"2011: Weak Sales... Weak Christmas...": Disappointed Retailers.

Ltailgatinholden on 26/12/2011 - 21:05

I try to avoid almost all forms of news and current affairs nowadays, but it's quite inescapable to hear all the major companies in Australia complaining about weak sales this Christmas, yada yada yada. I have some questions that I wonder if fellow bargainers have noticed too.. is it all a ploy?

ONE. They say people are reluctant to spend atm.. is it a miser/fearful attitude plague in the populace.. or is it largely that prices are just higher than previous years?

I wondered why I seemingly spent less than previous years. I'm noticing the major complainers (Woolies/coles groups, Harvey Norman, JB Hifi's, various clothing stores… ) are the ones with the starkest price increases or 'lack of real sales' compared to the past (i.e. i see through the whole 'making bread and milk a dollar or 8c dockets, and simultaneously increasing everything else by few % thing). Do you think these big companies just want even more of the profit pie, and are conditioning all of us to accept higher prices?

Things like the introduction of Aldi seemed to make things more 'competitive'..but it has also diluted the range of items overall and made everyone go 'imported goods'..and even they have increased their prices… is it just inflation? (I'm no economist). I can only speak of personal experience with groceries (Coles/Woolies).. for the past 5 years, I've noticed staff expenditures have drastically reduced (essentially there's less staff, and they all have to work harder)… they've introduced things such as self-serve (which will pay for itself in no time).. and they've stepped up with their own imported private labels…heavy rebranding/marketing, and have really sophisticated studies to determine 'what-is-the-highest-price-the-customer is-willing-to-pay-for' …in summary.. theyre going to be making so much more profit, spending it for their futures, and still increasing prices. surely they aren't in trouble like they claim?

  • woolies is taking over more pubs each day… increasing its master's stores exponentially, and more woolies store openings too!
  • i guess gerry harvey is the personification of the whole concept i'm on about… he's taking over all the clive peeters, etc in our area..even though I can't see it surviving.

TWO. If no, is everything (from even raw materials in China to the retailer) just more expensive nowadays due to other factors that I'm not aware of?
I've heard things like natural disasters in QLD/Japan/Thailand, bad economic issues in the EU, or increased working standards in China, or lack of resources… all of these contribute to increased prices? Or are they largely excuses?

THREE. Have you noticed higher prices in bargain webstores such as Book Depository or CDWOW, etc lately? I'm noticing I'm buying less from them… was their path unsustainable, and simply 'introductory'? Or are they happy with jacking up prices, and hoping we won't notice.. and so they don't lose too much traffic/business to make them worry?

Sorry for rambling. I tried to make it as cohesive as possible.. :(

General Discussion

Comments

  • retiredfeline on 26/12/2011 - 21:16
    +1

    It's all the bad news from Europe and the US, and fear of another recession. Remember that the news about the middle class doing it tough in the US is real and when people see news like that, they think: it could happen to me too. I noticed that the crowds seemed the same at Bunnings so I think people are putting money into their homes. Also overseas holidays, i.e. experiences, rather than goods since the Aussie dollar is high at the moment.

    • RandomNinja on 27/12/2011 - 00:09
      +1

      I think greenpossum's mention of the high AUD is a significant cause. There are so many posts on Ozbargain for deals from o/seas sites, most notably small consumer goods (eg: DVDs, video games, books). With people becoming more tech savvy and shopping online becoming more popular/safer, it's no wonder retail is suffering. Then there is the issue of price perception; if you're used to online prices, everything at retail will seem expensive and you're less motivated to spend, even on items that were the same AUD as last year.

      • tailgatinholden on 27/12/2011 - 11:01

        yeah, currency is definitely one of the factors.. i'm also noticing we're buying a lot from places with heavily subsidised shipping (Hong Kong/China that everyone knows about… then also the UK seems to have free shipping on all the DVD's/games/books etc)… is that just government intervention to make their online stores more competitive? I can't see myself being a DVD/Book store in australia sending globally? lol.

        We're coming to a point (perhaps in a few more years) where our government needs to look at how to view the whole retail environment..especially if it's increasingly going online.

        Postage prices in Australia and US seems to have increased… I remember a couple years ago… I bought so much stuff from US ebay… graphics cards, instruments, anything! then suddenly their postage prices became so prohibitive. I heard recently they've laid off half the staff in the US Postal Service.. they were losing billions. now i don't buy anything from the states :(

  • toomuchdogfur on 26/12/2011 - 22:54

    Heh, flicking through the Daily Telegraph today and two things caught my eye:

    Retailers love to cry foul about weak sales, yet here comes the day where they are supposedly offering bargains in desperation for your cash and two headlining items are actually more expensive…

    EDIT: Hang on, looks like DSE is actually selling a different bundle… one with Just Dance 3 included, so might actually be better value there!

  • c64 on 26/12/2011 - 23:56

    harvey norman is still making a healthy profit, even if it has gone down a couple of percent. woolworths always seem to boast about record profits each year.

    • cloudy on 27/12/2011 - 08:16

      profit itself is a fairly crude way to judge how well retail in general is going, for instace u r right that HN may almost be just as profit as last year, but their share is the same as circa 10 years ago, mind u 10 yrs ago is pre inflation so its really much lower. the reason is u can maintain the same profit with more stores, like woowlies building more masters stores, an extra 1mill in record profit from 500mill in store investments now doesnt seem so rosey

  • [Deactivated] on 27/12/2011 - 01:15
    +2

    One moment we are told the consumer is being tight - not spending enough
    And next we are told sales are down by 1-2%
    Then its the Internet taking away their sales. Remember Internet is not only OS made sales its also Aust made internet sales

    Slight disconnect here.

    If consumers are not spending and sales are only down 1-2% then internet isnt a big problem
    If internet is a big problem then they aren't being tight.

    Another GH "complaint" since many already have their big screen TV's that market was already going to go away, why are we getting eg 32in Tv's for sub $300 prices for brand names? Higher dollar? No it's less demand, which goes against "normal" price elasticity rules (Lower the price increase the sale), because the majority have their rooms and spare rooms with a set already courtesy of the stimulus gift by the government.

    Likewise Netbooks and Tablets….

    • cloudy on 27/12/2011 - 08:22

      i dont think normal price elasticty in economics ever meant to apply for some items, like houses tv fridges etc

  • psychtracker on 27/12/2011 - 05:39

    I basically never watch TV news, so am pretty much out of the loop with this kinda thing. But, was listening to the cricket on ABC radio yesterday morning, and during a news break some random Retail association dude said they were expecting $247M Boxing Day sales revenue in Perth, these awesome amazing sales!! record spending!! blah blah.. What happened, did it all go "tits up", and they're complaining again now?

    • tailgatinholden on 27/12/2011 - 10:49

      yeah, i guess it's these retail associations that spruik the masses to spend… it's their job to do that.. and they'll use various strategies like saying 'doom and gloom'.. then another day some optimism for crazy revenue. it just seems that we'll never know what's true or not anymore..

  • Wallyt99 on 27/12/2011 - 06:51
    +2

    Alot of people have been living off 'revaluation reserve' for the last decade… I.E - Refincing and using created equity to buy a new car, pay off the credit card etc. People have now started to be more wary of credit, start to pay off their mortgage, and avoid using credit cards.

    The entire basis of our retail system was built upon a willingness to use credit and is such is not a sustainable model. Retailers have always survived - even in the hard times - as they are still an essential service… however I feel that many of the present retailers lack the smarts to survive.

    In addition the world has changed - it used to be that if your local store did not have it - they would order it for you and you were happy to wait. Now, you can just get it from home, and get it cheaper. As such inventory holding costs for retailers have increased… a significant amount of these costs is in interest paid (or lost) on the cash invested in purchasing the goods. With high business borrowing rates this is also a problem.

    • cloudy on 27/12/2011 - 08:26

      i agree with all ur points. easy credit days are gone, and unless the RBA wants to move into the 0 to 1% interest of other nations aussies will continue to pay off debt & save on interest costs

    • tailgatinholden on 27/12/2011 - 11:15

      "retailers have always survived"
      yeah, even stores i hate like HN… I still like to see whitegoods/furniture in person before i buy.
      and retailers overall can quite easily adjust to an online/delivery model as we've seen already, to reduce overheads.. don't like how jobs will probably be lost though.

      "present retailers lack the smarts to survive"
      some are so lax… i think about billabong and how their shares are going straight down… although i think all fashion brands are cyclical… they've made no effort in the past few years to reinvent themselves, just interested in expanding and takeovers.. same goes for the failed colorado, fletcher jones, etc.

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