Being a part of both the retail and manufacturing sectors in Australia I have a good position to see where things are headed in Australian small business. Because of the unusual circumstances of the last couple of years Australia is in an interesting position - The manufacturing sector is fading as in most western countries, but Australia is facing an unusually rapid decline in the retail sector due to our high dollar coupled with the rapid expansion of online shopping monoliths like Amazon, the Book Depository, Uniqlo and many many others. Americans can buy cheaply in America, Australians eschew Australian retailers and buy from America too now. It is much cheaper so Australians simply vote with their wallet and buy from there. Without making any judgements on whether local retailers are overcharging or not (and please do not start a discussion on this in this thread), I think that while America was tipped into the water by the failure of the housing sector, I predict that Australia will be brought down initially by the collapse of the retail sector and most people will not see it coming. My reasoning is this: Traditional retail is a massive employer in this country, and it is crumbling far more quickly than people realise. The number of industries and companies that rely directly or indirectly on the health of the physical retail sector is very large. The wholesale sector, the transport industry, the retail leasing sector, the advertising sector, printing businesses, shop fitters, commercial waste services, the insurance industry, tradies, carpenters, sparkies, estate agents and many others. The conversion of tens of thousands of smaller employers such as shops into large, automated distribution centres that feed online stores do not employ many staff, in fact the idea is to have one warehouse and as few staff as possible. At the other end of the scale traditional store owners are laying off staff, closing their doors and giving up building leases and trying to "go it alone" by translating their business into a web store from their garage. I think that many many people who feel that their jobs or businesses are safe because they are well removed from the retail sector will be in for a very big shock when it happens and they find out how connected everything in this economy actually is. Just my thoughts, I hope that I am wrong.
Not discounting what you are saying but have you been to a shopping mall on a weekend lately? No shortage of people walking around Whether those people are actually buying or just window shopping I have no idea Online buying works for some markets but not for others I don't see Coles or Woolies being replaced with online supermarkets - ever Books and music are another matter Clothes are difficult to predict - some will buy online but others need to try things on first
The think that people don't take into account though is that the majority of retail (and many other types of) businesses are operating so close to the line at the moment that it doesn't need to be a large drop in turnover to tip them over the edge - even a 10% drop in turnover will render many businesses non-viable, and that is coupled with the large rises in operating costs over the last 3 years pushing from the other direction. I was speaking to the recently retired president of a business chamber in Melbourne last week, he said that not one of the retail stores that he personally knows down there has paid their last BAS, many haven't paid their last two or three - they don't have the cash flow to do it.
I will guarantee you that a large percentage of them are using the shops to try on clothes and shoes for fit and colour, checking out watches and bicycle accessories and electronics and cookwear to see if they like it and then walking out of the shop, going to the food hall and ordering the exact item that they just tried out in the store from the internet from an overseas online store with their smart phone. The shops in the mall are becoming "showrooms for overseas internet stores" with a food court attached. We had a shoe shop nearby close down a while back, the kids would come in and get fitted for boots and walk out saying "thanks for your help, I'm off to order them from the net, they are cheaper there" and they didn't even realise that there was anything wrong with doing that.
The only light I can foresee for the Australian economy is in Tourism as more tourists flow in due to the lower AU $. The lower dollar should also help the manufacturing industry but it may well be too late for that. Over the last decade, the Australian Government has been making free trade agreements with several countries including the USA, NZ, South Korea, Japan, Singapore and exploring one with China as well as several other countries. Do you think free trade agreements are good for the manufacturing Industry? The health of the Retail Industry must surely be dependent on Australian workers having well paid permanent jobs so that extra income can be spent on non essential items. Lets hope that iron ore, gas and coal prices remain high for if the Au $ drops against the US $ then our tax from these areas drops and then where do we get the money to fund the NDIS and the Gonski education implementation>? Now big business is going to get a reduction in company tax which will be offset by the rise to pay for new mothers non work pay packets. If the government ( either red or Blue) can't get the tax $ in, how the hell are they going to pay for these new social ventures>? Results Not Typical././You have a right to be concerned but there just doesn't seem to be any politician who can see the light. Regards Errol 43
"the kids would come in and get fitted for boots and walk out saying "thanks for your help, I'm off to order them from the net, they are cheaper there" and they didn't even realise that there was anything wrong with doing that. " I dont believe they have done anything "wrong" shopping in itself is not a contract! The shop was only offering an "invitation to treat" Did the shop offer the very best price ? What was their mark up ? (( 200% ?) I always ask for the best price, and most often receive wholesale or trade price on most goods purchased ie silver, gold, electronics, car parts etc) Did they agree on a price? If you dont agree on price with a retailer does this mean your are "wrong"? My advice is to very carefully decide what goods you are really interested in, then, and only then, begin negotiating on price. I believe all prices are negotiable. ( ask and you shall receive) My experience is that many ( not all) retailers say they cant buy the products at the same prices offered online. That is misleading. Of course they can buy at the online price all the have to do is put in an order with the online dealer. The online dealer also has overheads i.e. rent , taxes, regulations, E bay fees, pay pal fees etc etc and there is also the postage cost to consider that may be passed on in part or fully to the customer. They online dealers must be purchasing the product and paying all overheads and still make a profit. That is the dilemma for retailers they have to buy at the very best price and compete for the limited consumers disposable income with other distributors of other or similar products.
I'm on your side jonesy, don't use a service if you're not willing to pay for it. It's like going into a business and asking to use their toilet or carpark space and not spend any money there. The fashion outlet is renting the space that the change rooms occupy and by using that service as an online "fitting room" is paramount to theft. It is wrong. If you want to buy online you're free to do so, don't bleed the expertise and facilities of the bricks and mortar businesses so you can save a $. 200% mark up is nothing either. That's how we operate our business basically and we mangae to earn a very very modest income for the two of us (both of us earn less than the average wage), the upside is that it is our business and we call the shots. We price our product on about 30% food cost, so if a piece of fish wholesale costs us $2.50/kg, then we sell it for $7.50.
Hi Shiney I dont care which side you are on I didnt recall asking that question Nothing wrong with your business plan either. Would you be doing anything wrong in asking your fish wholesale for the best price knowing that the fellow down the road was both buying and able to sell the same product fro a much better price ?
Unfortunately, what's happening to retail sector (online retail) is just part of what happens with industry innovation. You can't unscramble the egg, anymore than anti-gun advocates can uninvent the firearm.... it's here, we're all going to have to live (read; "Deal") with it. An example I once read about used the innovation of a machine that could make bottled lemonade cheaper than traditional methods. Much of the savings was achieved through the elimination of manual labour costs. The manufacturer was able to sell it's lemonade cheaper and attracted more market share. The customers had more money in their pockets (after buying their lemonade) to buy other goods (spreading through the rest of the economy). Now here's the clincher...the labour freed up by the machine allowed people to transfer out of factory jobs into other lines of work (ever wonder why we now have so many office workers compared to the 'old days'?) The expansion of labour into other areas of the economy allowed further growth were once it was stagnant. Yes, online business will effect our economy and people will lose their jobs...but it won't be forever. The makers of fashion hats, moccasins and lead paints didn't starve. They transferred into new, emerging jobs like, computer programming, telemarketing and...dare I say it...online retail. What I'm saying is the death of main street retail won't be the end of the world. I don't know what it'll look like, but I'm sure I'll end up with more money in my pocket, rather than paying for all those shop assistants and skyrocketing commercial real estate costs which are currently hidden within the price of my store-bought goods.
It is not the same. Perhaps I should provide a different example. It is wrong (or at least rude and parasitic) to take up someones time knowing full well that you have no intention of ever rewarding them for their help. I have a friend that worked in a music shop (which closed this year), he said told me a story of a girl who walked into the store, took over two hours of a staff member's time getting training and tech support on a machine and then she left. She returned 10 days later with said machine in her hand which she had purchased from the US via the internet, plonked it down on the desk and asked the same sales assistant to plug it in to the shop PA system and show her how to set it up. Ski shops got so tired of people coming in and having a boot technician spend time fitting them and then asking for the fitting details to be written out so that the customer can go online and order that most shops now charge a $50.00 fee to be fitted, refundable on purchase. People are not going into the stores to negotiate a price, they already know that the store can't match the OS price, they are deliberately using other people as a free fitting and training service. I find it amusing that people single out retailers and "ripping us off by not charging American prices" but don't complain that dentists here charge a bomb compared to the Philippines, tradies charge far more than in America, just about EVERYTHING here costs more than most places including services. You can buy a house for a few grand in some American cities, why are we being ripped of on house prices here? Rude or inattentive retail sales staff are no different to rude or inattentive office staff, receptionists, bus drivers, taxi drivers, lawyers, call centre staff, tradies, you name it.
No doubt you will end up with more money in your pocket by not purchasing from Australian businesses. My question is whether you will have an income to buy stuff with in a few years if the failure of one of the main pillars of the Australian economy collapses? High unemployment, low GST revenue, large numbers of people on welfare, collapsing commercial real estate market... You would have to be one of the lucky few to have your own industry unaffected by that. Yes, maybe well into the future everyone can find a job in front of a computer trying to sell stuff to other people in front of computers, but in the interim we are not set up for that. Whether people approve of Main st. retail of not it cannot be denied that it's demise will throw us unto a deep recession. The problem now is that businesses in every sector are operating on such thin margins that if any business sector in Australia takes a dive it will be enough to take down a lot of businesses in other sectors with it. As I said, I may be wrong but the numbers look pretty clear to me. .
Perhaps there's a business opportunity there for a 'try before you buy online' type business. Customer pays to try product, manufacturer provides free demo products + fee to be listed. Retail websites pay to be recommended. Customer receives % of fee back if they buy from partner sites. No need to keep stock, just a minimal number of sizes. After all, why fight it and whinge? There's more money to be made giving people what they want.
As a small business operator many of my competitors work from home, buying off ebay and flipping it to make 5-10% profit.Those guys dont have anywhere near the overheads as a shop in town that has to pay rates,water,land tax, GST,workers comp,insurance, etc etc.My business has to make more than 10% to stay afloat.Too many people mistake profit for greed, and yes there are some greedy businesses out there And yes of course I can buy goods for what my customers buy them for, but what is the point of that?Not many customers are going to pay me more for something they can get cheaper. I dont know where you get 200% markup from , probly someone that knows someones cousins friend who worked for whoever, who had 200% markup, so therefore all retailers are making 200%? I have been running my business for 16 years and my Dad 25 years before that and the retail game has certainly changed.If I was making 200% I would be retired and living in the Bahamas or something by now lol And yes, all prices are negotiable, thats a double edged sword.Whilst I'd like to make as much profit out of an item as possible, if I dont have a low price on the product, I risk a customer not asking for the lowest price and searching for a cheaper price.Retail is a hard game, and I'm trying not to sound like a whinger when I say not all retailers are rude,greedy and making 200% . Sorry OP, not starting a discussion on overpricing And I think that it is wrong to tell a retailer that your trying their gear so you can buy it cheaper online.Some kids dont understand that its wrong,I see it all the time.I dont tell them their wrong as such, but try to educate them on the benefits of buying locally.Most times it doesnt work. Like I've said before, Australians are a funny bunch, we want the highest wages,benefits, and conditions in the world but we want the lowest prices in the world and I dont think you can have both.
Great thread My comments where not a discussion about retail pricing but about what is 'wrong" "Wrong", "rude and parasitic", "paramount to theft" ................( insert nasty word here) Welcome to the real world of business gentlemen. You are in competition with every other seller and every buyer is in competition with every other buyer. "Its not the same": of course it is. The seller wishes to maximise his profit and the buyer wants to maximise the value for their dollar. I often do business in the share market . Very cut throat business. Even a simple key stroke error can cost $1000's Do you want to pay retail prices for those Santana Minerals (SMI) or pay the market price like all the other participants? In some posters eyes it is wrong for me to put in an offer that I believe is fair. I am so sorry that I purchased a block @ 5.4 cents. Sorry that my order was not completely filled! @ Shinney Will you answer my question? Would you be doing anything wrong in asking your fish wholesale for the best price knowing that the fellow down the road was both buying and able to sell the same product fro a much better price ? ( you wont be wrong if you do , or do not) just give other people the same opportunity. @ fosinator 200% was a question Please speak with your financial advisor /accountant this is a common figure i.e. tradesman mechanic/sparky (non mining) hourly cost including super etc etc ~$30/40 hour allow for vehicle other overheads etc etc charge out rate ~$100/150 hour One other point and this is where a good experienced salesperson is worth their salary. I believe this skill is almost non-existent in most businesses today. That is the ability to sell. Online competition is a fact of life. A true sales person must be able to counteract any perceived benefit of the cheaper online sale with offers to provide true customer service, warranty or exchange of defective goods, agree to exchange selected goods if the customer changes their mind ( not for boots), ability to provide the goods immediately, without the postage cost or possibility of an online fraud, can offer a discount ask has the customer looked elsewhere if the price is important engage the customer in what was the best price are etc etc. The sales person must try to put a package together of goods or services or both if they cant the may as well tell the buyer to buy online
