By Bernard Hickey
Large parts of New Zealand's economy have settled down into a series of monopolies and duopolies, often foreign owned.
The relatively small size of our population and a consistent trend over the last three decades of deregulation towards consolidation and economies of scale has seen a series of industries coagulate into the hands of a few dominant players.
New Zealand's media scene now has just two major newspaper groups, two major radio networks and 3 television operations. In supermarkets we have two major chains and in shopping malls Westfield is the dominant player.
Some argue this is one reason why consumers lack choice and that prices are higher than they are in more competitive markets such as Australia, Britain and the United States.
Some argue this lack of competition and price inflation in our so-called non-tradable sectors of finance, retailing, media, health and education has been a factor in the unbalancing of our economy away from exporting and production and towards consumption and importing over the last decade.
So it's great to see a new enterprise trying to shake up two of these sectors and lower the barriers to entry for smaller manufacturers and retailers.
Advertising man Greg Partington, the Managing Director of Ogilvy, is launching the Shopping Channel on Sky 18 (24/7) and late at nights and mornings on Prime from October 1. He wants to create a platform for retailers and manufacturers, small and large, to show off their wares to hundreds of thousands of women in their homes.
The channel, based on the Home Shopping Channel and QVC in the United States, will sell advertising slots by the minute to anyone who wants to reach this audience. It also provides a shopping and delivery system so shoppers can order the products they see on the television over the phone or the internet and have it delivered to their doors.
This challenges the entrenched players in the shopping mall and the media business.
Currently it's expensive for anyone with an interesting new line of cosmetics or shoes or household gadgets to reach an audience and then get into a distribution system for that audience.
It's currently locked up by a few players and the barriers to entry are high. New Zealand's shopping malls are dominated by a relatively small number of chains with limited selections of products, often determined by just a few buyers who prefer to deal with the really big suppliers.
Advertising campaigns on our New Zealand's two free-to-air television networks are too expensive for most small manufacturers and retailers.
The advent of the Shopping Channel is therefore challenging the dominance of the shopping malls and the free to air networks in retailing and media. It also may help turn around a disturbing shift in shopping habits offshore.
A PwC survey out this week showed almost 6% of New Zealand's retail sales are now done online, with 35% of that online shopping done on offshore sites, often in a way that reduces employment and the tax take here.
New Zealand women now spend more than NZ$1 billion offshore on shoes and clothes.
Partington's Shopping Channel will employ 50-80 people in New Zealand and aims to open up wider ranges of cosmetics, shoes, clothing and household goods to women shoppers that are currently getting that variety through online stores offshore.
Extra competition has got to be good for consumers and the local economy, particularly when it lowers the barriers to entry to New Zealand manufacturers wanting a launch pad for a wider audience offshore.
I'm not much of a shopper, but it's great to see these established players being challenged in the worlds of retailing and media.
29 Comments
"to show off their wares to hundreds of thousands of women in their homes".
1: Where's this consumable stuff all made?
2: Show to women?(only) who work or do not work?
3: Will this venture bring down the cost of milk?, bread?, butter?
4: What will all this stuff (shite) be bought with? Credit?
5: Who gains from this?
I think that you need a complete course of our patented potentiated colon de-tox tablets , friend .
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I joined here, because I thought BH was the better-thinking of fhe fiscal-comment set,
Given that we are clearly on the crest of a very big wave, I thought he was more likely, in probability terms, to be at the forefront of the needed social discussion.
If this effort is an example of 'better thinking', then the fiscal world is worse off that I thought.
Total failure to grasp the big picture, and to understand what underwrites wealth.
Doing a tour of Tahiti last year, the driver pointed to a new supermarket (on a closed island where everyone was already fed) and stated it would be good - lots of 'jobs'. No though about what that did, in relation to 'supply of things purchasable by those job incomes'. I laughed at the stupidity of the comment. As I do at this.
Y landlord - eh?
Where's the connection? I spent all day enjoying myself, and that's the norm, I spend many more days enjoying than 'working', and pity anyone who falls for equating enjoyment with rate-of-consumption.
That (supermarket) observation was in the middle of an Auck - Hawaii sailing trip. Only 3 months of fun on that occasion, but we've been known to do a continuous year sail-cruising /not earning.....
Your point?
Let me see, your average grocery shopping experience in New Zealand is to jump in your motor vehicle and drive to the supermarket, a experience that actually isn't because you are insulated from the external world by a layer of glass and the noise of the vehicle. Probably a few delays from traffic lights and other incompetent drivers along the way. After driving around in circles a few times you find a park and enter the supermarket. Grab a trolley and wander around for 30, 40, or 60 minutes before you stand in queue to check out your groceries. When it is your turn you may or may not get a friendly greeting from a check out operator you don't know. Out to the car and run the gauntet back home.
At no time during this exercise have you had a meaningful exchange with another human being. Great fun this world we are in eh?
Good design can of course bring very different results, but people are more interested in counting up how much capital gain they have made in the last year. But no wonder they do because there is bugger all else of mention in their worthless lives.
Because you borrowed.
Why should I enjoy the same hours you work? (And probably use up less of the finite resources of the planet we have to hand on to our kids, in the process). Stayed out of debt. went without. Got smart about what I went 'with'. There's usually a way (my coolstore panel walls/roof being an example, my $2 Gentle Annie power-bill replacement being another.
I make sure I put a contribution back into the society I'm part of though - but in my case it's voluntary, real effort. Often passing on my outdoor-activity skills to kids. Fun too, but who said you can't enjoy your input?
Compare
Bernard Hickey versus Adele Ferguson (names names)
re A PwC survey out this week showed almost 6% of New Zealand's retail sales are now done online, with 35% of that online shopping done on offshore sites, often in a way that reduces employment and the tax take here.
And why wouldn't you go off shore to shop if:
a) much cheaper
b) so many other jobs have been off-shored, what makes retail stores special and have to be protected?
For me it depends on the product, and who is really making the killing in the (NZ) market place.
So I am aiming to buy NZ made products as first priority, designed in NZ but made elsewhere, second, then OZ....then the rest, and I avoid US and chinese (especially food) as much as possible. I do this to keep my money in NZers hands....I'd suggest thinking along these lines....
However when I see a Sony ps3 headset in NZ shops at $180 v $120 overseas is it the shop making that huge margin or Sony NZ? bet its the latter. However I also dont think the shops really compete, want a controller? its $109 anywhere....$56 online, where is the customer loyalty being generated? zilch take it or leave it, ok bye. Steam games are hugely cheaper again....why pay $100 when you can download for $40?
What I have also noticed is NZ websites like say rebel sports are the same price as their shops (but you have to pay postage). One wonders why bother having an on line presence...shoes though seem about as expensive in OZ online shops as here.......
I also think brand loyalty is a long over-played and worn out record...."such and such" is better quality then that.....well when they are both owned by the same company, both use inter-changable parts and the "trade qaulity better one" burns out in 7months (and 6 uses) and takes weeks to repair (how can a tradesman afford to wait weeks?) I really wonder....AEG v Ryobi? cant see me buying AEG again...
</rant>
;]
regards
regards
I am reminded of the business an ex colleague intended to set up about 5 years ago, although he never entered into the partnership in the end. They costed out 4x2 framing and they could land it for $1 per metre ex Sweden.
Gibber has the answer, switch off the TV and Radio because it is all lies anyway. Then buy what you can online.
One of the advantages of online shopping is being able to research what you are buying. This came up on one of Amanda's articles not so long back. This means you don't have to rely on or trust the information from a shop assistant that more often than not doesn't have a bloody clue and finds you an annoyance taking them away from texting their friends. I have avoided some costly mistakes that way. $200 pair of cheap chinese binos the equivalent of $1000 Nikon's being a good example.
Sure I am making a general statement here and there are some exceptions. Came across a young lady in an autoparts store recently that was clearly an enthusiast and as such was helpful. Few months back I needed some shoes so found my self in a mall, god help me. After trying half a dozen stores I actually found a young man who was so helpful in fitting my wide feet that I found his boss and gave him a big rap.
While the shopping experience is not something I covet, if I did then I would be pretty miserable with what we have available.
From the NZ Herald comments : John is well pleased Bernard , that you're not thrashing the baby-boomers this week .
..... and Jon Dean thinks your lack of polarizing & your non-confrontational style is because someone large has sat upon you ......( JD is being a tadge mean towards your Mother-in-law , methinks ) ...
Rodney from Howick says " Bernard has made polarization his mission statement . Facts are not newsworthy or sensationalist . "
The Hooded Finger says that you're just an adman , and " only expert in being parasitic on others' endeavours . "
.... I think they like you , Bernard !
social media takes a dive
http://www.huffingtonpost.com/2012/07/28/social-media-bubble_n_1712085…
As a frequent online shopper, I cannot help but wonder why anyone would open up a shopping network. From what I have seen of the shopping networks in the United States, Australia and other countries, what is offered seems to be almost universally expensive and dreary tat.
The reason New Zealand retail, and so much of our other industry, is in so much trouble is that their costs are out of control because there are a very large number of people involved for no apparent reason and they all expect their ticket to be punched to a significant value as the goods go past them.
The situation has arisen because much activity in the New Zealand market place is run by a very small number of players – for example the virtual duopoly that exists in building materials escalates our building material costs, according to a recent listener article, by about 20% over Australia's, which is not exactly a low-wage, low-cost market.
Online purchase allows time for research into what you buy, and my purchases of clothing, footwear, books, spectacles, electronics, car parts and other items have allowed me to both choose from an enormously expanded selection while buying at discounts of between 50 and 90% on New Zealand recommended retail prices.
Many of these purchases have been made from New Zealand firms who have a firm grasp on their supply chain and have worked out that with commodity items, such as books or electronic devices where the source of purchase makes no difference to the buyer, and good margin is still to be made by cutting many links out of the supply chain and exerting iron control on overheads.
Broadcast, scattergun advertising is so last millennium, as is the concept of long supply chain. The most viable concept these days is targeted, niche direct marketing and supply to groups who have a demonstrated interest in what you have. It is just so much more cost-effective for advertisers, and more the point, it doesn't alienate those who are not interested by carpet bombing them with ads. In the age of things like Google ad words and their metrics, why do we still think unreflective broadcast advertising is a good idea?
Because they provide no meaningful choice other than to consume more rather than better viewing, I don't have Sky TV. I am considerably surprised that they have a shopping channel, where you are paying a subscription to be allowed to watch advertising. Does anybody else find that both slightly incongruous and a reflection of their monopoly position?
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