14 replies to this topic

[larry]

We caught up with various friends  on the weekend, and some of them are involved in the retail area, and others also had retail businesses, and a couple of points came up repeatedly...

-high shopping center rents are crippling lots of business, even some of the news agencies in large perth shopping centers are struggling to make a profit, and these are traditionally 'safe' businesses

-some of their friends have a large electrical shop , and they already have details of the sales they will be offering for nov/dec and jan  with dropping prices for some of the tv's in the sales over the next 3 months.

-as i've been told by other retailers in the past, in many cases they are making no profit on the sale items, but do make a small profit on 'rebates' they get back based on what monthly sales targets they reach.

-with retail rents going up (eg some book shops in subi have had rents increase by 100% in the past year) landlords have so loyalty to tenants, so people better be careful starting a shop, as they shop fitout can be wasted money if they need to walk away...

shopping centers and landlords are the biggest issue for retailers, as wage costs can be adjusted by staffing levels, but rents are the killer....lots more shops will go under in WA over the next year....

[TheFrog]

Just put a toll on the carpark and the trolleys.

[TheFrog]

How is this a factor in TV's though, they have such huge price fluctuations, who's to know their bottom line?

[diesel]

larry, on Nov 21 2011, 02:18 PM, said:

-as i've been told by other retailers in the past, in many cases they are making no profit on the sale items, but do make a small profit on 'rebates' they get back based on what monthly sales targets they reach.

[blybo]

Then don't open a shop in a shopping centre . Anybody with half a clue has known for some time Westfield et al don't really care if you go under, as long as you use their over paid fit out companies and pay the rent all is good. When you stop paying the rent they lock you out and put somebody else in. Doncaster Shoppingtown, which is Westfield's first "black label" centre, is my local and it is a joke how many shops have shut already even though the redevelopment is less than 3 years old, so more than likely within the first rental term. There's always somebody else trying to get in so it is a successful model for Westfield but not the retailers.

Selling on price is dead in the water as a sustainable retail practice. I predict in the not to distant future the AV wholesalers will begin opening their own outlets and online shops as the chains realise cashflow without profit is only a temporary solution.

I base my footwear retail business on speciality products and old school service like actually fitting people, can't buy that experience online

[ugoagogo]

I think more brands will go the Miele and Asko route and remove the discounting option , then service will factor more in decision making and profit is kept up for both parties while also countering the effect of local internet sales.

Edited by ugoagogo, 22 November 2011 - 05:52 PM.

[pgdownload]

larry, on Nov 21 2011, 02:18 PM, said:

shopping centers and landlords are the biggest issue for retailers, as wage costs can be adjusted by staffing levels, but rents are the killer....lots more shops will go under in WA over the next year....

That's capitalism for you. If shops can't turn a profit then they will close and other buisinesses that can make a profit will replace them or ... landlords will start dropping their prices (as empty stores make no profit for them).

Regards

Peter Gillespie

[TheFrog]

pgdownload, on Nov 22 2011, 08:09 PM, said:

That's capitalism for you. If shops can't turn a profit then they will close and other buisinesses that can make a profit will replace them or ... landlords will start dropping their prices (as empty stores make no profit for them).

Regards

Peter Gillespie

True, but in the process of making a profit, it's the consumer who suffers, as we have to bear the cost somehow.
On what basis are these greedy overlords jacking up rents 100%....?

[myrantz]

TheFrog, on Nov 23 2011, 11:48 AM, said:

On what basis are these greedy overlords jacking up rents 100%....?

Greedy, or stupid.. Depends on how you look at it...

e.g. look at Centro... If they don't charge those rents, they will be in bigger trouble than they already are right now.

Not sure about the other states, but here in WA, all the big shopping centres have exactly the same shops *... S/C aside, everywhere there is a GG, there is bound to be a HN nearby. And somewhere there will be a Bunnings, and nearby there will be a fast food outlet...

And people ask me why I have trouble with directions, every surburb looks the same to me...

* Expansion: My point on that is that shops are not only competing against competitors, they are competing against themselves...

Edited by myrantz, 23 November 2011 - 02:02 PM.

[pgdownload]

TheFrog, on Nov 23 2011, 02:48 PM, said:

True, but in the process of making a profit, it's the consumer who suffers, as we have to bear the cost somehow. On what basis are these greedy overlords jacking up rents 100%....?

Because that's what the market is willing to pay. Greed is human nature. If you were selling your $500,000 house and someone offered $500,000 and someone else offered $600,000 which offer would you take? Are you being greedy? In this case you have the consumers, the retailers and the landlords. All of them looking to maximise their take. If one gets too 'greedy' then the whole transaction fails.

Regards

Peter Gillepsie

[bassett]

There is no doubt that high rents are forcing retailers to close, Add to that high power costs, superannuation, insurance, wages and God knows what else and
your on the road to bankruptcy.  And if you have a franchise, the more successful it is the higher the franchise fee's.  Your average "Bakers Delight" fee's are
around two grand a month.  And that's a lot of Buns.

Shopping center operators also have to pay a percentage of there profits, to the parent company.  In our local shopping center  "Park Beach Plaza"  in Coffs
Harbour  there is a continued rotation of shops closing and others taking there place. Mostly ladies fashion  and shoe shops.  They have just announced  yet
another redevelopment, with  Myers coming to town, together with another even more specialty shops, and a multi-story car park.  The cost is around 40 mil.

Unyet in the old part of town shopping area's and arcades are vacant.  Even the Elders Real Estate office  has closed up.  The local newspaper has just announced
there to go digital,  with only a Wednesday and Saturday  paper issue being retained, and both will be fee, over there entire distribution areas.  Mind you
there advertising fees are three times that of the Sydney Morning Herald. There internet site will no doubt require a fee to access there online paper issues.

[TheFrog]

pgdownload, on Nov 23 2011, 02:12 PM, said:

Because that's what the market is willing to pay.

What's the benefit to the consumer with higher prices and bankruptcy rates?

[TheFrog]

myrantz, on Nov 23 2011, 02:01 PM, said:

Greedy, or stupid.. Depends on how you look at it...

* Expansion: My point on that is that shops are not only competing against competitors, they are competing against themselves...

Competition should also help the consumer, not just help the rich get richer.

[pgdownload]

TheFrog, on Nov 23 2011, 05:10 PM, said:

What's the benefit to the consumer with higher prices and bankruptcy rates?

The benefit goes to the person most in demand. Sometimes that's the consumer, sometimes the retailer and sometimes the landlord. The point is that if bankruptcies start happening or prices get too high for the consumer then rental prices will drop, or store markups will drop. At the end of the day no one is forcing anyone to participate. You don't have to be a landlord, retailer or consumer.

Regards

Peter Gillespie

[digitalj]

bassett, on Nov 23 2011, 04:30 PM, said:

They have just announced yet another redevelopment, with Myers coming to town, together with another even more specialty shops, and a multi-story car park.  The cost is around 40 mil.

Myer is yet to decide between Port Macquarie and Coffs Harbour AFAIK. $40million redevelopment? Pfft. Try a $60million redevelopment at Settlement City in Port Macquarie.