The future of Australian retail? - Aussie Stock Forums

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  1. #1

    Default The future of Australian retail?

    I've been hearing some conflicting reports lately about the retail sector - sometimes there'll be articles about how people are keeping their wallets closed this festive season, yet later another article will pop up about how Christmas sales this year are expected to be the same or higher than last year's. Oh, and there's also been the announcement of profit downgrades from JB Hi-fi and Kathmandu.

    So I am curious to know what are your views on the future of the retail sector, based on your own experience when you are shopping?

    I must say, JB Hi-fi still seems to get a lot of people through the doors, but it is more browsing than anything. When people do buy, they are only buying relatively small priced items, not the big screen tvs or the home entertainment system.

    With department stores like Myer and DJ's, I went to them in Sydney yesterday at about 9am for the boxing day sales, and there really weren't that many people. They had security guards at each end of the escalators to prevent chaos, but there weren't enough people there to cause chaos (although by about noon the amount of people had about tripled).

    I noticed two things during the day:

    1. I think we live in a "I want it now" society, and people don't really want to travel up eight floors in large department stores to get it. JB Hi-fi probably has it right in this aspect - just have one floor, and create a 'frenzy' environment to make everything look cheap. I think the days of the glamorous high rise department store buildings are limited. I also query why they even need so many levels - no one really goes to them to buy DVDs, tvs or white goods anymore, as there are plenty of other stores that can do a better deal.

    2. The 'discounts' weren't really that great. The Van Heusen business shirts they were selling for $40 can be bought at that price during sales at other times of the year. The really nice Van Heusen 'slim' shirts were still the same price as usual, no discount. I've also been keeping my eye on the PS3 deals at JB Hi-fi, and they haven't changed at all through Christmas and boxing day.

    There's also been a lot of articles mentioning how online shopping may one day kill off brick and mortar retailers, but personally, I like to see and touch an item in person before I buy it, and I also don't like using my credit card online, so the price reduction would have to be really great for me to turn to online.

    What does everyone think?

  2. #2

    Default Re: The future of Australian retail?

    I went to Westfield today to buy a $10 item that was not in stock. Nothing took my fancy and I did not notice any price difference compared to any other day. People are obviously buying, as the place was packed and the lines at the registers were huge.

    I buy almost all of my items online (including groceries) more often then not from the US or China. I only head to the shops to get single items that are not worth shipping or that I need immediately. I suspect there are a lot of other people who do the same especially for mid priced items.

    I know in the motorcycle community a lot of people go the the shops to try on gear, get the size and then buy it from the US and why not when its 1/2 the cost.

    I hold shares in one Australian retailer because I think their products are somewhat sheltered from the online market. Retailers who do not act will continue to get hammered on the stock market.

  3. #3

    Default Re: The future of Australian retail?

    It's simple - ignore any articles which predict what sales will be like. Especially from News/Fairfax.

    Quote Originally Posted by skcots View Post
    I hold shares in one Australian retailer because I think their products are somewhat sheltered from the online market.
    Which? I am highly curious.

  4. #4

    Default Re: The future of Australian retail?

    Quote Originally Posted by Starcraftmazter View Post

    Which? I am highly curious.
    +1 which retailer do you feel are immune from the fall out?
    Allow for the worst, hope for the best.

  5. #5

    Default Re: The future of Australian retail?

    I think department stores are a little redundant in this day and age. Everything is niche-y these days; if a company focuses on the one thing it does and does it well then they can succeed. Department stores (Myer, DJ, etc)to me feel stuffy, inpersonal, and overpriced. (Of course, I go to the likes of Kmart to get cheap stuff).

    I think retail in Australia has a bright future. I think the problem is that a lot of companies got used to easy money without having to try for it, and they have unrealistic expectations, and that when the times were really easy that a lot of companies that aren't necessarily good companies or well run companies made a lot of money; and that now that money is a bit tighter they are struggling to be as profitibable.

    I've run a retail store for the last 6 years now, and this Christmas was probably one of my quietest. That said, we still made ridiculous amounts of profits, and I am in a market that basically all of my product is available from online retailers for a fraction of the price. And a lot of customers choose that over us. But we also offer a lot of services that online retailers simply can't match, and so we stand out because of that.

    It's easy to compete on price - you just keep dropping it until you're the cheapest; but that is no way to run a business. We had a competitor that tried competing on price, and they ended up closing most of their stores and lost millions of dollars. Yes, you have to be competitive, but just being cheap doesn't work anymore. Because cheap you can get online.

    The retailers that survive and thrive in the marketplace in the coming years will be retailers that can be competively priced (but not cheap) but that can also value-add and provide service or services that are worth the hassle of leaving the glare of the computer screen, and worth the few extra dollars it costs.

    Yes, more retailers may close their doors. But that's life and that's business; the world is an ever changing place. We must adapt quickly, or fade into obscurity...

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