Red Zebra Business Centre - Management Memos
June 2012 Making Measurably More For Your Business Since 1985! Page 1
Time to think about on-line trading #2!


une is the second month Management memos is focussing on the changes in the retail market space that lead to both on-line shopping and on-line trading more generally. This time we see a bold new experiment by Subaru!

Subaru is not the place you'd normally look for inspiration on running an on-line shop!

But here it is - the Subaru BRZ. The car you can buy only on-line! See it in the showroom. Test drive it at the dealer. Buy it only on-line! Now that's got to be the ultimate in multi-channelling!

Subaru BRZ

The Subaru experiment is limited to Australia, and that's what it is - an experiment. To see how successful the experiment has been, view the video 'Drive' report at this link.

No-one expects car dealerships to disappear any time soon. And no-one expects pool shops to disappear any time soon either. They will just change.

The growing trend to research and buy on-line is simply unstoppable, so the only question is "How do I make it work best for me and my pool shop?"

Stop fretting! The answer is already clear. Australians are turning to on-line sources more and more, and you need to be there. My Local Pool Shop gets you there quickly, easily, and economically.

The successes last year for the early-adopters have been significant increases in shop sales. On-line sales, yes, but unusually high increases in shop sales. As we have always said, participation in My Local Pool Shop is a way to build-up your pool shop.

Obviously, it's working!

Probe into retailing on the net

THE competition watchdog will launch an investigation into clothing importers who are reaching agreements with overseas suppliers to stop selling their products to Australians on websites or instructing them to lift their web prices.

Australian Competition and Consumer Commission chairman Rod Sims acknowledged that anti-competitive practices in the realm of on-line shopping could breach competition legislation.

He said an investigation would be launched, and companies found breaking the law would be prosecuted. 'We are extremely committed to having a close look at this,' he said.

'Making sure Australian consumers benefit from the revolution that we've got in the on-line world is a top priority … We will therefore use the [Competition and Consumer] act to its fullest.' Mr Sims said companies found to be engaging in these practices could face heavy fines.

Probe into retailing on the net (from Previous column)

Mr Sims, who has described the on-line economy as 'the biggest regulatory challenge in a generation', said any evidence of exclusive dealing that substantially lessened competition, or of suppliers controlling prices would not be tolerated. He went on to say that " [The Commission] will make sure that the established players aren't doing anything against the [law] to block consumers from getting the benefit of the extra competition that they can get through buying on-line".

Fines in some instances can arise from the issue of an infringement notice costing $6600 per offence, or there could be legal proceedings. Such proceedings, depending on the circumstances, the size of the company, and how much detriment was caused, could result in fines of millions of dollars.

Choice spokeswoman Ingrid Just applauded the ACCC decision. But local distributors said the crackdown could spell the end for many Australian clothing wholesalers and retailers.

Nicola Reindorf, of fashion distribution agency Flying Standard said 'Before on-line, businesses here used to charge whatever they wanted for imported stuff … but now it's not about greed. We're just trying to cover our taxes and duties and make some kind of margin.'

Clearly the ACCC is more concerned about consumers than businesses - because businesses have to adapt. That adaptation really means making the most of in-line activities yourself.

RBA Less Optimistic on outlook for the economy

THE Reserve Bank dramatically downgraded its assessment of the Australian economy before the federal budget, slashing its forecasts for growth and inflation and opening the door to further rate cuts.

The RBA quarterly review released in May predicts subdued jobs growth, weak building activity, soft government spending, weak business investment away from the mining sector, and inflation near the bottom of its target band.

Offsetting all of these and allowing the Reserve to match the Treasury forecast of 3.25 per cent economic growth, is a strong pick-up in export earnings, itself responsible for 1 percentage point of the RBA's 3 to 3.5 per cent economic growth forecast.

The new outlook is a turnaround from May last year when the Reserve forecast solid employment growth and the budget forecast 500,000 new jobs in two years. The Reserve says it no longer has faith in counts of job advertisements to tell it what is going on - because they do not account for a pick-up in job losses that are occurring at the same time.

Workers who lose their jobs are tending to stay unemployed rather than move to new ones, facing "a range of difficulties, including the need to retrain or relocate, before they can take advantage of employment opportunities in expanding industries or regions".

Although Australia's unemployment rate is low, the Reserve says the prospect of unemployment is weighing heavily on consumer confidence.

"What is striking reading the statement is the Bank's admission that growth and inflation have clearly undershot its expectations," said RBC rates strategist Su-Lin Ong.

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