RETAIL

Seems that yesterday was a day to concentrate on the retail sector and the problems it is currently experiencing. Most of the problems the retailers have is of their own making. It is not Amazon. Amazon is a good thing for our market. It will focus the minds of the retailers and make their businesses are stronger. Yesterday I got an email from a subscriber about his experience with Harvey Norman (HVN). Here it is in full:

I had a wonderful e-commerce experience with HVN yesterday.

My coffee machine died and I needed a new one.

Ordered on line at about 9:30am

Selected 1-4pm delivery window for $14 the same day.

GPS tracked its arrival so I could just wander out and say hello to courier- Set up machine and so got my morning coffee the very next day.

Perfect experience utterly Amazon Prime like!

Competition does work. Unfortunately, the department store business like free to air tv and the dinosaurs is in terminal decline. The numbers from Myer confirmed the worse for the company and the five-year strategy looks threadbare. The biggest problem is the expensive long term leases the company has that means that it is hard to close stores and rationalise the non-performers.

Yesterday the AFR held a retail conference where Launa Inman , the former CEO of Target and Billabong, said that there were too many discount department stores in Australia. It is strange though that our retail market remains so attractive to foreign players. We even have Debenhams heading here to join Zara H&M, Uniclo and others. There must be money to be made here to tempt them. Maybe the retail market is not the problem but our retailers who have taken the customer for granted and not moved with the times. There are some that are thriving. Lovisa (LOV) and Kogan (KGN) together with Nick Scali (NCK) and the Premier Investments (PMV) ‘Smiggle’ and ‘Peter Alexander’. It can be done. Clearly MYR though is struggling and a dead man walking. No wonder the shorts are piling on the pressure and Solly Lew is waiting like a corporate undertaker. Hard to see Richard Umbers surviving another year.

 

And 5G

 

Much has been discussed on the advent of 5G and its potential to make the NBN irrelevant. The focus is shifting from the functionality of the technology and whether it works, now to the forthcoming auctions of the spectrum required for 5G. The auctions of the 3.4GHZ to 3.6GHZ bands are going to be a world’s first. This has attracted the ACCC and Rod Sims who has said that it is reconsidering how it views mobile spectrum ownership. Mr Sims said the regulator would consider competition holistically, rather than individual spectrums, to ensure that incumbents did not lock out new entrants, such as TPG. He specifically addressed the NBN concerns and made it clear he was against any kind of protection for the NBN. “The way to counteract threats is not to impose regulation to protect the NBN.” Sims said the benefits of 5G would be allowing wireless broadband services at gigabit speeds, the ability to connect large numbers of devices and objects facilitating the internet of things and the ability to provide a number of discrete fit-for-purpose networks rather than general purpose networks.” The upshot is that the ACCC believes that spectrum should be allocated to new entrants to ensure competition and that the current holders of some spectrum bands do not dominate. Optus and NBN Co currently hold significant portions of the 3.4 gigahertz band. Optus holds all 100 megahertz in Sydney and Melbourne metros, while NBN Co has 100 megahertz in outer Sydney and Melbourne. Telstra also has a smaller holding and is likely to pick up a large portion of the new spectrum on offer. TPG has been tipped to be a big buyer of spectrum to bypass the NBN. However, it would require a big capital commitment and may need to be equity funded in time. Next year will be another interesting year for the Telco sector.

 

Have a great day

 

Clarence

XXX

 

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