News in brief, 22 June
The past week has been dominated with the news that Fairfax are terminating 1,900 jobs in Australia and the impact this will have on the company’s New Zealand operation. Some of you may say, what does this subject have to do with retailing, or property issues? We believe it has some real impact in respect of both. Just today, a commentator said that the creation of the Internet was the worst thing that has happened to the media since the creation of the newspaper industry. So what’s our opinion?
Some of you will recall the commentary we gave recently on the situation in the USA and our observation of the decline in the number of book retailers in that country. Given that the USA is a huge market, we treated that information as a serious threat to the book industry in New Zealand.
The move by Fairfax to cut staff and to lean more vigorously into online media, is a signal that all is not well. Which is a pity as Fairfax is the owner of the wonderful newspaper the Melbourne Age, amongst many others. The falloff in advertisers supporting the newspaper industry is the reason behind the Fairfax decision. Similarly, in New Zealand, we have all noticed how thin the weekly editions of our daily newspapers have become. There is no doubt that potential consumers of any product are exploring online opportunities, rather than being coerced into buying from newspaper advertising.
It is not our view that newspapers are dead and buried, but they will never be what they once were; certainly weekly papers may ultimately disappear, but weekend reading will remain. The challenge for Fairfax will be how to replace their lost newspaper revenue. Certainly online advertising will never provide the same returns, and Fairfax shareholders will be holding their breath while this conundrum plays out.
Remaining on the subject of online retailing for the moment, it is a fact that the “GrabOne” web-site has a large following. However a number of successful advertisers are finding that the redemption of coupons purchased is very low. This means that people actually purchase items and don’t use them. One of the very significant “non- redeemed” items is apparently golf round purchases! It seems this line of purchasing is becoming addictive! Are we really careless enough to make a purchase and then not validate it?
RCG's shopping centre review
Those of you in the shopping centre business, don’t forget that RCG will publish in July's Retail Examiner the results from our national shopping centre review and this includes revealing the overall winner. If you as an owner want to add information that is not available to us relative to sales, growth, performance, future then email John Polkinghorne our Economist at firstname.lastname@example.org.
Burger Fuel Worldwide is a Kiwi fast food franchisor, with gourmet burger takeaways operating successfully in New Zealand and the Middle East (and less successfully in Australia).
BFW has turned into a real contender over the last year or two, and is now making strong profits. For the year to March 2012, Burger Fuel made a profit of $708,000 on revenue of $10.3 million. Small change by the standards of the larger retailers, sure, but the Burger Fuel stores in NZ turned over $28.4 million in the year to March, and there are now eight stores open in the Middle East.
Share prices have doubled in the last two years, showing confidence in Burger Fuel's growth prospects. It seems that most of these will come from offshore, with the number of New Zealand outlets stable at 27 year-on-year. Nonetheless, it's great to see a Kiwi retailer doing well overseas.
In the press
Local and international media highlights 15 - 22 June 2012
Publisher purchases online retailer
Media and advertising company APN is moving into online retail, forking out $36 million for a controlling stake in brandsExclusive. The company believes there is tremendous value to be unlocked in the global shift towards eCommerce which will be a core part of the digital media landscape in the future.
The company owns local newspapers and radio stations across Australia and New Zealand, and has been knocked by dwindling advertising revenue. It posted a loss of $45.1 million in 2011. APN recently outlined its intention to expand its outdoor advertising business in an effort to diversify its earnings.
(Source: Inside Retail)
Fine food industry boom
A growing appetite for consumer fine dining has led to a boom in the New Zealand food sector. Kiwis have become more demanding and sophisticated when it comes to food, largely due to the rise in popularity of cooking shows.
New Zealand is producing a growing number of specialty foods, which is assisting us to carve out a place in the global market. According to New Zealand Trade and Enterprise, there are now greater than 2,000 specialty food and beverage manufacturers in New Zealand. Export earnings have leapt from $2.9 billion in 1990 to $8.7 billion in 2006.
(Source: NZ Herald)
Nokia takes a knock
Nokia says it will cut 10,000 jobs and shutdown plants as the dwindling company contests competitors, and gave a grim outlook for most of the year, causing its shares to plummet 18 per cent to close at 1.83 euros. The Finnish mobile phone maker recently announced personnel changes and said it has decided to sell its luxury phone brand, Vertu.
(Source: Inside Retail)
H&M find key growth in Asia
Swedish apparel leader H&M continued to take up the opportunities in Asia as it reported positive profit growth overnight. The company says it plans to grow its store numbers by 10 to 15 per cent per annum for the foreseeable future and designated China as a priority.
(Source: Inside Retail)