Retail, More Specifically Brick and Mortar Going Bust - Are we (OzBargain Community) Playing an Active Role in it?

All of a sudden there is a Tsunami of store closure announcements.

A lot of senior execs from these stores have blamed the bargain hunters going online to compare prices domestic and in overseas markets. Some have made general comments like, it is getting hard to have a USP apart from cheaper prices. How true are these comments?

We, as Ozbargain community take pride looking for cheaper prices. That made me wonder how much role are we playing in all this? And isn't this natural anyway?

Other facts and questions:

1) Online shopping has been around for ages now, so nothing new. So what has changed now and why these execs are pointing to buyers that shop online?

2) I have always been a conscious buyer and ALWAYS compared prices (brick/mortar or online), was there a generation that didn't do that and just bought what was in-front of them?

3) Where do we go from here?

All thoughts welcome.

Comments

  • +69 votes

    Jbhifi posting increase in profit each year so it's not all retails are struggling.

    • +1 vote

      JBs whole business model is based on low-margin, high-volume so it's not really comparable to the types of retailers that are struggling.

      • +1 vote

        Yeah it's really not low margin (ex JB tv salesman of 5 years) also alot of $$ is coming from the telco department with phone/internet signups Telstra pays very well too.

        Example Norton 5 user 2 year oem sells for $379 staff price is $35

    • +1 vote

      Every action has a reaction:)

    • -1 vote

      Looking at their vinyl section there comes a statement to my mind from a former relative who was just like Gerry Harvey a very successful vacuum salesman: Stupid people cause me so much pain I have a mission to punish them! Too right he was, he made millions!

  • +16 votes

    I blame mummy bloggers and influencers to excuse myself.

    • +4 votes

      As an influencer I am offended by this comment

    • +48 votes

      I don’t blame them, I just loathe them in general. They only “influence” me to not buy what they are flogging.

      • +2 votes

        Exactly this.

      • +13 votes

        I worked at a multi level marketing organisation. You would be surprised how gullible ppl are with this influencer crap.

        • +7 votes

          Ozbargain has made me extremely gullible too. If a deal gets to the front page, and it's available in my location, and i have a reasonable use for the product/service on offer, then i buy. Shameful i know.

          • +2 votes

            @WaywardOne: The Ozbargain way is to buy a super deal even if you don't have a use for the product!

            • +1 vote

              @Gaz1: True
              I have bought so many things only because they were cheap and not because I wanted them
              I guess we are really contributing to the stock clearance of many physical stores regardless.

              I’m sure we are contributing to the retail / online market in some form :)

      • +2 votes

        top 3 words that annoys me.
        Influencers
        startups
        distrupters

      • +3 votes

        I don't understand how the term "influencer" became a thing - they're paid marketers. They're literally just paid shills. Is marketing now "influencing"?

  • +16 votes

    All of a sudden there is a Tsunami of store closure announcements.

    No it's fake news IMO.

    All of a sudden there is a tsunami of ADDITIONAL MEDIA REPORTING on store closures because of some alarmist reporting that the bushfires would crush our entire economy (which I personally think is garbage, alarmist and dishonest journalism).

    Stores close all the time. It's only because of the added focus our economy is under, thanks to the bushfire reporting, suddenly any store closure is being reported in the sensational doomsday way that all western media is now famous for.

    Look closer at the stores closing. Many had prior announcements of closures prior to bushfire season. Others have poor fundamentals e.g. bad sales for the last few years, poor adaptation to the new online retail world, poor management etc.

    It's just media flavour of the month.

    • +3 votes

      It could be just this and nothing more… However, I personally have not seen news articles relating the two, so not sure, if thats the sole reason.

      • +9 votes

        Not the sole reason, but there's certainly a massive increase in store closure front page type articles in the last 3 weeks.

        E.G.
        https://www.news.com.au/finance/business/retail/tech-giant-b...

        https://www.news.com.au/finance/business/retail/inside-austr...

        https://www.news.com.au/finance/economy/australian-economy/w...

        Also look at the language used:

        where theres smoke aussie retail icons shock announcement

        inside australias 2020 retail bloodbath

        Seriously….just typical sensationalist journalism.

        • +10 votes

          I mean, I'd never use news.com.au as a news source in the first place, it's a terrible place to get your news. So that's your first issue.

          I've seen the store closures come up in my news feed but it's been much neutral and just fact reporting. Maybe you just need to rely on better sources? Also, none of the articles you linked even mention the extreme bushfire season, so I think you're putting your own biases here that people are relating the bushfires with stores closing down.

          Also, I really hate the notion of fake news. All of the news you're linking is real, just slightly sensationalist (again, because you're relying on a poor news source). It's a really poor term that came from a poor source so I tend to avoid using it from that perspective as well.

    •  

      Can you explain how store closures are linked to bushfires? I'm not really following…

      • +3 votes

        They're not.

        I'm saying the media are falsely and sensationally saying that due to the extreme bushfire season, our economy is stuffed and as a result all these stores are closing.

        • +6 votes

          The news outlets were saying our economy was stuffed (which is true) before the bushfires too

    • +4 votes

      Where did you come up with this idea? Retail volumes/growth is stagnating big time and this is after we have had successive interest rate cuts. Its keeping our inflation levels low and putting a massive hand brake on economic growth. Not sure why you think the struggling retail sector is 'fake' news.

      •  

        "fake news" is a term used by people they have an opinion that is based on little or no research and any facts.

    • +1 vote

      It's been happening all year though, retail is going down the tubes. As someone who loves shopping, can confirm! Bushfires will wipe a lot of tourism, not seeing the link between them and the Aus retail sector.

    • +1 vote

      Retail closures in Jan/Feb in periods where the economy is struggling is normal.

      Many marginal businesses struggle on until the Christmas rush in the hope things will pick up. Some do and survive, others see the writing on the wall and give up in the new year.

      There's a similar pattern in manufacturing of closures around the time when factories take a plant offline for a planned Christmas shut down (and instead announce to staff they won't reopen).

      I agree with Skramit's second last paragraph that a lot of these businesses had long standing underlying issues pre-dating fires. However I think the role of bushfires in damaging consumer and business confidence is real, if difficult to measure. It's entirely possible some firms are seeing this as the final straw on top of their historical issues and a poor Christmas result.

    •  

      The difference is that big brands that have been around for a long time that are known and "loved" are now starting to go out of business.

  • +3 votes

    Good topic.

    It would be very interesting to know how much 'damage' OzBargain does.

    The recent Garmin 50% off code leakage for example (https://www.ozbargain.com.au/node/511301), I'd love to know how many people used that code and how much it cost Garmin in profits.

    Can anyone (Scotty?) provide stats on how many people click 'Go to Deal' on a post vs upvoting / commenting? So say for example 256 people upvoted the deal, I reckon at least 10x that used the deal without interacting with the post.

    • +6 votes

      how much it cost Garmin in profits.

      It may not have though. Retail markups are huge especially if you're direct selling your own products.

      5 sales at $50 profit each vs 100 sales at $5 profit each. Literally Amazon's business model.

      Also, if you check your link, the site shows you 12842 clicks.

      •  

        It may not have though. Retail markups are huge especially if you're direct selling your own products.

        5 sales at $50 profit each vs 100 sales at $5 profit each. Literally Amazon's business model.

        • Very true

        Also, if you check your link, the site shows you 12842 clicks.

        • Wow, that's much higher than I expected.
        • +5 votes

          also a big % of the people that bought at a discount wouldn't buy at full price, so less profit but more sales could equal the same or evene better result

    • +24 votes

      It would be very interesting to know how much 'damage' OzBargain does.

      I have no evidence or stats to support this, but my theory is that OzB helps stimulate retail rather than put pressure on it. In a general sense that is.

      I'm pretty sure based on previous site polls, that many regular OzB admit they spend more now on "stuff" than they did before OzB :)

      • +12 votes

        I'm pretty sure based on previous site polls, that many regular OzB admit they spend more now on "stuff" than they did before OzB :)

        100%. While it's great to find a deal on items you know you already want to buy, many of us here trawl here for new things/gadgets we didn't know we wanted/existed. There's also plenty that suffer from FOMO when a decent bargain lights up with hundred comments in 10 mins.

    •  

      A good example of how much "damage" an Ozbargain can do would be a price error on eBay & Amazon (if seller fulfilled).

      Both those marketplaces only allow you so many cancellations before you account falls into a bellow standard service metric. In those cases, the accounts can be automatically deactivated or listing rankings dropped.

      If that happens, that's a massive impact on a business. Especially if they are main sources of revenue, that is peoples jobs right there.

      Add to that PayPal no longer refunds PayPal fee's, so as a seller there's an additional loss there.

  • +7 votes

    Amazon started up in March last year I believe and that would have had a drastic impact straight away. This will continue to grow as it has done in other markets and their deliveries are already improving from 3-5 days delivery in cities to 2 days now, eventually will be next day delivery and even same day delivery once their new warehouses (like at Moorebank) are setup and their inhouse logistics network grows. Coupled with free parcel lockers and it's an ideal shopping experience. I'm used to researching and buying online for a decade now and have no need to go into a store to touch/feel items before purchase so it works great for me. Not to mention all the added perks with Prime. I'm also not a fan of having to go into a store and price match/haggle on prices, not something used to. Prefer set prices and decide if it's value to me or not.

    • -4 votes

      I thought Amazon started in 1994?

      •  

        Yes in the US. They started here recently though. I think first year or so they were just a third party marketplace but last March they started actually stocking and selling products themselves. Prime came out few months later.

    • -2 votes

      Nope, Amazon AU launched in Nov 2017, not March 2019, just wiki it in 5 seconds
      and Nope, their delivery speed never improved
      I live in metro Melbourne, prime member
      it usually takes 3-5 days, never next day delivery even when I order before 9am on weekdays
      interestingly, delivery from Dandenong often takes the same number of days as from NSW, sometimes even longer

      It takes so long for them to process orders
      Aust Post is fast thou, when they get it from Amazon in the evening, they deliver it the next day
      they really need to work on this…

    • +1 vote

      Amazon definitely killed retail stores in the US. Kmart and Sears to name a couple.

      Their effect isn't fully realised here yet, it will take a few more years.

    •  

      I've never bought anything from Amazon

  • +1 vote

    1) Online shopping has been around for ages now, so nothing new. So what has changed now and why these execs are pointing to buyers that shop online?

    Adoption is catching up with implementation.

    2) I have always been a conscious buyer and ALWAYS compared prices (brick/mortar or online), was there a generation that didn't do that and just bought what was in-front of them?

    There still are and price isn't the only deciding factor for an online purchase.

    3) Where do we go from here?

    This is not the first significant market change and wouldn't be the last. People need to adapt by upskilling or shift into the unskilled labour demographics.

    •  

      Adoption is catching up with implementation.

      So true, not all retailers highlight it in their annual reports (of the publicly listed ones anyway), but last year several were still recording significant growth in ecommerce driven sales while still recording growth in same store sales.

      Some retailers don't even do click & collect yet, some of this stuff is pretty complicated to implement and takes time and planning.

      Bunnings is one of our biggest and most successful retailers and they only just got into ecommerce despite having a website for years.

      All that is to say it is 100% still being adopted by both customers and retailers. Unsure what impact it has on bricks and mortar stores though, probably negligible I think.

  • +14 votes

    There would be plenty of reasons why certain brands / stores are closing. I don't think the reason Bose is closing its stores would be the same as why Bardot are.

    Times are tough. Those people that have a job probably haven't had a pay rise above CPI for 5+ years. Costs for things such as energy continue to increase.
    The economy in general is suffering (despite what some would tell us).
    The bushfire impacts will be felt for years and years, not just financially but also in regard to consumer confidence. Coupled with that, a lot of individuals have donated to the various charities, further reducing the amount of disposable income available.

    Together with those things, I think that consumers are becoming more discerning. More cost-aware, more adverse to disposable fashion trends, and even less influenced by advertising (e.g. there is less advertising on some of the media-streaming than on traditional media channels).

    • +2 votes

      you mentioned stagnant wage growth and costs rising
      a lot of the brands that are closing are luxury items that maybe people can't afford anymore like bose & high end fashion labels

      eb games can be blamed (at least in part) on the gaming market shifting away from a box on the shelf to downloading via steam, origin, the playstation and xbox stores etc etc

      • +1 vote

        Can't remember when I last went into an EB Games store. Previously I'd just walk right past EB and spend another 5 mins walking to a JB HiFi store in the local shopping centres. Lately though I'd just order the game online (eBay or JB HiFi usually). EB's whole business model is completely wrong. They aren't competitive on pricing and they are the video store of gaming which will get quashed by digital downloads eventually. So you can expect more store closures in the future.

  • +8 votes

    I think it's largely just increased awareness of much of a premium we pay in Aust along with being able to price compare more easily between shops due to online shopping.

    • +2 votes

      Yep, the shops that are closing tend to be managed with a level of incompetence and greed that would put them out of business as soon as they have halfway decent competition. They just had none (or not enough) because the Australian market was too small.

      Internet comes along, bam, global competition. Now that we're not forced to pay $30 for $10 books/movies/gadgets, we don't.

      Shock! The valueless parasites who've been screwing us over for years with 200% middle-man markups suddenly cry "unfair!".

      Good riddance you nasty little dinosaurs. We'll never get all that money back, from all those rip-offs over the years, but at least your cash cow will be dead soon.

  • +6 votes

    I have compared price and budgeted all my life.
    But when I shop online it’s because I can’t get it in store.
    They don’t keep their stock up.
    They don’t keep variety.

  • +7 votes

    Retail is still huge however the angle that is often taken on these closures is "loss of jobs." Retail jobs are a large part of the economy so that's what gets the normies worried.

    The general shift IMO in "brick&motar" is stores moving towards big box / warehouse style (low low prices but moving huge volume of commodity products in a low rent location where price is the ultimate determining factor) and "mall" style shops moving to higher end / luxury products (high prices/profit on specialty products in a high rent location where price is often not the determining factor).

    Things change, businesses adapt, it's about knowing your customer. I went into an ebgames the other day, found they don't even sell PC games anymore. Makes sense as a business decision since PC gamers all get there stuff from Steam/Origin and other online distributors these days. Why waste retail space trying to attract a tiny audience? They had replacd the PC section with an entire wall dedicated to Nintendo Switch. The store was packed..

    •  

      they might still have one shelf with a few dusty pc games tucked away in a back corner between the t-shirts and pop vinyl figures but it's hard to find (and even harder to find something worth buying)

  • +1 vote

    A lot of senior execs from these stores have blamed the bargain hunters going online to compare prices domestic and in overseas markets. Some have made general comments like, it is getting hard to have a USP apart from cheaper prices. How true are these comments?

    Have you got a source for these comments?

  • +25 votes

    I thought Gary's GST solution will solve everything.

    /s

    • +2 votes

      It solved his bank account issues that's for sure.

      Stingy as always…. no donations from Gary for the fires.

      Good old Liberal Party, helping those poor old billionaries through the tough times.

    •  

      It made Amazon move here, surely that helped the local market! Don't quote me on that.

  • +4 votes

    Its just a natural evolution of the retail marketplace. Too many retailers, not enough differentiation, wiser consumers, better logistics systems have led to an increase in online and a reduction in instore spending. Match that with high rents, high electrical bills and high labour costs and retail is in trouble for some products.

  • +3 votes

    I do feel the market is moving towards online which may be making it harder for brick and mortar stores, especially when people are shopping online and comparing prices instead of just hitting up a shop and asking a sales guy for a "great deal" which I imagine people did before my time XD.

    Personally though comparing prices is like obvious, having a website that looks for good deals is really the way things go, it almost seems silly to think people wouldn't end up looking for a great deal or price. While I do think its made people change their perception of a deal (a sale means nothing to me now, its all a comparison to the last lowest price instead), I think that everyone would end up doing it this way at some point.

    Still though I do think this will affect some brick and mortar stores, especially with things like amazon which I've personally found to be quite quick, easier for warranty/ACL issues and to the point.

    In saying that I do think retailers are misunderstanding the importance of presence, companies like Apple don't have Apple stores because they make a lot of money from them (though they probably do). They have these stores because it gives out presence and is more geared as a showcase to make people buy their products and feel better that there is somewhere they can go.

    Its like people staying with NAB bank or commonwealth because they can go in a branch even though they'll only do it once in like 5 years.

  • +20 votes

    A perfect market economy actually presumes perfect information - i.e. that all purchasers are aware of all prices and offers at all times.

    Bargain hunting at its core is nothing more than this.

    If retailers can't survive in a market economy, that's completely on them for relying on consumer ignorance for profit instead of other ways of competing.

    • +1 vote

      You presume all retailers charge for all services provided.

      Someone who tries on CK jeans in Myer and goes to iconic to buy it is using Myers services without paying and benefiting from iconics no retail presence for lower price.

      I made up that example, but the fact is we’re not in a perfect market economy, some don’t rely on consumer ignorance for profit, some just fail to charge for all services provided.

  • +6 votes

    Could it also be a result of Retailer greed? They were charging $xx amount for products/services and people were buying back in the day. With information age and more savvy customers, there were alternatives available. Retailers basking in largish margins became lazy and thought the golden goose would continue to lay. They chose not to evolve/respond to the changing market - in the meantime opened more shops/including large retail space (than necessary) - end game, high overheads and sales not keeping up. Finally woken up and "blaming" shift in market which was visible miles out. Is no different to large companies which did not evolve (Nokia, Kodak, Yahoo) and ended up being overrun.

    •  

      Dunno if you want to use yahoo as an example, albata inc (formerly yahoo) make a lot of profits

      •  

        I was using that as example of being outrun by competitors. Yahoo no longer runs as an independent business - maybe still profitable and making money. There was a time they used to compete with Google and maybe were ahead.

    • +1 vote

      Yeah this is a huge part of it. Australia has massive margins from cost price to selling price. 10-15 years ago stores could get away with it because most people didn't realise what was going on but now there's nowhere to hide. For the big items $500 and over they have a huge profit percentage. With most online retailers selling closer to cost price. They have to meet in the middle and drop their prices by a decent amount. I'd still buy a big ticket item from a bricks and mortar store if they charged a bit more compared to online retailer (Other than Amazon), as I'd want the safety of return, refund, warranty, etc as peace of mind.

    • +2 votes

      I tend to agree with you. It wasn't until 15 years ago that local retailers had to compete with the rest of the world. They dictated to us a narrow range of goods at inflated prices. Books were an excellent example. Amazon and Book Depository came along, and people had access to almost everything in print in English, at significantly lower prices.

      •  

        I remember $30 paperbacks, $30 CDs, $35 movies (on horrible quality VHS cassettes that degraded the more you watched them).

        Those thieves are just whinging about having to put up with a level playing field.

  • +2 votes

    Nope. Online is only good if you can control yourself. Think about it this way. If you had to be at work 9 - 5 then you can't shop. With online you can shop at your work and spend 3x as much (more profit). The premise of improving access to shopping by going online and credit cards (disconnecting you from your cash / budgeting) means you spend more money.

  •  

    i think OZbargin and other forums for publishing prices has brought upon the mentality of getting the best price for your goods. service comes next.

    its fair people want value for money, but at what cost. Once all the brick and mortar stores goes, everything will be purchased online. You can't buy white-good or tv just from a webpage.

    • +2 votes

      Yes you can. I buy all my whitegoods online. What's the point of seeing a dishwasher before purchase? They all look great when they've never been used.

      Consumer level TVs are no different. All the shop is showing is demo mode - oversaturated cherry picked clips and the average consumer doesn't even know what they're meant to be looking at.

      What you're referring to is simply buyer experience, a notion that is rapidly approaching obsolescence.

      •  

        I wasn't meaning the buyer experience. I meant to say that with B&M stores. Assuming they have stock you can take the goods home with you straight away. no delivery fee or waiting for delivery.

        just before xmas and on boxing day. all the people who left their shopping to the last minute. can head out to pick up their good straight away.

  • +16 votes

    What we're seeing are the effects of structural change in retailing.

    Insofar as cheaper prices are the "death of the industry", this has been coming for decades.

    Remember in the '80s and '90s when someone would go to the US (or elsewhere) are come back with suitcases full of cheap gear and we were all amazed? That's when the mass population first became aware we were getting ripped off, but we didn't have the ability to do much about it, short of flying ourselves somewhere to get all this stuff.

    Then the internet became mainstream and we became even more acutely aware of price differences and the rise of "cheap online" shops in the 2000s. We started to venture into this world, both in buying from overseas and with a few local mobs having a go at this model. Overseas travel started to become more ubiquitous and more people had access through the combination of these mechanisms to cheaper offshore markets.

    Then the markets went down the pan in 2008 and 2009, "everything" got discounted and we expected these prices to last forever. At the same time we tightened our belts in fear the world was going to collapse. The co-incided with the rise of the Zaras and H&Ms of the world and even greater access to online, overseas shopping through Amazon and various other outlets.

    All the while, the retailers that are now collapsing did little to change their business models. They still relied on old business models that consumers had been effectively telling them were broken for 20+ years, it's just that consumers had little power to consume through over channels. As that "power balance" changed, consumers moved to exercise that power. Many retailers did little to respond and the market simply moved away from them.

    While I agree that many consumers will effectively shop entirely on price (and always have) there are many failings beyond this that have led to collapse, including:
    * Average (at best) customer service even at the most basic level
    * Staff having very limited knowledge of the products they're selling
    * Unclear product offerings (effectively just stocking "whatever" and flogging it)
    * Limited stock availability in store (if I can't buy what I want there and then, I may as well get it delivered direct to my home, rather than wait to have it ordered in (if you're lucky) and have to go back to the store)
    * And so on …

    It's a bit hard for "senior execs from these stores [to blame] the bargain hunters going online to compare prices domestic and in overseas markets" when retailing has always had price competition at its core. The online price comparison of today is just the catalogue comparison and ringing around of yesterday. People have always sought to buy from the cheapest outlet, it's just that in days past the cheapest available outlets were sitting atop high cost business models that had limited competition.

    And while I agree that it's "hard to have a USP apart from cheaper prices", that's why you're the senior management off the outfit … to come up with a USP!!! If you're saying you can't do that, please for the sake of the shareholders, sell the thing off now and extract whatever value for can before you destroy even more of their capital.

    I tell you, if I was the Chair or major shareholder in an organisation and my senior management team's response to reduced competitiveness and falling profits was to complain that consumers aren't buying from us any more because we've become irrelevant to them, they wouldn't see out the meeting as the senior management team!

    Strike me pink! Are Australian retail managers so inept that they simply cannot produce a business model that is unable to compete in this world?

    • +5 votes

      I tell you, if I was the Chair or major shareholder in an organisation and my senior management team's response to reduced competitiveness and falling profits was to complain that consumers aren't buying from us any more because we've become irrelevant to them, they wouldn't see out the meeting as the senior management team!

      Amen. I have sat in grief-fest meetings. I now employ the Elon method - just walk out.

      Are Australian retail managers so inept that they simply cannot produce a business model that is unable to compete in this world?

      I do not envy their position. Whilst it is true that many retail leaders are inept, many simply have their hands bound. Try diversifying roles amongst staff or amend working hours - you'd get a call from Fair Work. We don't even have to look that far. I mean, how long has it been since we had one of those posts on OzBargain?

      It is easier to shut down an entire company than to sort out human resources.

      • +1 vote

        Whilst it is true that many retail leaders are inept, many simply have their hands bound.

        It is easier to shut down an entire company than to sort out human resources.

        Agreed, hence what is really the bedrock of my comments. If you have no other USP than lowest cost … and if your business model doesn't allow you to provide the lowest cost (so you have no USP) … then get out of the business and give the shareholders back whatever you can, while you can.

        • +1 vote

          so you have no USP

          I think you need to give a talk to all the companies whose main selling point is…

          "Buy Aussie made. Support the locals".

          If there was ever a slogan that made me think, "so they're the best at being made nearby."

          • +1 vote

            @tshow:

            "Buy Aussie made. Support the locals".

            Going back to the '80s (that I know of) I remember various incarnations of "Buy Australian" campaigns. I also remember various people (myself included) wondering what does that actually mean? We're under no obligation to buy Australian … we'll buy the best, and we'll hope the best is Australian.

  • +4 votes

    Retail doing it to themselves for the ridiculous prices they charge for goods

    •  

      I spent $300 the other day on dress pants for work. First I went to Chadstone and had a look at many stores. Nothing seemed a good mix of price and quality.

      Then I went on to T.M.Lewin dot com and bought 5 pairs for $40-$60 each, one with a matching suit jacket for another $70. Most claimed to be "marked down" from $200+, which seems ridiculous to me, but they are nice quality when they arrived so perhaps they are worth it for some people. They delivered from England for me to pick up in store in Chadstone a few days later.

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