2016 was a horror year for retailers with 2017 shaping up to be a shocker

This year has seen the closure of Masters and Dick Smith Electronics, but 2017 isn’t looking to be much better.
Society

This year has seen the closure of Masters and Dick Smith Electronics, but 2017 isn’t looking to be much better. Already Payless Shoes, Howards Storage World, and kid’s clothing store Pumpkin Patch have announced they won’t make it to the end of the current financial year. Experts are now saying that this will only be the start of the list unless something is done.

While the Federal Government and Treasurer Scott Morrison would like to think their new tax reform plan is going to save the day, there are a lot of experts saying that the problem is much bigger than that. The country is already facing a recession heading into the new year, but the blame might have to be on the businesses that failed. Experts point to their failures as a way to tell other businesses what not to do.

One example is that Howard’s Storage World offered high-end storage solutions but didn’t enter into a competitive market when stores like Aldi were offering cheaper products instead tried to keep pushing products no one wanted to buy. One shopper posted on their Facebook page after they announced they were closing “I have more and better things to spend my money on than a $129 shower bottles holder”.

If you look at the Aldi model, who have had a great 2016, they keep their prices low, offer products that the clients want, and when that want changes they bring in new products.

Retail expert Barry Urquhart from Marketing Focus told news.com.au, “Consumers are saying, ‘tell me what’s, new, innovative creative and exciting’, and they can’t see it on the business landscape,”. He added, “There has been a lack of imagination, a decided lack or absence of new product. That is one of the reasons why this Christmas is going to be a very flat, uninteresting situation. It is relatively dull, boring, repetitive — and that is not the sort of thing that will capture the imagination or stimulate the emotion.”

Have certain stores or brands disenfranchised you over the past year? How have you seen the retail landscape change?

  1. Greg Hills  

    Not really a big time shopper. Just buy essentials really. So I won’t comment on what retailers need to in that sense. I will say that with any business, it is the management skills, and shrude buying of products that people want that will make a business successful.
    The problem is bigger than just that though. The infrastructure costs of business, such as bookkeeping software, taxation compliance essentials, accountancy fees, are starting to get out of control.
    The government’s tax reform could include a simplified business tax model. Lower general tax rate (25% of taxable income is about right). G.S.T. Rate does not really matter as that is passed on to customers anyway – all,the business has to do is make sure they have a great bookkeeping system that will keep good Business Activity Statement records. Then, also make sure they provide for their quarterly payment by reserving the funds in a special account, away from theor Working Account.
    As part of the tax reform, all other indirect taxes should be abolished. The G.S.T. Was meant to replace those 16 years ago. The fact they were retained was the fault of the now defunct Australian Democrats – it was a trade off to exempt essential grocery products from the G.S.T.
    If indirect taxes are abolished – and I mean ALL of them, our business sectors products will become much better price competitive, and they then have a great chance to sell more.
    The economy can then be kick started from there!

    • graham  

      customers are only interested in one thing—-price—-but they also want the best quality,and now they have to compete with online stores,Take a fridge that sells for $1000,with a 20% markup,out of that has to come wages,rent–huge—delivery cost,telephone,and the list goes on,so out of the profit there is not much left,maybe just enough to cover overheads.But from the other side of the fence,how does the consumer find the funds to buy the fridge,of course they want the lowest price,because they don’t have any money after they paid their bills,viscous circle,how about allowing inflation at 4-5 %,and put the interest rates up slowly,then maybe we can crawl out of this hole we are all in,and business can make a profit

  2. Abel Adamski  

    Many who are looking forward to retirement have been made painfully aware they will be on their own so essentials only with the very occasional “luxury” or indulgence. The employment environment is becoming far more insecure with employers looking to casual and part time and EBA’s that remove awards and conditions , penalties, overtime etc thus reducing employee income. Once again insecurity means conserve money and save.
    Young families now have to save for their childrens education in 15, 20 years time, once again minimise expenditure.

    The Austerity and worker insecurity comes at an economic cost for all business, especially small business and that feeds up the chain

    • Dee  

      I agree with Abel. Right when the government needs to produce a stimulus, they’ve just told a large number of pensioners they have to cut back their lifestyle. Part time workers with no security can barely support themselves let alone go out splurging on things they don’t really need. Our economy is in very serious trouble and they’re trying to fix the budget in ways that will cripple us more. I really think the government is so obsessed with their “plan” (??) that they’ve lost touch with what’s going on out in the real world. Labor’s plan made more sense to me and I’m scared of the country being in the hands of such amateurs at a time when we need sensible changes.

    • Glenda  

      Thanks Abel for telling it like it is. The cycle continues to go around and around and workers and families have to bear the brunt of mismanagement and poor planning. One thing that rankles with me is the introduction of the working “contract” many years ago. This represents to me a crime against humanity.

  3. Noel Baxendell  

    The Great Depression and other serious recessions are usually a result of attacks on wages and working conditions. There was a 10% wage cut at the beginning of the Depression follow by another. When people feel insecure about their job and wages, they stop spending. In turn, retailers and manufacturers cut jobs, leading to calls for further wage cuts. The Turnbull government’s cuts to pensions will not help retail spending, perhaps ensuring that the drop in GDP in the last quarter is followed by another (a recession).

    I certainly hope I am wrong.

  4. julie brown  

    I think retailers as well at looking at some of their pricing need to look at good old fashioned customer service.
    The need to treat everyone who walks into their shop as a potential customer.
    If you give a customer good service they will return and tell their friends. If they don”t give good customer service, they wont return but will still tell all their friends !!

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