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The Forum > General Discussion > Small business the price makers V the price takers and the takers are loosing the battle.

Small business the price makers V the price takers and the takers are loosing the battle.

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And there in lies the problem Paul, a huge disparity in wages.

I remember building a shop in 99 and the electrician was on $17.50 per hour. My butchers were on about $15. About 17% more for the sparky.

Today, a butcher is on about the $22 per hour, while the electrician is on more like $45, a difference now of 105%.

Why! Because the country needs an electrician and can't just arrange for a cheaper one from the likes of Coles. Not yet anyway.

As for governments, they can control it, but they are simply not game to go there.

They could say that a company owning and running a business can not be actively involved in any other business that offers a distinct completive advantage I.e. Fuel.

They could put a stop to the unchallenged expansion of these big two, in that they (large retailers) can only operate one store for a certain amount of permeant population.

At Caboolture, a small rural town in the 80's we got one Coles. The population was then around 50,000.

By mid 2000's, the population was more like 130,000 yet, there were no fewer than ten Coles/Woolies so a ten fold increase to service a three fold population increase.

The reason they build so many is to occupy the available commercial land so as to keep the foreigners out.

And our governmentS, all of them just sit back and watch it unfold, to the point now where the big too are simply too big and too powerful and virtually nothing can be done now.

The worst thing governments ever allowed was discount fuel and extended trading hours.
Posted by rehctub, Monday, 29 September 2014 1:58:11 PM
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Butch, I'll relate a story to you about a good mate of mine in retail. Tom the Pom, years ago, Tom ran a small retail shoe shop in a small main street shopping strip, done okay, not a millionaire but okay living, was there in the same shop for over 10 years. About 3km away they started to build a new 'Westfield'. Before the shopping centre is even completed the Westfield's sales and marketing people approached all the local shopkeepers with offers to join Westfield, Tom included. Tom had a good look at the offer and it didn't stack up for him. Westfields came back, and Tom gave them the knock back. They told Tom straight he was being foolish as "they" with their big monster of a shopping centre would put him, and anyone else who didn't join them, out of business! Tom had to move to another location, it didn't work, and he lost his business, now works for a wage.
The "deal" was totally in Westfield's favor, there was no way Tom could survive long term, and small retailers in Westfield's don't, they are in Westfield's view 'a dime a dozen' people to be simply profited from. Westfield;s are complicate with the big retailers in putting small business out of business. What do you think on that. We had two small butchers in the Westfield's plus 3 supermarkets Coles, Woolies and IGA selling meat, one small bloke has now gone. He had plenty of customers t/o was very good. Not staff wagers were the killer but Westfield's costs killed him off. The other bloke near Woolworth s is now copping it. Woolworth have meat specials all the time legs of lamb @ $6.99/Kg, then it was $5/kg, The best price else where is about $10/kg, including othe Woolworth stores. Same with two F&V markets there is now only one.
Posted by Paul1405, Tuesday, 30 September 2014 8:12:37 AM
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Yes Paul, and while the big retailers are to blame, so too are the consumers. As for small butchers, I'm the first to admit that many have caused their own problems with their dishonesty and deceitful practices, something that has hurt the honest ones as well.

But, the main problem for small retailers are costs and, because in most cases their sales have actually fallen over the past ten years, their is no future because they have already maxed out their margins so there is nowhere left to go. The future is bleak.
Posted by rehctub, Tuesday, 30 September 2014 9:13:46 AM
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The Butcher who went belly up in the Westfield's, had great t/o, but even that was a problem he would put out specials like chicken breast fillet @ $6.99, lamb griller's 2kg/$12 etc, but that would draw customers for the specials, but they buy nothing else. Plenty of t/o but as you say no margin, then the two chicken shops would match his price. I suppose its competition. these big shopping centres want more than just rent, they even take something like 2% of your t/o, a sort of private tax. you can't blame the consumer for going after the best deal, that's human nature.
What do you think of things like buy groups, co-ops, franchises etc for small retailers, must help with wholesale, advertising etc. Mitre-10 hardware is an example, up against Bunnings (Westfarmers Coles) and Masters (Woolworths) both with mega stores.
On the big retailers, they do donate large amounts to the LNP and their board members and CEO's have influence with poly's all around the country, they also employee lobbyists in Canberra etc. When it comes to legislation its hard to beat that kind of clout.
Posted by Paul1405, Tuesday, 30 September 2014 10:28:20 AM
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Yes Paul, but surely if we can legislate against media domination, surely we can do similar about retail, especially multiple sectors being owned by one chain, fuel, electronics hardware as examples.

As for the butcher and his specials, yes, you're right as it's long been a battle. Many shopper are foxed to buy what's best fir their dollar and, if it means cooking chicken breast 101 different ways, then so be it.

I used to have this problem myself in my cheaper shops, so in the end I would limit the amount one could buy of specials, unless they purchased other meats. This only has a small effect and usually turns more off than you draw. I found the best advertising to be a loyalty card system, but even that has been flogged to death.

My other tact was to buy bacon for $650 Kg and sell it for 2.5 Kg for $13. A small loss, or chicken wings I woukd buy in bulk for $1.10 and sell them for 99c. Loss leaders but my theory was most people would buy cheap bacon, or wings, but they couldn't live on them. Of cause to get these specials they had to buy something else.

The trouble is that the big retailers may tell us they have lost leaders, but in fact it's now been proven that it's the suppliers who are taking the losses.

As for buying groups, while they can be a great idea, they can also be a logistical nightmare for suppliers. An example being meat dropped off when nobody is home. While it may have been paid for in advance, if it goes missing, or goes off it never the fault of the consumer.
Posted by rehctub, Tuesday, 30 September 2014 12:15:41 PM
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Rehctub, the PC socialist view you hold that it should be legislated by governments that small business receive business advantages (business welfare in other words) is straight out of the Communist Manifesto.

Whether you like it or not we live in a capitalist society, where every business competes against every other business, and socially engineered level playing fields DON'T EXIST, nor should they. If you want government legislated business engineering , move to North Korea.

Take your socially engineered, government controlled business engineering elsewhere. If a business goes broke, it's their own fault. Stop blaming the lack of government business welfare. Long live capitalism.
Posted by May May, Tuesday, 30 September 2014 12:16:06 PM
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