The past week has been a week of intrigue, with a number of key issues quietly sneaking in under the radar. The first one was the introduction of the Emissions Trading Scheme that was introduced on the 1st July.
The impact on households is averaged by the Government at $3.17 per week, and they contend that the tax cuts which pop up in October will give the average household another $25 per week. So the rationale is that we will all be better off.
However the Government failed to comment on the fact that at the same time (1st October) GST increases by 2.5% to 15%. Basically the ETS is a rort. Most of us will accept it but its an unacceptable and unwarranted piece of legislation that will certainly help to keep consumer spending down, make no mistake about it.
We don’t say this lightly. There will be very few increases in salaries because of the pressure companies are under to trade in a difficult environment, unemployment still exists, and government are also cutting jobs.
Therefore consumer spending must reduce, and no economist can debate that. Retailing will find itself under intense pressure in the next 12 months. Further, Internet sales in some states in the USA are being targeted for Tax.
It would not surprise us if the NZ Government target this as a potential source of revenue. We have previously highlighted that our research suggests we have about half a billion dollars in NZ from internet sales!! This would be a great source of further income!! Tax, tax and more tax!!
The debate surrounding Alan Hubbard has quieted down and its a matter of waiting to see what the enquiry reveals, meantime South Canterbury Finance are still advertising for deposits!!
DNZ Property Fund bought out the management agreements on Friday for $35 million and on Thursday this week at its AGM will ask its shareholders to raise the same amount!!
In Auckland the sale of the Ponsonby Soho development never materialised and as of today is back on the market again!! The simple facts related to this development is that the land cost must satisfy the end feasibility, if not there will never be a sale of Soho.
Some other interesting observations. McDonald’s opened another restaurant in Rotorua last week and they still seem to be focussed on expansion. We believe that this is the goal also of Burger King so we will be watching their potential growth with interest.
The fast food business seems to be currently booming, given the excellent results of Restaurant Brands. What is it that forces up sales and then profit? There has been little change to the respective menus, and the branding has not changed significantly, so it must be as a result of consumers choice of meal over more expensive options.
If that’s the case then this is the time for the respective fast food brands to retain some of those new customers. We note Restaurant Brands are already on to this as they are considering a new food franchise!!
Of the new images and retail planning that has merged, we believe McDonald’s have done a much better new brand/refurbishing job than the others. We are also contemplating the Book/Stationary business and where the retailers are in this industry, this is something we will review in the next couple of weeks!!
Last week also saw the announcement by Hoyts Cinemas that they are leasing a new complex in the Base Development in Hamilton owned by Tainui.
This will be well received in Hamilton as the existing facilities in the CBD are old fashioned and in need of refurbishing. It also brings to mind the fact that this must be the first new Cinema Complex built since Sylvia Park opened in 2006?
Finally a couple of issues we have identified. Why is it that there are limited packages of Rugby World Cup clothing available for children. Something our Apparel clients may want to contemplate as children are the target for marketing this event!!
One of the RCG team attended an event put on by the Property Council of New Zealand last week, it was titled “Woman in Property”. Only women were invited and basically it was a drinks/chat session!! Well that’s the point, what would the reaction have been if it was a “ male only” event!!
Finally, if for any reason its demonstrated that there is a major profit gain from producers to consumers, in the supply and sale of fruit and vegetables via the respective supermarkets, then there will be a major consumer reaction!!
Smiths City Share Prices 2008-2010
Smiths City Group Limited is a Christchurch based holding company for a group of businesses operations including Smiths City, Powerstore and Alectra.
They have been making improvements- operations that were unprofitable or strategically not important were shut down while costs were reduced and two stores have successfully opened up in Wellington. Trading arrangements with many whiteware suppliers have resulted in a larger selection of retail goods.
The decisions paid off and last week they announced $1.6 million operating profit after tax in the year to March 2010, compared to $1 million the year before. This was an increase of 61.8%! Despite this news however, share prices have stayed relatively constant.
NZ Retail News
Fast food owner growing fast
New Zealand’s Restaurant Brands’ shares rose seven cents to $2.37 after chairman Ted van Arkel told shareholders the company is on target to deliver a net profit after tax of between $24 million and $26 million this financial year.
That is up from the $20 milion the company predicted when it reported a 70 per cent increase in annual profit in April.
(source: www.insideretailing.com.au)
Next gen cinemas to boost Hoyts
Hoyts in New Zealand is planning to develop cinema venues with fully digital 3D screens, auditorium seating, and gourmet food and beverage facilities.
The first project, for which Hoyts is joining with Tainui, is due to open at Te Rapa in Hamilton in 2011.
(source: www.insideretailing.com.au)
Apparel group continues to disappoint
New Zealand-based Postie Plus Group has experienced a slowdown in sales in May and June, but remains optimistic and says it is outperforming other apparel retailers.
The company 18 per cent owned by Kathmandu founder Jan Cameron operates Postie Plus and Babycity stores.
(source: www.insideretailing.com.au)
Lasoo ropes in New Zealand
Reachmedia has launched lasoo.co.nz, adding to its multichannel catalogue offering. Lasoo is a shopping research tool that will allow time-poor New Zealanders to search, sort and select products from a range of different retailers and categories.
The pre-shopping website brand has had unprecedented success in Australia, where it has been operating for two and a half years, and now averages more than one million unique views per month, as well as boasting retail giants such as Dick Smith, Target, Harvey Norman, Myer, IKEA and Flight Centre
(source: www.insideretailing.com.au)
NZ grocery prices under fire
Supermarkets don’t rip off customers with huge mark-ups on fruit and vegetables, the Food and Grocery Council says. The Green Party wants an investigation and says fruit and vegetable growers face ruin because two giant supermarket chains are using their powerful position to put the industry at risk.
MP Sue Kedgley said yesterday a survey of 75 fruit and vegetable growers found supermarkets marking produce up by up to 500 percent, while growers were being forced to sell for less than it cost them to grow it.
(source: www.insideretailing.com.au)
On top of the (New) World
New World has come out on top as New Zealand’s most trusted supermarket according to a survey of Kiwis nationwide.
MD designate of New World owner, Foodstuffs (Auckland), Murray Jordan, said trust was integral to the way the company does business and was something that Kiwis clearly value.
(source: www.insideretailing.com.au)
Lobbyists urge action on shop prices
An influential lobby group has supported looking into setting up a supermarket code of conduct to ensure food suppliers are treated fairly, after a survey found mark-ups of up to 500 per cent on fresh produce.
The Food and Grocery Council, which represents mainly food manufacturers, yesterday spoke out in favour of investigating the concept – promoted by the Green Party in the wake of its survey – but only if the supermarket code set up in Britain in February proves successful.
(Source: NZ Herald)
Michael Hill loses sparkle
Jewellery retailer Michael Hill has received stinging criticism over his first public motivational seminar, after attendees complained it was no more than a recruitment drive for the company.
(Source: NZ Herald)
Low prices? Don’t count on it, say publishers
How much should a digital book cost? The answer is more complicated than you might expect.
In the United States, the popularity of the Kindle has been driven largely by Amazon’s US$9.99 deals for ebooks. But many publishers feel bullied by Amazon’s dominance of the market, and resent the huge cut it takes – which can be up to 65 per cent of the sale price
(Source: NZ Herald)
