An economic problem unique to Australia?

I just think that it wouldn't end cold like that. Sure it'll be tough for a while, but change is always tough. It's just that people will find new ways to make a living, a new service to provide or widget to make. 30 years ago no one would've imaged the I.T. industry, mobile phones...or dare I say it Online retail...just as at this point we can't imagine anything new...but it will happen, always has.

My understanding is that retail jobs, while counted as contributing to a nations GDP, are essentially non-productive. If the effort of the retail sector is calculated as an added service however, as customers, we have to weigh if the value added to the product (by the retailer) is in line with the increased cost Goods+Service. i.e. is the choice, service, convenience worth the extra price.

Now obviously I've picked a round number but it wouldn't be over the top to suggest an average retail mark-up in Oz on wholesaler prices to be in the order of at least 200%-300%. We have to weigh up if that added cost represents fair value for the extra service rendered. If not, wouldn't those labour hours and extra dollars have been better spent somewhere else in the economy?

As an example, 200 years ago, more man-power, capital and effort was being expended (per capita) on the "spice trade" than what we do today in the oil industry.

 

RNT

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.



Was this girl really ugly?
Was the sales person on commission or hourly rate?
How many other customers were turned away during this two hour period?


I need pictures to form a proper opinion or it did not happen

I dont believe the woman was the problem in this music store.

Do you relly believe she was?

 

Retailers are only the middle man between the manufacturer and the consumer. Retailers are not the key to economic prosperity, they are merely a reflection of economic strength. It is the productivity of the nation which is the heart of the issue. We must address this if we are to truly prosper. What has happened to our industry and why........we have failed to keep up. Our government is so busy subsidising loss making industries and has completely overlooked where job growth is. Yes robots replace people but in turn they are an Industry in themselves. Our education system has failed.......our demand for socialism has made us blind to the realities of the unshakeable truth that you reap what you sow.......we vote for those who promise the world and complain when our taxes are raised to pay for the promises......we demonise the productive resources of our nation........spend time in Asia and you will soon see that we are on our way to becoming a backwater if we do not vote in politicians they speak the truth......you cannot have everything in life but the harder we all work, the more secure we become.

 

I do too and think this is ultimately how thing will end up going: the retail store will turn into a showroom.

If you think about it, the Manufacturer > Wholesaler > Retailer > Customer supply chain is very inefficient for a very large number of products, especially branded products where the brand itself is one of the main selling points. In that scenario, the "retail" presence is simply an extension of the marketing exercise.

Case in point: Telsa Motors has one "store". They have dozens of showrooms where you can check out their cars, ask knowledgeable sales staff any questions and place an order for a new Roadster or Model S but the order is processed at their head office and their entire back-office and service systems is centralised. It's significantly more efficient than the (old) decentralised dealer franchise system and existing dealers hate them for it. Telsa can rent an empty ground floor showroom, give it a nice coat of paint, drive some cars in, hand an iPad to a couple of sales staff and bang! they're up and running in a new city.

Apple's strategy is a bit more complicated, but their Apple Stores are basically high visibility service centres that just happen to be able to process sales. You can go in, play with their toys and then go home and buy them online after you've thought about it for a bit. Apple doesn't care either way because they know they make more sales by giving people the chance to play with stuff beforehand and see how easy it is to get tech support at the Genius Bar.

I think one of the biggest problems in Australia is that landlords are seeing this evolution from traditional retail to "flagship" stores i.e. brand marketing exercises and believe that those marketing budgets are big enough to subsidise unprofitable retail businesses - and they're probably right - but that there are ultimately enough brands who want and need "flagship" stores. On that, I think it's quite possible they're wrong. A good mailing list can be many, many times more valuable than a space in Westfield with a name and logo stuck on the front.

That's not to say having a high visibility showroom is a bad idea, but landlords are going to have to recognise that they're marketing exercises first and profit generators second. If the brand can get a better ROI somewhere else, the "flagship" store/showroom will simply become a bad way to spend a marketing budget and with the profit centre being largely online, it won't be hard to justify dumping the showroom.

FWIW, I also think that our higher wages can be justified, but not with the level of service we typically get here. The problem, I think, lies more with rents than it does with wages but if "retail" is going to go through this transition into "face-to-face marketing" I think retail staff are going to have to earn their money as providers of service and stop being the sullen, unhelpful robots they seem to behave like at the moment.

 

Of course the elephant in the room with this concept is found in your examples: General Motors and Apple. This model suits huge corporations. It does not suit small business. Small business is the health of an economy. A country with a large small business sector can weather economic storms far better than a country where the only employers are mega corporations. Italy survives because it is a country with lots of small businesses. Mining towns die when the sole employer for the town closes it's mine. Personally I don't like the idea of the primary employment mode for a country is based around mega corporations being the primary employers and small businesses being driven out. that is to my way of thinking a very, very dangerous system.

 

This bit:

@ 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

Tradesmen and retailers are not the same jobs.I can charge out repair work at $x amount per hour but if a customer comes in I cant say" Oh that product is a bit dearer now because I havent had a customer all day"

I agree a good salesman can swing alot of people as to the benefits of paying more to buy locally.Personally I pay 20-25% more to keep it local.

 

"FWIW, I also think that our higher wages can be justified, but not with the level of service we typically get here. The problem, I think, lies more with rents than it does with wages but if "retail" is going to go through this transition into "face-to-face marketing" I think retail staff are going to have to earn their money as providers of service and stop being the sullen, unhelpful robots they seem to behave like at the moment."

Well worded comments and I wholeheartedly agree

 

Perfect example for me as I have a music shop
Yes I think the girl was most of the problem.Without knowing the details, the sales person could hardly say"Now are you going to buy this from my store, because if youre going to buy it elsewhere I wont help you" could he?If he did that he becomes that "other" bad thing, not just more expensive but rude.The girl probly thought nothing of it because it hasnt been explained to her, but when she needs any advice or accessories, that store is no longer there.
Of course the easiest answer is for retailers to make their costs lower and prices cheaper.Hmmm dunno how I can lower the cost of rates,water, power,insurance etc,etc, that shite just keeps getting dearer.Cant sell stuff at cost to compete or we end up like your mates music shop.
We combat it a little by selling bread and butter type stuff, like accessories and bottom end to midrange products.I've found the expensive brand name stuff, well musos generally know what they want with that stuff and know where to get it.The good old 80/20 rule again, 80% of the Musical Instrument market is bottom end, also 80% of my business comes from 20% of my customers.

 

That's a fair point and the "flagship store" model might not work for some of them, but business-as-usual isn't going to work for many of them in the long term either.

The model that a lot of small businesses seem to use is:

1. Buy something from an overseas manufacturer,
2. Put a 100% margin on it,
3. Stick it in the shop window.

That business model is becoming increasingly unsustainable so anyone using it is going to come under increasing pressure from online competition anyway.

Maybe an option for smaller manufacturers would be to set up a flagship co-op with half a dozen others under the same roof and split the running (read: marketing) costs. It might look like a retail store and even make sales in-store sales, but if independent retailers are seeing consumers using their stores as fitting rooms and going straight back home to order the product online then the retailer is offering more value to the manufacturer than they are to the consumer. In that case the retailer maybe needs to sit down with the manufacturer/wholesaler and say "Look, you're taking business from what has traditionally been our market and we're actually helping push some of it to you, so why don't we just skip the complicated wholesale pricing and inventory stuff and let us act as your promotional division?"

I certainly agree that a healthy small business sector is important for the economy, but if they don't provide value to the consumer then those businesses simply won't survive. The German mittelstand seems to be a robust model for small businesses so maybe we should be looking there for ideas, but for retail specifically I think business owners should be looking for creative ways to adapt their businesses and get ahead of the curve before the economics make their model unsustainable.

 

Perfect example for me as I have a music shop
Yes I think the girl was most of the problem.Without knowing the details, the sales person could hardly say"Now are you going to buy this from my store, because if youre going to buy it elsewhere I wont help you" could he?If he did that he becomes that "other" bad thing, not just more expensive but rude.The girl probly thought nothing of it because it hasnt been explained to her, but when she needs any advice or accessories, that store is no longer there.
Of course the easiest answer is for retailers to make their costs lower and prices cheaper.Hmmm dunno how I can lower the cost of rates,water, power,insurance etc,etc, that shite just keeps getting dearer.Cant sell stuff at cost to compete or we end up like your mates music shop.
We combat it a little by selling bread and butter type stuff, like accessories and bottom end to midrange products.I've found the expensive brand name stuff, well musos generally know what they want with that stuff and know where to get it.The good old 80/20 rule again, 80% of the Musical Instrument market is bottom end, also 80% of my business comes from 20% of my customers.

Your call Fosinator however I am seeing this from a slightly different human perspective. hence the first question.

Two hours spent with one customer is a very long time. At what point would a good manager/owner intervene or "assist" the sales person with the sale?

If no other customers was left unattended in the shop no problem and no real loss.

However if the store was busy at what point would you have to explain to the customer that to demonstrate this equipment that it would take some considerable time and would they mind if you temporally excuse yourself to serve other waiting customers for a short while, call the manager for assistance or seek to arrange a more suitable time ( appointment ) to set up and fully explain the operation of this particular piece of equipment without interruption.

The last guitar I purchased a while ago( Yamaha APX-5A ) the salesman cruised in and out quite a few times as I tuned up strummed etc he had a quick strum and pick as well he served several other customers in that period. I also negotiated the price on a package including guitar , little Rowland cube street battery powered amp, capo, harp neck brace thingo. Lucky I didn't know much about the new loop stations or I would have probably purchased one of those as well. No problem I will probably get one online!

cheer$

 

and you want the Libs to get in

HOW do you think the retil shops will go with the huge cuts they are planning, the 20+k job losses, the tax increases that they will make

If Abbot wins we ALL loose

 

We pay wayyyyy too much in this contury compared to the USA / UK. Even things like online games / software -- delivered online from USA servers paid for in USA dollard but because you come from an Australian IP you get slugged the 50% Australia "tax" -- same servers, no extra overheads but we pay a huge premium

The bricks and mortar stores have it even worse. I dont blame the retailers as they are making the best a bad situation in this country,

The monolpoy on distributors /wholesalers in this country is one of the problems. Having contracts to make a monoploy of the supply lets them set the stupidly high prices here.

i also blame Frank Lowie and the like. Westfield and / Centro and the like make me sick. Greedy money hungry scum of the earth.

an average shop in a Westfield will cost you 100k / year in rent + outgoing ( and the pathetic contracts where if you make too much profit they take a % of it like a tax)

that is digscusting I hope that prick dies of cancer. A slow long drawn out painful cancerous death.

 

I know one business owner who told me retail space in Manhattan is on average 50% cheaper than Melbourne. There's also twice as many customers in Manhattan.

 

There you go making stuff up again.

 

lol we will see, newman did it up here(15k job losses - huge spending cuts) -- and that is just the tip of the iceberg that the liberals are crashing us into.

 

Are you suggesting the government employs the retail shop workers? That's not how the economy works.

I welcome the cuts. I welcome cuts to beaurocrats, administrators and senior executive public servants who are over-represented on the government payroll. They produce no coal, no grain, no beef, no components, no circuit boards, no value adding. They are a drain on society when there are too many of them.

Rudd going on claiming there will be cuts to teachers and nurses. It's a bit stupid. This is the Federal Government here, the Feds employ no teachers and no nurses or doctors - that is the States responsibility and out of the States budgets paid out of GST receipts. So don't be fooled by Rudd's honeyed words. Because they're a distraction, don't be sucked in by them.

Tax increases? Carbon tax has increased my power bill dramatically and the price of everything relying on electricity which is... everything. Mining tax has decreased mining activity hurting my super while at the same time new taxes on super lower my retirement prospects. In the here and now we soon will be taxed on our bank deposits even though this is independent of that capital generating any income. There are fewer allowable tax deductions to me, the working man, this year compared to last, which increases my tax despite the same costs existing to me in producing my taxable income. The so-called 'alcopops tax' which Rudd and that harpy Roxon demanded alcohol companies collect even before it went through parliament to become law and therefore be a lawful tax. Did the law ever indeed pass in the parliament - I can't find out? Tax increases? That's a weekly occurrence under Crud and he's still put us in a debt hole.

 

lol carbon tax has added about 10% a pittance compared to other rises. This year in QLD we had a 20% rise double the impact of the carbo tax. Households and business have ben OVER compensated for the carbon tax.

what has aded huge costs to yor power bill was the government selling off the assets and privattising them.


and Rudd has every right to claim that. Newman in QLD has and is doing it. He has announced plans to fire many experienceed nurses from our hospitals

http://www.couriermail.com.au/news/...es-for-graduates/story-fnihsrf2-1226683347695

Mining tax is a joke watered down to a point it is a non event.

lol I doubt Abbot will reduce the "alacolpops" tax and the banking deposit levy is just shifting the burden of the guarantee, it is a worthwhile scheme that most other countries have. Abbot has allreadt ruled out removing this.

 

Parroting vapid TV political advertising slogans like they are true is not very insightful and just proves why many of us despise representative democracy.

Large cuts to subsidising inefficient industries is no different to large cuts to inefficient government. Our Government's are grossly inefficient and bloated with much of their so-called "services" being to look like they are "doing something" resulting in hundreds of pointless inquiries and committees, layering of bureaucracy and adding more and more pages of legislation and regulation and other burdens onto the productive parts of the economy. Australia was ticking away quite happily getting good enough Government services etc twenty years ago. Given that productivity improvements are supposed to mean more effective output for the same inputs it is ludicrous to suggest that a larger quantum of better, higher quality government services (as at least as what we had in 1993) and sufficient to service today's population could not be provided by the same number of public servants as in 1993. Front line services in many parts have been cut due to better technology and targetted service delivery but the fat of the back office bureaucracy has been completely bloated unnecessarily and, in many cases, in ways that have been detrimental to helping front line services actually help people.

12,000 public service job cuts by natural attrition (jobs payed for by racking up credit card debt to be paid by our non-voting kids) is absolutely nothing. The public service could easily be cut by 50,000 with minimal noticeable effects. Cut it by 100,000 and the noticeable effects will be a much stronger, more productive, higher paying economy as random paper spawning, innovation sapping, investment killing regulations are slashed along with the 100,000 jobs.

As I posted HERE, in the face of growing national debt and high unemployment, President Harding nearly halved the government budget in less than two years and the effect was highly beneficial to the economy within a short period of time resulting in a halving and a halving again in unemployment. Bigger government on an already bloated government does not create prosperity, it destroys it.

The cuts obviously suck for the people directly affected but their forced employment in wasteful shite sucks for everyone else who is currently being forced to pay for it. As mmm...shiney! said, Abbott is not going anywhere near as hard as he should. He should follow Newman's example at the very least.

 

Is this a unique Aussie problem really?

I see this more as a result of the corporate model squeezing out genuine small businesses. The mall you wander around and the shops these kids are using as a fitting service. Are they owner operated or corporate owned and run by middle management?

I have recently changed jobs for the main reason I want to work for the bloke who owned the business. He can teach me exactly how he wants things done, I can learn more about how to be most effective in contributing to the success of the business.

Previously working for a manager I found most of our work was based on hitting various kpi's that were so removed from the actual success of the business I was only really learning to do as little as possible while looking like my contribution was more .

I honestly think this is what is giving the online retailers such an advantage. Its not the price difference so much as the fact brick and mortar businesses have service built into their business model; only now with the managers and middle managers managing employees with no connection to their contribution to the success or failure of the business.