but even regular clothes sold in these countries may come at a higher price. I distinctly remember that the Cedarwood (a Primark brand) and TM Lewin shirts sitting in a store in Bangladesh (said to be selling factory rejects), selling at about $25 (around £22).

That reflects the sheer cost savings that comes from economies of scale, being able to manage huge coordinated logistics, of procurement, shipping, fulfillment, and distribution in-store. By selling a these prices, Primark pretty much guarantee volume sale, thus enabling the huge economies of scale. They try to optimise further by reducing packaging to the minimum, doing away almost completely with anything beyond the label and tags on their products.

And just like that, by pricing things low, Primark essentially create a strong flow of anchor business for the textile plant that needs business in emerging Asia. They are willing and able to keep running for Primark because in times when they don’t have so much orders, Primark is there; and when they have too much orders, Primark can step back a little. This flexibility is valuable to the plants who are looking to cover overheads and staff costs, maintain the skilled labour they had hired and trained. And so the value they create gets passed on to customers, and perpetuate the cycle that keeps them in business.

The world economy is not just in an energy transition or move towards lower carbon emissions. Given increasing automation and digitalisation, the demand for labour should be declining. Nevertheless, there seem to be a general shortage of labour all around. Perhaps it is an issue of skills mismatch post-pandemic. But many have also identified a few other emerging issues including the fact that people are quiet quitting or finding the existing landscape of work broken.

I don’t think people are not willing to work long hours. In fact people are working so much more than in the past despite the luxuries their higher income can afford, including more leisure time. The question is who and what they want to devote these ‘working hours’ towards.

It would seem almost hilarious that people deem it strange the new generation wants to have space and time for their own lives and side hustle. If we look beyond the cultural norms created in the boomer’s generation, it is clear that the direction towards greater capitalism, marketisation and the free economy is that people would be more cautious about how labour is being traded and delivered.

And perhaps that is exactly what is happening. We are finally recognising that the labour market has been broken and with the advent of technology, the solution is more freelancing, contract work and piece-based or scope-based compensation. No more over time or time-based pricing. No more self-worth being tied to your job titles. Everyone can be in the C-suite. Everyone can be their own bosses.

It already started when the corporate or career ladder was torn down one or two decades ago. Partly as a result of economic crises requiring ‘restructuring’ or ‘right-sizing’ of firms. And partly because of the perverse financial incentives pervading the frenzy of financial optimisation through spin-offs, mergers & acquisitions – all of which disruptions the more traditional notions of the ‘ladder’.

In any case, I think the new trends of the workplace are still functions of the direction we have been taking our economy towards: increasing adoption of technologies, reduction in contracting costs leading to the breakdown of the Firm (as predicted by Coase in his theory of the firm), fragmentation of markets driven by endless differentiation and specialisations. That in turn creates a force to reshape demand through marketing, advertising, culture-making – an aspect not addressed by economics but nevertheless driven by economic incentives.

We often forget that our culture is in a large part shaped by economics and incentives; and the doctrines and policy approaches we have taken shapes these incentives in profound ways.

I previously wrote about the power of physical retail and as I recently was on vacation in London, going through high street shops, huge department stores such as Harrod’s and shopping malls like Westfield, I feel even more qualified to share more about the magic of physical shopping and hence retail.

The shopping experience is more than just about giving shoppers a moment of experiencing how it is like to own the item physically and “have it” – there’s also the environment, the context to make the purchase decision, and also the opportunity for store to tell a story about the shopper’s identity.

Take for example the Prada stores that control the number of shoppers in the store at any moment by creating a queue and allowing only a certain number of people at any one time to enter the store. This makes you have that special sense of pride when you’re in the store while looking at the long queue outside, thinking you’ve earned the privilege of being in, so it must make sense for you to at least buy something.

Then, there’s the concept like Harrod’s of having many service counters focusing on an array of product each, breaking down a phenomenally overwhelming shopping experience into something bite-sized. When combined with the sheer variety of goods all around you, there is this sense that something around here must fit you; that you should be getting something!

To that extent, the magic of physical retail would remain for decades to come even as online retail comes to take over more of the purchase of more mundane stuff.

Leaders of today are mostly driven by being able to identify opportunities to exploit, rather than solving problems present. Take for example the public federal debt of USA – no government really bothered too much about the size of the debt in absolute terms because as the economy grows, the debt to GDP ratio shrinks, unless of course they took on more debt, which they kind of did. Sure, there were times when it seemed a crisis was coming but just change the rules and things seem to go on fine.

There were many of such things that happened during the period of the reign of the boomers. A lot of boundaries that were thoughtlessly set were tested, and then extended. As culture shift, people tried to stretch things: when we moved from little villages in Singapore to high-rise public housing, the high-rise was around 12- to 13-storey; others were mostly four-storey high. Then we started building 20- to 25-storey buildings for public housing, and now 40, even 50. The buildings became built even more closely. The leadership focused on opportunities to keep optimising things and turn people’s attention such that they can define what is ‘better’.

But better also requires actual problem-solving. And often times, that meant confronting the problems that we ourselves created when seeking out or exploiting opportunities. For example, as we exploit high-rise and high-density, our urban heat island effect increases; our living conditions from an environmental, climate and weather perspective goes down even as it appears materially better. People just accept that is a price to pay for ‘development’ – but there has got to be more efforts to figure a third way out.

Singapore’s dependence on foreign labour presents the same challenge. We know that foreign manpower has been integral in our economic development. But we also simultaneously recognise that getting international companies to localise their labour and employment in Singapore can make a big difference to the socio-economic outcomes of locals. Nevertheless, the potential social fissures and inequalities on both ends of the labour spectrum (extremely high paid expats, and low-paid labour in the construction industry that may not have the best welfare and environment) seems to be just accepted as price to pay.

I think leaders need the time and space to prove themselves, make better decisions and serve the people. And while we practice questioning leadership and some of our basic social compact principles, we should also be patient, and mindful that changes will take time. Helping to turn our attention into problems that should not be just accepted as necessary evil or the cost of good outcomes is just the first step. We need to jointly figure out the third way. It is not necessarily one that do not involve trade-offs (that’s probably fantasy), but one that allows us to be conscious about the point where we want our trade-off to be.

How far ahead do you plan in your life? In Singapore, we take a serious view on long-term planning. Not just because we want to do it; but because we know it manners immensely to the society and individuals living in it.

On hardware matters, we’ve done exceptionally well. That’s why our PM Lee can say during the National Day Rally 2022 that plans laid out for our infrastructure more than ten years ago such as Tuas Port and Changi airport are progressing well – and the Tuas Port plans of 65 million TEU container will only be complete in two decades time. And now we are also making plans for these infrastructure to be more resilient in times of reduced demand.

This might require some degree of economic forecasting: how much can we afford, how much will that bring in return in terms of growth, how much can we grow, where can we find the resources. When I was in public service, I did get to think through some of these questions; and even now, at Enea consulting, I continue to work on these problem for clients. So at an individual level, it pays to consider doing some visioning and forecasting as well.

For those who are busy daily and worrying about bills all the time, this can seem discouraging and de-moralising but it is precisely what one needs to have that path beyond the daily grind and struggle with the forces in life. Long-term planning and developing a vision provides some clear sense of hope and also allows one to open up one’s mind further to see the bigger picture, and pockets of resources for one to try accessing.