Monthly Archives: January 2019

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Myer chief retails ‘tale of woe’

Down at heel: Retail has a hard road ahead, Myer’s boss says.MYER boss Bernie Brookes has described Australia’s retail landscape as a ”tale of woe” where sector growth will remain below 3 per cent for the next few years due to consumer angst over rising energy prices, steeper healthcare and education costs and the carbon tax.
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The chief executive of the country’s biggest department store also warned that higher penalty rates and the current industrial relations framework would lead to many shops shedding staff and reducing their trading hours.

Speaking at a Financial Services Council lunch in Melbourne yesterday, Mr Brookes said the pain was being felt across the discretionary retail industry and that he feared further company collapses following a string of failures in the past two years. ”What we are seeing in retail is really a tale of woe, we are seeing the most difficult time I have encountered in nearly 36 years that I have been involved in retail. I have not seen it as difficult, as consistently difficult, than what it is today,” Mr Brookes said.

While the strong dollar was encouraging shoppers to surf the web for better deals overseas, a weakening of the currency could trigger a new round of corporate collapses. ”There is no doubt a lot of stores are hanging on, they have got high levels of inventory and are hanging on despite the high level of the Australian dollar being generous to them in their buying prices,” he said. ”If we see the Australian dollar come off, [it is] going to be more expensive for them [shops] to purchase the product, and therefore we could see quite a few more stores go into significant issues.”

Asked about future growth rates, Mr Brookes said he remained sceptical about the discretionary retail sector squeezing out even 3 per cent growth in the short term.

”I think if the discretionary retail sector grew by 3 per cent, it would be a fantastic opportunity to get back into some of the metabolism of good growth and good profitability and, more importantly, good prices for the consumer.

”I don’t see 3 per cent growth in discretionary retail in the next year and perhaps the year on. This is a tough market and it isn’t going to improve overnight.”

Myer has already trimmed its forecasts, warning that its full-year profit will be as much as 15 per cent below last year’s performance, while rival David Jones has warned of drooping sales and profitability this year. Mr Brookes said data flowing from the company’s 4.1 million MyerOne club card members showed they were worried about higher energy prices as well as the rising costs of healthcare and education. The carbon tax was also holding back spending.

He said the Fair Work Act meant stores would be forced to close early in the face of massive penalty rates that staff had to be paid. ”There will be stores closing on Sunday,” he said. ”With the reintroduction of penalty rates, you are going to see not only stores close but also shopping centres close.”

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TV ads sway more than online: survey

ADVERTISING on TV continues to be far more influential than ads online, with many people complaining about the intrusiveness of digital ads and their potential to invade privacy.
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According to research by Deloitte, which surveyed people in eight countries, television advertising was the most influential on consumer decisions in Australia, followed by newspaper ads and online.

But online advertising is catching up to traditional media with the fast-growing influence of online reviews. The survey found that 56 per cent of people learnt about a new product online for the first time and 43 per cent bought something based on an online review or recommendation.

The report also found that many shoppers, 41 per cent, checked competitors’ prices on their smartphones while in a shop. Dubbed ”word of mouth in the 21st century”, the researchers concluded that checking prices online had become everyday behaviour.

The survey results provide an interesting dilemma for advertisers, with people concerned about the potential for invasion of privacy with online ads, but also interested in more targeted online marketing. Many of those surveyed said they would click on more ads if they were targeted to their needs.

Researchers said that the online advertising community needed to provide more reassurance to consumers regarding the collection, use and security of personal information, in order to overcome people’s privacy concerns and boost effectiveness.

Among the types of advertising available online, Australians preferred search engine advertising, interactive advertising and advertising on apps on mobile phones. But video-based pre-roll and post-roll ads were not very influential on buying decisions, ranking fifth and 10th in terms of influence.

Deloitte Technology, Media and Telecommunications partner Clare Harding said the research also showed that while TV was the preferred form of entertainment for most Australians, 60 per cent of those surveyed were multitasking on other electronic devices.

”Opportunities exist for newspaper publishers and advertisers to connect with consumers across multiple platforms and provide an integrated content or brand experience. Advertisers should also take the opportunity to rethink ad design and incorporate the ‘small screen’ of smartphones, tablets and laptops into the ‘big screen’ viewing experience of the TV,” Harding said.

The report, undertaken between November 2011 and March 2012, surveyed around 2000 consumers in each of the eight countries surveyed, with those interviewed spanning four generations. This is the first year Australia has participated.

This story Administrator ready to work first appeared on Nanjing Night Net.

Mojo names former ninemsn head as chief

FORMER ninemsn chief executive Joe Pollard is set to become the most senior woman in Australian advertising as she takes over as head of Publicis Mojo Australia.
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Ms Pollard joins the company at a time of huge change for the industry, with the softening of advertising markets and the rise of digital.

Publicis Worldwide earlier this year also took over ownership of the Australian company.

Publicis’ blue-chip clients include Coca-Cola, Toyota, LG, Qantas and Goodman Fielder.

The executive chairman of Publicis Worldwide, Jean-Yves Naouri, flew to Australia to make the announcement, praising Ms Pollard’s leadership experience in marketing communications, creative, media and digital. Ms Pollard has been chief executive of ninemsn for three years. Under her leadership, ninemsn showed strong growth in audience engagement, revenue and profitability. Two offshoots, Cudo and Bing were also launched.

Mr Naouri said Ms Pollard had a wealth of experience in all aspects of marketing and communications.

”Given her time on agency side, client side and recently running the largest digital publisher in Australia, I believe she brings a unique set of skills to Publicis Mojo,” he said.

Ms Pollard was at Nike for 10 years, including time as chief marketing officer.

Ms Pollard said Publicis Mojo had an amazing roster of world-class clients facing complex business challenges in a changing environment.

Publicis Mojo’s executive chairman, Graeme Wills, and chief executive Nicholas Davie, both set to step down from their roles, will stay on in the short term to help a smooth client transition.

This story Administrator ready to work first appeared on Nanjing Night Net.

Demand, not carbon, drives expansion

It’s the timing of the Olympic Dam expansion that is being reviewed and, despite what the opposition may say, the carbon tax and mining tax are not decisive.EVEN taking into account the fact Canberra’s spin cycle is in overdrive ahead of the July 1 start of Labor’s carbon tax, Tony Abbott and Christopher Pyne have been a bit hyperbolic this week.
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During a whistle-stop tour of South Australia, Abbott said BHP Billiton’s $30 billion Olympic dam expansion project was ”hanging in the balance”. Axing Labor’s carbon tax and mining tax and reining in ”union militancy” were three major incentives that a Coalition government would deliver, he said, adding that in the meantime the Labor government should guarantee that its mining tax won’t be extended to gold, copper and uranium.

Pyne said BHP was reconsidering the timing of the Olympic Dam expansion because of heightened political risk, adding: ”I directly blame the Gillard government for that.”

The truth is more complex, as usual. It’s the timing of the Olympic Dam expansion that is being reviewed, and the carbon tax and mining tax are not decisive.

BHP chief executive Marius Kloppers, the group’s chairman, Jac Nasser, Rio Tinto chief executive Tom Albanese and Glencore chief executive Ivan Glasenberg have all warned recently that Australia is becoming a more expensive place to invest in, and a more regulation-heavy one.

But as BHP reacts to softer commodity markets by re-sequencing its lengthy line-up of potential resources developments, Australia’s carbon tax and mining tax are not front of mind: hardly surprising really, given that Kloppers is a supporter of carbon pricing and helped negotiate a watered-down mining tax after Julia Gillard pushed Kevin Rudd aside in June 2010.

Kloppers said in September 2010 that BHP accepted that climate change was a reality and added that, because the multilateral push for a carbon pricing regime had been derailed, Australia would be best served by going alone, and going early.

The BHP view at that time was that carbon pricing was inevitable, but that it needed to be simple, transparent and predictable, revenue neutral and broadly based, but also designed to protect trade-exposed industries.

He has subsequently criticised the structure of the Australian carbon-pricing regime, saying for example that the imposition of a carbon tax on the coal industry makes it more costly, and therefore less attractive as an investment destination than it was compared with coal-producing countries, including Indonesia, that have not yet introduced carbon pricing.

Nasser has called for a slower introduction of carbon pricing here and he has also said he thinks Labor’s Fair Work Act should be redrawn to reduce ”disproportionate union influence”.

And yes, getting the go-ahead for a mine development in this country is a regulatory marathon. It took more than five years to negotiate it in Olympic Dam’s case and more than 8300 people, 38 government departments and service providers, 55 non-government organisations and 60 industry groups had a role in the development of the project’s environmental impact statement.

We can do better than that.

It’s worth noting that BHP’s consistent message has been that it understands that careful and open planning and consultation is needed to build a lasting consensus around a development of the size of Olympic Dam, the world’s biggest uranium deposit and fourth-largest copper deposit.

BHP has also not stepped back its overall support for carbon pricing. In fact, it’s been loading a price for carbon into its investment decisions for years. The structure of the tax here is not its ideal, but BHP believes it can live with it.

The key forces behind BHP’s rethink about major expansions, including Olympic Dam, are commodity demand and commodity prices.

Both have softened as the northern hemisphere sovereign debt crisis and the economic slowdown it has induced depresses China’s growth, and as the hangover from last year’s over-zealous attack on inflation in China endures.

The price of copper, Olympic Dam’s main product, leapt by 257 per cent between December 2008 and mid-February last year for example, but has since slid by 27 per cent.

Kloppers and Nasser have been pretty clear on this, with Nasser flatly answering ”no” to a question in mid-May about whether BHP was going to stick to a previously announced five-year $US80 billion capital expenditure budget, and Kloppers stating that iron ore demand will grow strongly but less rapidly in the next decade than it has in the past 10 years. He also predicted that after 2025 it will move into a ”protracted period of low to negative growth”.

BHP has 22 major project developments and expansions under way, and they will soak up the group’s spending power in the 2012 and 2013 financial years. Thereafter, BHP would have ”flexibility” on project sequencing, Kloppers said last month, and it will be running the slide rule over new prospects very carefully.

The sums on projects here, including Olympic Dam, will include the cost of the mining tax and the carbon tax, and BHP will also be comparing labour productivity.

Commodity prices are the big variable, however – if they stay off the boil, projects like Olympic Dam will proceed more slowly regardless of what party is in power in Canberra.

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Sydney Airport to land more tourists

Low-cost airlines like Scoot are providing extra lift for Sydney Airport.SYDNEY Airport was ”stepping up its role” in the tourism space, said chief executive Kerrie Mather, and there had already been wins with the arrival of low-cost Asian airlines AirAsiaX and Scoot.
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At a business lunch yesterday in Sydney, Ms Mather signalled closer co-operation with Tourism Australia and New South Wales Tourism.

She said she had travelled to India as part of the NSW Tourism delegation and was hopeful that direct flights to India from Sydney would eventuate. She had also just returned from China, which was a ”market with potential for us”.

Ms Mather said last year 640,000 passengers from China came through the airport and this year China would move to second place, behind New Zealand, as the dominant country for the airport’s visitors.

She reiterated that Sydney Airport Corporation welcomed the federal government identifying a future airport site for a second Sydney Airport and securing transportation corridors, but said the existing airport could deal with demand through until 2045.

Last week the corporation issued legal proceedings against the federal Minister for Transport, Anthony Albanese, after the government brought forward to mid next year a deadline for the airport to produce a draft master plan.

Ms Mather said the airport was consulting about a new plan it announced in December last year, which will see a reconfiguration of the airport, including moving the jet base and air traffic control tower, and integrating domestic and international flights from the same terminals.

”We are halfway through that period of consultation so we were on track delivering our master plan by 2014,” she said. ”It is important we incorporate [this vision] in the master plan, so we need time to work through.

”So we have asked for the reasons why the master plan has been bought forward.”

The airport had discussed with Qantas buying back its long term leases for its jet base and terminal, which were not due to expire until 2019, considering that the Qantas sites took up 30 per cent of the airport’s footprint, she said.

Discussions had already resulted in some suggested improvements, which dealt principally with productivity issues, she said.

Ms Mather said the train station access fees on the privately owned Airport Link remained an impediment and she wanted to see both the removal of the fee and improvements on the line, such as better provision for passengers carrying luggage. The NSW government has said it will release later this year a discussion paper on transport for the airport and Port Botany area.

This story Administrator ready to work first appeared on Nanjing Night Net.