One of the things we take for granted as a community is the presence of the corner shop or the local strip shopping centre.
If you run out of something while cooking at 6.30pm there is a good chance that a corner shop is both not far and open at that time.
If the kid comes home from school on Friday and mentions that he’s due at a party 9 o’clock on Saturday morning – no worries, local shops to the rescue. From Narrabeen to Palm Beach brave souls have put up their time and capital to spend time stacking shelves, standing behind counters, acting as local information officers... oh, and in between all that, trying to make a living.
Consider for a moment some of the competitive pressures affecting local retailing:
• Expansion by majors – publically listed retailers have very long investment time horizons and we are seeing them push out of the traditional shopping centre precincts and into the suburbs on the basis that increased urban density will eventually justify their investment.
As it stands now, there are eight supermarkets from Narrabeen to Palm Beach including Woolworths, Coles and Aldi with another Woolworths slated for Newport in the near future. Aside from food, the other markets where large scale competition is very evident is in liquor and petrol making it very hard for small independent operators to survive on a standalone basis.
How many of us who drive through Newport each day would recall the empty site at the corner of Barrenjoey Rd and the Boulevarde used to be a Caltex service station? Of course only one of the two Caltex service stations in Newport had a tie in with Woolworths – the one left standing.
• Competition from the internet – I don’t know about you but more and more I feel that if it’s not on Google it doesn’t exist.
Working people these days are time poor and the shopping expedition is another pastime that competes with the job, kids sport, school and all the other things that families have to do in a week.
The internet is a window on the world that allows us to comparison shop and then purchase almost anything from almost anywhere.
What has changed dramatically over the past ten years is the growth in the web’s credibility with consumers who are now comfortable with the idea of providing payment details and waiting for something to turn up in the post or by courier.
Of course the web doesn’t suit everyone but when a site like Catch of the Day can move thousands of 42” plasma TV’s for $599 there is going to be an impact at traditional retailers such as Harvey Norman and JB HiFi.
Similarly Greys Online seems to be the place to buy wine provided you are happy to purchase by the case and in an auction situation. The web is pretty much one big factory outlet – retail suppliers in the Northern Hemisphere can take their left over season stock and dump it through web outlets in the Southern Hemisphere. Local retailers who probably made pre-season purchase order commitments months in advance have to contend with someone else’s cheap end of season run out stock on the web being offered at prices lower than their cost price.
•Ad hoc competition – Ad hoc competition is that type of competition that comes from left field – councils allowing town halls and reserves to be used as clearance outlets, growers’ markets or outdoor food markets.
Or retailing happening in non- retailing areas such as industrial areas – think Darley St, Mona Vale or Warriewood Valley Industrial Area.
This type of pressure is over and above normal competition because it doesn’t come with a level playing field – traditional retailers pay traditional rents to traditional land lords for retail zoned premises.
It is arguable that a growers market, such as we now have in Avalon, can attract additional people to an area.
It is also arguable, and probably more so, that those retailers who pay full freight rent on their shops in Old Barrenjoey Road or Avalon Parade, who had the foresight to establish fresh food shops and who are there day in day out, shouldn’t be subjected to competition under the auspices of the local council.
Aside from the new wave of competitive pressures mentioned above, retailers have to contend with landlords, council regulations on the areas outside their shops, theft, employee issues, public liability and normal competitive pressures which these days are substantial and continuous.
As a client of ours once said about the retail environment, “It’s all too bloody hard these days; I’m going back to cheating”.
But retailers, like the rest of us, have to adapt to changes in competition and technology. I noticed recently one of the longest standing shops at Warringah Mall, Mall Music, announced their transformation from a retailer of music to predominantly a retailer of musical instruments – something inherently hands-on that can’t easily be down loaded from the web.
Closer to home I get an email every week from Avalon Fine Wines outlining their specials and linking you to their web site or email order facility. Even our coffee shop in 20 Bungan Street has an email facility – by the time you walk down the hall the coffee is waiting to be collected. All good examples of adapting to the times.
Of course the most progressive local retailers will adapt to what the market wants but the most crucial element will always be ongoing support from the local community.
I’m afraid I’ve lost track of how many times I’ve heard someone say ‘Gee, I really miss that shop’.
Yes, well then why didn’t you shop there?
Brian Hrnjak B.Bus, CPA (FPS) Financial Planning Specialist, is a Director of GHR Accounting Group Pty Ltd, Certified Practising Accountants and Authorised Representative of Premium Wealth Management Ltd.
ABN: 11 091 418 861, Australian Financial Services Licence Number 237498, Telephone: 02 9979-4300, Web: www.ghr.com.au Email: brian@ghr.com.au
These comments are of a general nature only and are not intended as a substitute for professional advice. This article is not an offer or recommendation of any securities or other financial products offered by any company or person. |
