Showing posts with label retailers. Show all posts
Showing posts with label retailers. Show all posts

Australian Retail Problems Not Caused by the Mineral Sector

There is clearly something wrong with the Australian economy. We seem to in the same position of Indonesia several decades ago when it had oil and the high price was pushing up the value of the currency. A high currency makes it difficult for those producing "non-boom" products to export. That is why the US is printing more dollars to weaken the currency, improve the economy and create more jobs. Nothing much is happening for it though because the US dollar is the major international currency as gold used to be.

Just why Australian shopkeepers are crying fowl is more difficult to understand. A strong currency means imports are cheaper. Australians are very import dependent in their spending habits and buying cheap imports is what they like to do. They buy such imports over more expensive Australian made products, but this shouldn't hurt the bottom line of retailers.

They claim Australians are spending less. Though figures show this to be the case, spending is not that easy to understand. If people save, the banks have more money to lend out to business and those who want to go into debt. However, due to the financial crisis Australian banks have tightened up on lending criteria. They will no longer lend to those with no offsetting assets. In other words, banks are withholding money. This money is not active within Australia. It may be invested overseas by banks.

The retail sector is wrong to blame exporters of minerals, the economy in general or interest rates. Obviously, the cause of reduced spending is the behavior of banks. Government could force the hand of banks. It will not do this as politicians fear a bank crisis occurring here in Australia. Some European countries were devastated by the global banking crisis. Their governments lost billions in propping up banks by giving them money that borrowers could not pay back. It was taxpayers money they were "giving" away.
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Economics by Ty Buchanan
     Australian Blog                         

Australian Busiesses Must Move to the Internet

Australian retailers are in a corner with people turning to the Internet to make purchases. With rents near zero for Internet sellers and high rents for retail shops the odds are stacked against local stores.

Travel agents are the ones hit the hardest. It is so easy to buy an airline ticket online. Next are bookshops. They cannot compete with Amazon, though some Australian bookshops are selling online as well. Pharmacists are up against large cut-price online sellers in the US. However, chemists can still rely on the highly subsidized cash cow called the Pharmaceutical Benefits Scheme.

Some Australian businesses are becoming paranoid. A woman was accused by a bookshop proprietor of making a list of books to buy on the Internet. A sports retailer asks for a deposit before customers try things on.

Things are changing so fast. Major stores in the US are allowing goods purchased online to be returned at city outlets. Australian businesses must make the move to the Internet now, or they will go to the wall.
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