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Oonagh Reidy

Inflation Down, But Price Rises Still To Hit, Says JP Morgan

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Prices fall might not mean good news for retailers.

Weaker than expected inflation figures for Q4 2010 won’t necessarily bode well for economic prospects this year, say analysts.  

The inflation figure of 0.4 per cent recorded for the last quarter of 2010, was below the expected 0.7 per cent figure although this won’t necessarily mean more activity at the tills, with interest rates still forecast to rise on the back of the catastrophic Queensland floods, which took place earlier this month.  

The lower than expected figures also won’t prevent the RBA from raising their cash interest rate over the long term, JP Morgan economist Ben Jarman told the Sydney Morning Herald.   

“We are still coming to grips with the impact of those floods.”  

The drop in the price of consumer goods was despite an annual yearly inflation increase of 2.7 per cent, which also fell below forecasted 3.0 per cent figure.   

And rises are on the way, he says.  

“There might be a knee jerk reaction here that the RBA has some time (before raising the cash rate),” he said.

“But they can’t wait too long.”

Target Shifts To E-Tail As Retailers Change Tack

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Fresh on the wake of rivals moves, Target shifts its retail artillery- online.


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In spite of all the noise made by leading retailers including Myer, Harvey Norman and Just Group over lack of GST on foreign goods bought online under $1000, retailers are now moving to the web in droves to drum up sales in a flat retail trading environment.

 “The new online store will complement our existing bricks & mortar operations,” David Hamilton, from Target IT said.

“We have taken our time entering the online selling arena to ensure we got it right and to make it the experience our customers would expect from Target.”

And Target, which has 290 stores nationwide,  won’t be just sticking to apparel, as per its current offering, and plans to extend in the future.

Although “initially we are launching the online retail store with a small selling presence starting with our baby, nursery and schoolwear ranges,” according to  CFO  John Box, the store has pledged to “build on” its range, which may also include electronic goods.

Department store rivals Myer recently moved its site to China, trading in discounted goods and Harvey Norman announcing an online venture, as well Bestbuys deals website. 

 

Target, owned by Westfarmers group, who also own supermarket giant Coles, could be looking to defend its discount goods territory  from competition not only from foreign traders but also Myer’s recent foray into cheaper apparel.

The myfind.com website, operating out of China, which went live on 28 February, is seeking to offer “great value and one-off special buys for online shoppers.”

The store, which was never affiliated with heavily discounted goods, appears to be performing a U-turn in its sales strategy, facilitated by the online move.

Canberra’s refusal to budge on the GST issue led them to set up shop out of China to avoid paying the tax they are forced to fork out while operating within Australia.

“If we can’t beat them we will join them,” lamented Mr Bernie Brookes, Myer’s CEO last year.

And it looks like other retailers are also changing tack.

Just today a leading retail conference, which heard speakers from Google and Deals Direct, said that while industry have been advocating a tax neutral competitive playing field, there is still a need for retailers to engage in the online and e-tailing.

 

Target is using the hybris B2C Commerce web solution to deploy the new e-store, which facilitates customers shopping online.

Oz Retail Exposed As Uncompetitive: Morgan Stanley

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Harvey Norman and Co are in for a shock.Retail landscape is in for a shakeout in 2011, say analysts.

Some of the major retail giants – Harvey Norman, JB Hi-Fi and Myer included are in for a huge shock, with analysts saying their trading could be uncompetitive.   

In its 2011 forecast, Morgan Stanley has said the Productivity Commission investigation into retail landscape here, is likely to find that it is ‘uncompetitive,’ despite claims by CEOs that GST is killing trade.       

The investigation, established following the furore kicked up by retailers claiming that internet trading eating into their sales figures, and demanding a GST of 10% be introduced on all online goods purchased from international retailers, who are currently exempt from the tax.            

Major price discrepancies between Australian and foreign retailers are clear – the Samsung Galaxy Tab is available online for $500 online from US retailers, while it retails for almost double that – at $899 in Harvey Norman stores.   

The recent strength of the Aussie dollar also meant consumers were getting more bang for their buck buying from overseas. 

It’s not the first time the market analysts have forecast shaky ground for the ASX listed giants – late last year they warned that retailers including JB Hi-Fi and Harvey Norman were set to make major financial losses due to the growth of online rivals.

However, reports this morning indicate that all is not lost for the retail sector.

Share prices at Harvey Norman, JB Hi-Fi and David Jones are on the way up after better than expected end-of-year financial results were reported at outdoor retailer Kathmandu and Super Retail Group. 

New Zealand based Kathmandu announced a sales hike of more than  whopping 10.3 percent  in the second quarter of last year, while Super Group profits were more than double that forecasted – jumping from a conservative $9.5m rocketing to $25m.

However, analysts expressed caution about the likes of Harvey Norman and Dick Smith repeating this success and expects profit figures to suffer a fall, according to Evans & Partners analyst Tony Wilson.  

However, despite this share prices still floated higher for the tech retailers, with prices on Harvey Norman stock opening on a 3.22 high this morning.

 

Massive product margins and a domestic market of 20 million consumers all to themselves are just some of the conditions retail stores enjoyed for many years – although not much longer it seems.   

However, that’s not the only surprise in store for Harvey Norman.          

This year could also see the electronic kings issuing shares to pay a special dividend, say Morgan Stanley.          

In previous years, almost half of the analysts’ predictions came through, although we’re sure Gerry Harvey has his fingers crossed one or two of these fail to materialise.

JB Hi-Fi Sees Orange As Major Expansion Looms

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Retail giant expansion to include NSW town of Orange, according to local media reports.
The company would not confirm specific details on new locations when contacted by Channel News, claiming plans have not yet been finalised, dismissing the report as “speculation.”

Last year, under the stewardship of new boss Terry Smart, the retail giant opened up 23 new stores and has plans to replicate these numbers in 2011 both in Australian and New Zealand markets.

This massive expansion comes in spite of the recent consumer backlash on brick and mortar retailers, opting to purchase many goods including electronics in startling numbers and at often reduced rates online.

Retailers including JB Hi-Fi and Harvey Norman are vulnerable to major future financial losses due the growth of online rivals continues, analysts at Morgan Stanley warned in December.

Last year the company reported a 26% increase in full-year profit across its group, and said it expected to grow sales by 17% in 2010.

Not everyone in Orange is happy about the possible move-in by the discount seller and electronic stores there have expressed grave worries about the impact the arrival would have on their trade.

 

“They’ll just decimate our sales, it’s as simple as that,” Leading Edge Computers owner Jim Whittaker told the Central Western Daily today.

“JB has some things that are cheap, but when you go to buy everything, it doesn’t always end up cheap.”

The town of Orange is located in north NSW has a population of around 38,000 with nearby catchment areas including Bathurst and Dubbo.

Its All Clear: Samsung’s 22 Inch BLU LCD Transparent Screen

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They’ve been named the top flat panel maker in the world.But now it looks like Samsung are looking to go one better again and create the first ever see through displays.


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Credit: Gadget Mania

The 22 inch transparent screen was debuted at SID 2011 (Society for Information Display) this week and operates with or without a backlight with Engadget reporting it could see its hands through the screen when placed behind the LCD panel.

The LCD will also adjust to natural room lighting and are intending for commercial use for now.

The transparent technology is also certain to be used by other brands so see-through TV’scould be the norm in any living room, some day fairly soon.

Shipping will start next week although it will be Q3 before it hits shelves.

NBN: Not Waving But Drowning?

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Drowning in a sea of paperwork, that is.

Commercial terms for the $11 billion NBN deal with Telstra have been finalised – at long last.

This latest stepping stone, the agreeing of terms which will pave the way for NBN to make use of Telstra’s copper fibre assets to rollout the broadband network, is in return for a tidy $11 billion fee to the Telco.

But it appears to be along road ahead until broadband rollout, with the ACCC and Telstra shareholders just some of the additional parties who must agree to the deal terms before final sign off.  

Other terms have also been outlined “in principle” the Communications minister announced this morning including retraining Telstra’s workforce to deploy the NBN and revisions to the governments public service obligation. 

“This is another significant step forward in the delivery of the NBN,” Senator Conroy said.

“Along with allowing for a cheaper, more efficient rollout of the NBN, the in principle agreement ensures there is continuity of all basic universal service outcomes for consumers while the country transitions onto the NBN.”

However, the deal isn’t finalised yet so could be subject to change. 

Telstra confirmed yesterday they were in talks with the NBN in a bid to finalise the deal terms, acknowledging the process was lengthy and cumbersome, at best.

When challenged by journalists yesterday about the length the process was taking, CEO David Thodey quipped; “well, have you ever dealt with lawyers?”  

 

He also confirmed his company has thought about the politics involved and what may arise if the Liberal party, who are strongly opposed to the deal were to get into power. 

Telstra are to commission an independent expert report which will be presented to shareholders later this year.

The Competition and Consumer Commission (ACCC) will also have to scrutinise the deal as part of its consideration of Telstra’s Structural Separation Undertaking, the minister Stephen Conroy said.

However, it appears the gloss could be taken from the NBN’s claimed broadband speeds by the time it finally does come to fruition, with the news last week that WiFi speeds of 1 gigabyte will be in Australia by 2012 – matching that of the network.

Read the story here

Location, Location: 10 Future M-Apps Revealed

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Mobile apps look set to become an increasingly in-demand – predicted to be a $15.9 billion industry by next year.Amongst the top ten tips predicted by Garter are location based services (LBS) and mobile commerce apps, already widely used by iPhone users which allows “check in” to a store or specific location.

LBS register user locations and offer services in the area based on their personal statistics, likes and dislikes – an “intelligent user experience.”

Smartphone will become smarter imbued with object recognition ability where the device will register surroundings through the camera as well as other ‘device sensors.’   

“Mobile carriers should provide expanded location services to include, among others, directory assistance, mapping, advertising and privacy controls,” warns IT researcher Garter.     
 
Users of the Smartapps looks set to reach 1.4 billion by 2014. 

On the m-commerce front, price comparison and payment solutions as well as Facebook, mobile e-mail and video and YouTube look also to be among the top apps of the future.  

“Mobile applications will be a highly competitive marketplace that attracts the interest of many stakeholders,” said Sandy Shen, research director at Gartner. 

The apps user explosion will also spark increased hardware sales and technology in the field as they become more and more mainstream – so watch this space.    

 

“Increasingly, mobile applications will define the user experience and device vendors that proactively integrate innovative apps and technologies at the platform layer will have the competitive edge,” Garter says.

Beleaguered phone maker Nokia, who has fallen off the cart when it comes to innovation in mobile apps, lagging rivals Android and Apple, should take note.   

NBN Halt Tenders As Prices Go Through The Roof

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It seems to be one thing after another. The latest twist in the NBN tale is to do with prices and builders.

 According to the SMH, the NBN Co was forced to suspend tenders negotiations with several major construction firms, including Telstra, bidding for work due to exorbitant pricing schemes.

The builders were bidding for work laying cables for the fibre network, which is said to be a costly exercise, around $12 billion.

However, the NBN believes the 14 companies involved were purposely driving prices up, with the intent of gauging excess profits from the government backed project, which, when completed will cost around $36 bn.

Telstra, John Holland, Transfield and EDI are reported to be among the players involved in the bidding process with the NBN Co.

The NBN Co, who is already under pressure over costs from the opposition and other detractors, have refused the higher price scenario as fair value, and maintain they will seek best value for money for taxpayers.

This comes after five months of negations with the bidding firms. The prices would have added an extra $3.7bn on to the price of the project, according to reports.

The industry had made the case for higher prices arguing capacity constrants and spiralling wage costs were boosting costs.

The broadband company are now said to be working on a ‘Plan B’ for the fibre network build.

 

”Current pricing, in our view, does not reflect capacity constraints in the industry,” believes NBN Co head of corporate services, Kevin Brown.

Telstra  is already set to make a mint out of the NBN and has agreed a $11bn deal with the broadband company over the transfer of its copper network, which has yet to be approved by its shareholders later this year.

Metal, White iPhone 5 Out June 20?

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Its white, looks like the Terminator, it’s got a metal back…is this the new iPhone 5?


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Speculation is rife that the newest iPhone offspring will be hitting stores in the US as early as June, meaning it will hit here sometme later this year.

This follows confirmation by Phil Schiller, Apple’s VP of Marketing, that “the white iPhone will be available this spring (and it is a beauty!).”

However, note the clever Mr Schiller failed to mention a specific model, which is making many industry speculators believe his comments were a thinly veiled reference impending 5 release, which  could in fact be the model sporting the paler colour this spring.

And its not just a new colour the iPhone 5 will be sporting. It is also hotly tipped that Apple are bringing metal back.

A metal backed cover, which according to Maclife reports looks “looks like a descendent of the Terminator,” means the tech giant will be kissing goodbye to its glass encased cover.

Judging from images leaked online, it looks very similar to its predecessor in terms of size, but with a curved back.
 

 

It is also rumoured to have a larger four inch display screen, but keeping the 960×640 resolution, indicating the company is trying to improve the antenna performance of the smartphone after problems with the iPhone 4.

Apple Killing Rivals As iTunes Gets Greedy?

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US authorities begin examining Apple iTunes new business arrangement as content providers cry foul.Steve Jobs’ company, which is taking a 30 percent cut from all non-Apple content sold through its music store has set alarm bells off in official circles who suspect anti-competitive practices are being pedalled by the tech giant. 

The US Justice Department as well as the Federal Trade Commission, who is responsible for investigations into unfair trading practices, have not yet acted on the case but are carefully examining the situation as are the European Commission, according to The Australian. 

Media companies wishing to sell their music, movies, games and e-books applications through the  eponymous iPhone, iPad iPod or Mac PC are forced to go through the Apple payment system, where they take one third of the sale price.

These new rules makes doing business through iTunes and now its other publication subscription services on its iPad and iPhone an unprofitable game for outsiders. 

In addition, Apple makes it almost impossible for customers to make purchases externally, forbidding all outside links to other retailers.

And if that isn’t enough it also prevents other companies from building relationships and gaining personal information on their customers and makes it easier for music lovers to purchase from its iTunes Store if they have previously made a purchase as billing details are already stored in their system. 

 

The tech powerhouse don’t allow the retailers to retain customer information but keep it on file for their own marketing department’s use. 

Complaints from music companies are fierce and most providers are deeply unhappy with the new regime.

 “The costs don’t leave room for a sensible business model,” says Jon Irwin, of Rhapsody international who already sells content through the system. 

“The rate is so obviously anti-competitive it will never survive in Europe,” states Axel Dauchez, president of Deezer, another digital music provider. 

This also comes as Apple announce a new subscription service for publishers also, which will allow users to make purchases of magazines or newspapers on a weekly or monthly basis, which the company says will give publishers a revenue boost, given the flexibility of the business model.

But the same business arrangements including the 30 per cent cut apply as with the iTunes model. 

However, Steve Jobs denies any wrongdoing in the new arrangements.

 

“We believe this innovative subscription service will provide publishers with a brand new opportunities to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers,” Jobs said in a statement.