tag:blogger.com,1999:blog-4815867514277794362.post2846408006339188504..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: The forthcoming irrelevance of the Australian consumer electronics retailersJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger37125tag:blogger.com,1999:blog-4815867514277794362.post-78496002812488983092012-12-05T16:38:07.829+11:002012-12-05T16:38:07.829+11:00Excellent article and well described. A slowly hem...Excellent article and well described. A slowly hemorrhage at the arms of far bigger, more effective internet providers appears to be like the future for HN. When it comes to the capability of local providers to contest with international online stores, one issue that no one seems to be leaving comments on is the costs Australian based providers are paying for their products from OS providers. Their greatest cost, far and away, is not their set managing costs, it's their general costs. Look at JB's total margin, its about 22%. For HVN's possessed stores it's about 27%. That 22% or 27% has to cover leases, labor etc, and keep a little to investors. <a href="http://www.bharatbook.com/countryReports.asp" rel="nofollow">Country Overview </a>Anonymoushttps://www.blogger.com/profile/16975162102390768326noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-51747991420659391022012-01-31T10:30:14.533+11:002012-01-31T10:30:14.533+11:00I see that Woolies are washing their hands of Dick...I see that Woolies are washing their hands of Dick Smith:<br /><br />http://www.smh.com.au/business/woolies-sales-growth-falls-short-of-targets-20120131-1qqdd.htmlAnonymoushttps://www.blogger.com/profile/08665331027399341600noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-31962881759298830722012-01-17T17:32:18.293+11:002012-01-17T17:32:18.293+11:00far the best austral;ian online electrical goods r...far the best austral;ian online electrical goods retailer is appliancesonline, who have supplied me a stove and barfridge at lowest price, free delivered in 2 days to Newcastle and took away the old appliance free. Harvey, Domayne at al cannot match them for service and price and this is bound to kill bigbox retail soon.John Heslopnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-61112876910541242432012-01-15T14:09:40.239+11:002012-01-15T14:09:40.239+11:00After bad mouthing Australia's internet speeds...After bad mouthing Australia's internet speeds earlier, I just stopped by to say that my internet speed has picked up considerably over the past couple of days. I don't know why but it might have something to do with people no longer crawling up and down the mobile phone tower across the road. (I think they were crawling all over it to fix it rather than, you know, getting pleasure from it.) But on the off chance that you fixed it, John, thanks.Ronald Brakhttps://www.blogger.com/profile/06303527805739321316noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-38598500425093961212012-01-13T21:28:19.808+11:002012-01-13T21:28:19.808+11:00daybillposters: regarding my reference to 'dai...daybillposters: regarding my reference to 'dailyposters', pardon my dislexia!Marshttps://www.blogger.com/profile/07658993265237702394noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-78345578952866985202012-01-13T15:19:15.075+11:002012-01-13T15:19:15.075+11:00dailyposters: Thanks for that feedback. So my ques...dailyposters: Thanks for that feedback. So my question remains, why is Gerry Harvey (and others) not going on about this issue? I don't get it?<br /><br />Or for that matter, why don't these retailers source product from countries with lower wholesale prices and sell in Australia? Perhaps that's essentially what is starting to happen (eg with Harveys direct imports from Ireland)?Marshttps://www.blogger.com/profile/07658993265237702394noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-76325474566067994722012-01-12T11:08:52.465+11:002012-01-12T11:08:52.465+11:00Mars: At a Q&A in October last year, I asked R...Mars: At a Q&A in October last year, I asked Ruslan Kogan (the "Kogan" CEO) the question regarding electrical retailers in Australia and why, say, a Panasonic camera is $200 cheaper at B&H New York even after postage and even after GST considerations. He claimed that the big US/Japanese/Korean electrical companies have different wholesale prices for different regions, and Australia was one of the more expensive. I have no evidence this is true (and he did not explain why this was the case), and one might argue that it only takes several major electrical manufacturer to break-away and provide Australia with cheaper wholesale prices. I am only highlighting what he said without, unfortunately, any evidence it is indeed true. <br /><br />Another argument in the market place is commercial property prices in Australia, that are much higher elsewhere. In newspaper articles I observed 12/9/10 and 2/9/11, Pitt Street Sydney is now more expensive than Paris and London's High Streets (a Google search on this topic will bring up many articles discussing this topic).daybillpostershttps://www.blogger.com/profile/16541848775297426347noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-30157571649686971082012-01-12T08:46:43.403+11:002012-01-12T08:46:43.403+11:00hey jh...spot on analysis though not that difficul...hey jh...spot on analysis though not that difficult a call. Amazon usurps sales & lets the brick & mortar outfits take the rent & wages hit, nice business plan when Best Buy, etc. cannot afford to train properly nor pay for the luxury of passionate gearheads. <br /><br />The accessory niche has been the profit maker since way back when...unless you set up your tent across the avenue from the largest trans-shipper in the local market.<br /><br />I had such a store in Berkeley with the best spread of video goodies & toys (Sony thru Toshiba & back) & one day it dawned on me...take the video tape (T-120's) market as the loss leader which created the illusion of inexpensive on all levels.<br /><br />We pounded that message thru ads (sales in case lots Sat-Sun only) until the manufacturers stopped supplying product (tape). So I had the proper response...trans-ship the stuff. The manufacturers finally relented & product flowed.<br /><br />T120's were 12.99 when I dropped the case lot price to 7.99 each. Sold mountains of the stuff with customers wall-to-wall. Ah, the good old days.<br /><br />Didn't know the Good Guys were still in existence...started in S.F. on Lombard, btw.<br /><br />jphthe buckaroonoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-60473147043116899022012-01-10T11:14:12.230+11:002012-01-10T11:14:12.230+11:00Does going to a store and looking at a TV do any g...Does going to a store and looking at a TV do any good these days? In ye olden times one could go to the store and fiddle with the knobs to see how good a picture one could get, but when I went to Dick Smith's the TVs didn't even have knobs on them. So does the picture quality on the display TVs represent the actual quality of the TV, or are the TVs settings adjusted so the ones that bring in the most profit have the best image quality?Ronald Brakhttps://www.blogger.com/profile/06303527805739321316noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-14635814215096273052012-01-09T09:01:01.499+11:002012-01-09T09:01:01.499+11:00Interesting ! much is true although I think the tr...Interesting ! much is true although I think the true evolutionary path that the internet will take is unknown at this stage.<br />It is vastly overstated in Australia with e-commerce still less than 5% of total commerce.<br />You seem to have totally ignored the mass merchants in your summation .<br />Big W, K-Mart and a few others are now accounting for a decent market share in consumer electronics.<br />Harvey Norman corporate owns all the stores.<br />Yes its a franchise but its a $2 share.<br />The proprietors are nothing more than managers.<br />The % of the profits they get is getting less and less as the corporate takes back more and more.<br />The amount of resignations HN is experiencing at the moment is astonishing.<br />As for JB personally I think the business model is faulty.<br />They only show a profit when they open new stores.<br />Currently they are only talking about it.<br />It seems to me its all been seen before . "BRASHES"Cliffnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-79440125888027480872012-01-06T20:40:49.127+11:002012-01-06T20:40:49.127+11:00Re Mars: This is indeed something quite interestin...Re Mars: This is indeed something quite interesting, as the world-wide wholesale (and retail) prices are not reflection of what you'd expect given the factory-door prices (and of course including things like transport, localization etc.).<br />Even in EURoland, where you can shop across the borders, have no FX volatility, most of things are localized etc. the prices (and even availability of models/features) can be widely different between countries, much more so than one would expect. Various pundits have been predicting prices to converge, but it hasn't happened yet, so there must be a story in that somewhere... (and don't get me on US vs Europe prices - again, after taking into account all the bits that are different)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-41406144345277543962012-01-06T13:36:45.319+11:002012-01-06T13:36:45.319+11:00When it comes to the ability of local retailers to...When it comes to the ability of local retailers to compete with foreign on-line shops (bricks, on-line or bricks-and-clicks, or whatever), one issue that no one seems to be commenting on is the prices Australia based retailers are paying for their goods from OS suppliers. Their biggest cost, far and away, is not their fixed operating costs, it's their wholesale prices. Look at JB's gross margin, its about 22%. For HVN's owned shops (not franchised ops) it's about 27%. That 22% or 27% has to cover rents, labour etc, and leave a little to shareholders (one hopes!).<br /><br />Now those margins translate to markups in the range 30% to 40%. Whilst I'm not saying that's insignificant, it's not the crazy markups many consumers would have you believe, when you read/hear the hysterical commentary about stores being “rip off merchants”.<br /><br />So the elephant in the room has to be the differential pricing still being applied by distributors and suppliers, to Australia, compared with other countries. If that playing field was levelled somewhat, surely the whole question of the survival and competitiveness of local retailers' would have to e re-assessed.<br /><br />So my question, why are local retailers not making noises about this issue, instead of carrying on about side shows such as the GST on foreign goods?Marshttps://www.blogger.com/profile/07658993265237702394noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-50463917847039698792012-01-06T13:31:12.437+11:002012-01-06T13:31:12.437+11:00Interesting points. ThanksInteresting points. ThanksAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-39962200969624718082012-01-03T12:27:05.073+11:002012-01-03T12:27:05.073+11:00Your article is such a predictable response to thi...Your article is such a predictable response to this retail downturn. Everyone can point the finger...oh it's so easy. Look mum..how cheap this stuff is online..but<br /><br />Couple of quick questions.<br /><br />1/ Where did you buy the camcorder?<br />2/ How do you buy your furniture, whitegoods, and do you go into a store and look at a TV before you buy it?<br />3/Do you like to be covered by Australian consumer protection and warranties? Do you like the idea of sending your goods back to Hong Kong or the US if they aren't what is expected..?<br />4/ What makes you so sure these retailers can't survive with changes to their business and selling models, like direct online sales from within the shop to stop customer churn? And cost cutting with staff cuts and better inventory management selling online themselves straight from chinese warehouses..<br />5/ Are you also shorting the Aussie dollar? What if the dollar plunges bak to 60 cents..?What happens to online prices then?<br />6/ Why pick out HVN and JBH? Surely DSE (WOW) and smaller electrical retailers and the Department stores are likely to suffer loss of market share before these well run companies. Are you predicting these retailers, and other furniture stores will go out of business as well?<br />7/What stocks do you recommend as an alternative, or do you think ALL mainstream retail is finished..?<br />8/Why haven't you accounted for actual growth in sales of electrical goods overall, when the economy inevitably picks up? Or don't you think this will ever happen? Or if it does, that HVN and JBH will be out of business before it does...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-36206239408625721052012-01-03T09:53:35.399+11:002012-01-03T09:53:35.399+11:00Similar article on Forbes about Best Buy, publishe...Similar article on Forbes about Best Buy, published on Sunday: http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/Alexhttp://alexmanchester.comnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-69096008934476777682012-01-03T08:47:22.315+11:002012-01-03T08:47:22.315+11:00Not to speak for John in reply to Arthug but if yo...Not to speak for John in reply to Arthug but if you are going to own any large property stock in Australia make it Westfield, the class act in the sector globally and its expansion plans in Brazil and Argentina are very exciting.<br /><br />If you are going to own a small real estate stock in Australia make it Carindale, eventuially westfield are going to take out the half it doesn't own at valuation and note a recent substantial shareholdingh notice from the Myer familys private company-thery tend to know a bit about retailing...<br /><br />If you are shorting an AREIT or are thinking about it can I introduce you to an absolute disaster masquerading as a sound business run by an accountant from Yorkshire who has an opinion about absolutely anything but no feel for real estate?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-62103987453726339112012-01-02T18:33:05.075+11:002012-01-02T18:33:05.075+11:00Great post and summed up well - a slow bleed at th...Great post and summed up well - a slow bleed at the hands of far larger, more efficient internet retailers sounds like the future for HN.<br /><br />Not so sure about JB though. JB is a music brand - the clue is in the name ; ). Everyone knows that record shops are where the kids hang and JB has done a great job of hooking people in to the brand through CDs then selling them TVs and expensive HDMI cables.<br /><br />Now that they're CD revenue is under threat from iTunes/Grooveshark/Spotify you don't see JB whinge like Gerry, instead they pivot and bust out their own subscription streaming music service (JBNow).<br /><br />And you can bet your over-priced SD card that they'll use this music service (which comes with a one month free trial) as a traffic generator for their online store...where they'll sell the kids cut price TVs and gaming consoles.Marc Loveridgehttps://www.blogger.com/profile/16499916088068733641noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-26069890496854308272012-01-02T18:01:29.067+11:002012-01-02T18:01:29.067+11:00HDMI cables at best buy ($50, $40 on sale) have be...HDMI cables at best buy ($50, $40 on sale) have been keeping them afloat for the past few years.<br /><br />Never pay more than $5 for an HDMI cable, unless it's over 10 feet long.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-43966705230470228192012-01-02T14:13:08.224+11:002012-01-02T14:13:08.224+11:00Since no one else has done so, I would be remiss i...Since no one else has done so, I would be remiss if I did not wish you a happy 2012. I am sure I speak for everyone: Many thanks for spending the time writing this blog that has immensely benefitted all of us readers.<br />RichAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-67943024380911573982012-01-02T13:26:32.460+11:002012-01-02T13:26:32.460+11:00John: Radio Shack absolutely was hobbyists, comput...John: Radio Shack absolutely was hobbyists, computers, and stereos in the 70's and 80's, migrating to VCRs, and then DVD players, digital cameras, and home theater stuff in the 90's. Just look at their catalogs. But they expanded into areas that were dying. Yeah, high prices for simple things like memory cards are not helping your RSH equivalents, but there is a bigger problem beyond paying for convenience - the market for the stuff RSH used to sell is gone. Walk through a college dorm and count the stereos. You're lucky if you can find even one.<br /><br />My point is lower prices will not help RSH and their ilk survive, since the stuff people used to buy via looking, touching, and pushing buttons doesn't sell enough any more. Maybe lower prices would help Best Buy survive a bit longer. My old company could sometimes get overnight delivery from China. I suspect the future is not Amazon but directly ordering from knock-off suppliers in China.<br />RichAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-17801852250802073522012-01-02T06:09:30.699+11:002012-01-02T06:09:30.699+11:00You picked the wrong card on Amazon. Here's th...You picked the wrong card on Amazon. Here's the correct card, its $128: <br /><br />http://www.amazon.com/SanDisk-Extreme-Pro-SDHC-SDSDXP1-032G/dp/B004JJQN8G/ref=sr_1_1?ie=UTF8&qid=1325444839&sr=8-1Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-49979481097144443892011-12-31T23:41:14.959+11:002011-12-31T23:41:14.959+11:00P.s. to discussion in comments
It's not exact...P.s. to discussion in comments<br /><br />It's not exactly that people want stuff for nothing, it's that that stuff mostly should really cost nothing.<br /><br />Support, reliability and assembly quality are matters of percentile difference - maybe 10%, maybe 20, mm-kay, 30%.<br />Not like 300% or what.<br /><br />Let's be honest - for a long long time a "high-tech manufacturing" was very lucrative business. Yep, huge "fixed" RnD costs, but then you basically sell stuff at hundreds of % mark-up. It keeps going well for few who indeed still do their RnD spendings.<br /><br />The rest just take some basic/old stuff and somehow imply it should cost proportionally.<br />I can see buying Intel CPU which costs $1 to make for $300 - they did spent good money upfront to develop it. But why anyone should pay $100 for $0.5 SD card made with most basic designs is quite beyond me.<br /><br />And it seems to be catching up.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-70525450191515711472011-12-31T23:24:08.831+11:002011-12-31T23:24:08.831+11:00One important thing to consider is what other onli...One important thing to consider is what other online retailers besides Amazon pop up "locally", e.g. with more finesse then international delivery can afford. Because one material advantage for "real" stores is the right now effect, and local online retailers with fast deliveries finish that one off.<br /><br />I honestly have no idea how Australian online retail feels, but if it does, Radioshack might be "the best case".<br /><br />Tho actually, the difference between properly imploding and slowly fading out to obscurity in brick-mortar retail is really hazy. In no small part it depends on stuff like rent and labor costs, e.g. if it's possible to "clinge to a fringe" near break-even selling "several cell contracts per day".<br /><br />Then again, there's always a possibility of a good old mess-up on their own part. Drifting away to irrelevance is the default path, but many fading companies tried to pull off something big and breaking through on the way. And more often then not, afterwards, "autopsy revealed that the cause of death was intensive care", so to say.<br /><br />Regards,<br />Dmitry.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-65231757881256446432011-12-31T16:17:49.423+11:002011-12-31T16:17:49.423+11:00I am not at all being facetious about radio shack....I am not at all being facetious about radio shack. <br /><br />There were 2400 stores - one within 10 minutes drive of most Americans.<br /><br />They sold that hobbyist stuff - but there was no way that there were enough hobbyists to keep 2400 stores open. May 240 stores - but not 2400 stores.<br /><br />The 2400 stores was to sell convenience, not plug adapters to switch 4 pin motherboard power supply into 8 pin motherboard power supply.<br /><br />JohnJohn Hemptonhttps://www.blogger.com/profile/03766274392122783128noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-31554188481251821362011-12-31T15:52:33.132+11:002011-12-31T15:52:33.132+11:00Are you being somewhat facetious about Radio Shack...Are you being somewhat facetious about Radio Shack? Cables? They used to be a serious computer manufacturer and hobbyist supplier. That worked when people actually knew about hardware. What I see now in both retail and commercial electronics is people want stuff for nothing, even if it's junk. Support, reliability, assembly quality are nearly worthless. I just don't see a bright future for anyone, including Amazon.<br />RichAnonymousnoreply@blogger.com