How the mighty have fallen. There was a time when Woolworths was regarded as the best retailer in Australia, certainly the most profitable.
Independent supermarkets in Australia live on borrowed time.
But, at first glance, it’s easy to think otherwise. IGA currently operate approximately 1,300 stores. Woolworths have a mere 861 stores and Coles 746. That said, Coles and Woolworths stores occupy much more space than the average IGA outlet. Still, IGA handle a large share of the grocery market.
Many Australian businesses rely on China, directly for supplies and indirectly on exports to the region that fuel our economy. In particular, what happens in China matters a lot to Australian retailers.
Pharmacists most likely saw change coming, but I suspect that they didn’t expect it to arrive so soon. The Harper Review and the Abbott government’s plans to overhaul the Pharmaceutical Benefits Scheme will remove the comfortable profit margins pharmacists have been sitting on for years.
In March 2015, a technology company put out a set of slides titled ‘What’s Keeping CEOs of Retail Companies Awake at Night’, stating that CEOs are startled by the rising expectations of a digital customer. In my experience, some surely are, but not all. What customers actually want is quite simple: omni-channel right now.
When a currency experiences a major fluctuation there’s usually a ‘silent period’ before the economic consequences filter through. Recently published statistics by Citi Research indicate that the Australian dollar’s recent decline in value, which started in September 2014, is now becoming visible in the retail market.
No other industry has been affected by technology as much as retail. Over the last 100 years it’s been reshaped by everything from the emergence of cars, movies, mass-produced ready-to-wear clothes, to the internet.
Most apparel retailers offer a mixture of core (volume) and fashion stock, and their never-ending challenge in managing both types of stock can be summed up as margin protection. If specific stock cannot be sold at the right time it may need to be discounted, eroding the gross profit.