Aug 18, 2011

Retail 2: why it’s not as bad as we’re told

It's not just foreign competition and the strong dollar -- other factors are important in retail, and explain why some retailers are succeeding when others aren't.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

Newspaper and TV readers and viewers could be excused for thinking that the likes of David Jones and to a lesser extent, Myer make up the Australian retail sector, so dominant has the coverage of their recent sales reports been. Commentators and analysts, not to mention “experts”, have extrapolated their weak sales efforts to the rest of the retail sector. But on the most recent retail sales data, department stores account for under 8% of turnover in the sector.


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3 thoughts on “Retail 2: why it’s not as bad as we’re told

  1. Malcolm Street

    A couple of weeks ago we went into Myer in the local mall (first time in months) and it suddenly struck me that there was something quaint and old-fashioned about the idea of a department store – it was just a mall within a mall but one with less opportunity for specialised expertise. Just what is a department store supposed to provide that the mall that (in most cases) surrounds it can’t do better?

    It’s a variation on a question that every retail operation has to ask itself – what value am I adding?

    I have a casual job in a toy and hobby shop. We have extensive on-line competition in radio control in particular. However, we have a niche with people getting their first R/C plane/car etc who need a lot of hand-holding and support. We regularly get people in who’ve bought a first glow plug/”nitro” R/C car online, and rather than telling them to p*ss off are quite happy to provide them with the bits they didn’t get such as tools and fuel, which we make a higher margin on anyway. While there we show them our bigger, better supported, brands, our parts backup, our servicing capability and customer support program – all value adds relative to on-line.

    Mind you, being a local family company helps, with very quick response possible to market changes.

    Once again, retailers’ mantra in the new world: “What value am I adding, what value am I adding?…”

  2. crikey david

    StrawberryNet is actually Hong Kong based.

    It’s not easy to compete with an overseas based company, specialising in large items with expensive international delivery seems like the most reliable way of doing it.

  3. cannedheat

    I’m a big fan of Winnings – nice to hear they ‘get it’ with respect to on-line retail.

    The UK is resisting the move to malls and has retained it’s High Streets. Perhaps its cultural or simply too hard to acquire and clobber four city blocks and build a Westfield style monstrosity in London. However most UK retailers from you local Chinese Takeaway to Dwell, Currys, John Lewis etc have a proper equivalent online presence. Australia is WAY behind the curve here.

    One thing worth pointing out is Australian companies are wedded to the concept of a salesman. Online makes this position very different (often redundant). If you google almost anything from pipe to flower pots in Australia you’ll be led to a basic web page with an email address and/or a phone number so a salesman can ‘assist’ you part with your money.

    In addition on-line sales makes the distributor/retailer split look a bit artificial. Golly what will become of all those warehouses where folks shave off a 25-50% markup for taking a container of stuff in one side and driving a delivery van out the other?

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