The economic situation, whether it is good or bad, should be directly reflected in the retail industry, because the economy is good, the people make money, and naturally buy more; on the contrary, the economy is not good or the people think the economy is not good, and it will not cost.
This is not, Australia`s two famous discount chains Kmart and Target, have just released the latest results, unfortunately, the situation is not very good.
This also shows once again: Australia`s current economic situation is really not very optimistic.
As you may already know, Kmart and Target belong to the wealthy Sinong Group (Wesfarmers).
On Thursday, Sinong Group reported the recent results of Kmart and Target to investors, and General Manager Ian Bailey summed up the overall performance in one sentence: "over the past 12 months, performance has not been as good as expected."
Let`s take a look at the specific figures:
From January to May 22, Kmart sales rose only 0.2 percent year-on-year, the equivalent of no growth.
Kmart sales fell 0.6 percent in the first half of the fiscal year and 0.2 percent so far this year.
Target is worse off, with sales down 2.3% from a year earlier and 0.7% so far this year.
The person in charge of Sinong said directly: Target needs to be "repositioned."
Kmart and Target earned 631 million in the last fiscal year, but are expected to earn between 515 million and 565 million in the current fiscal year, which means profits will fall by at least 10 percent.
But Kmart and Target have performed well in sales and profits over the past 10 years. Why not in the past year?
Sinong`s Bailey manager says the economic environment and competitors` low-price strategy are two of the main factors.
Non-food retail sales fell ahead of this year`s federal election, while Australia`s economic grew at its slowest pace since the economic crisis.
If the environment is not good and consumers do not have confidence in the future, they will naturally reduce consumption.
The rival, mainly Woolworths, is also positioned as a discount store BigW.
In order to compete for the market, Big W did not hesitate to fight a price war, trading ultra-low prices for sales: his family`s sales rose 7.4 percent in the third quarter of this fiscal year.
However, this fiscal year Big W will still be a loss of 80 million to 100 million.
On the one hand, Kmart will face rivals and expand market share, on the other hand, it also hopes the price war will come to an end, the manager said.
These are not the only three struggling. On Friday, (NAB), Australia`s national bank, released its latest business survey, saying there was a "clear recession" in the retail industry.
Specifically, the challenges facing farmers include: increased purchase costs with the depreciation of the Australian dollar; large quantities of goods and not fast enough inventory turnover; and some popular goods that may not be available on the market in time, and so on.
The manager said he was trying to improve the problems and had improved, while not forgetting to give investors a strong shot, listing several good factors: the federal election was over; the Australian Federal Reserve cut interest rates; Morrison government could introduce tax cuts; and consumer confidence and spending were expected to pick up.
By contrast, Kmart and Target are lucky because there is a big tree to rely on: although profits are reduced, more than 500 million profits are still very considerable, such a high profit, can let Sinong do a lot of things.
Recently, Kmart has opened three new stores in Seattle, but not Kmart, but Anko, which may open two or four more in the next six months.
Sinong said that Anko will play the role of "experimental field", will pay great attention to "digitization", and the accumulated digital experience will be applied to Kmart. in Australia.
In addition, Sinong paid $230 million this week to buy Catch Group, an online retailer, in an effort to boost its online retail capabilities.
Target is in a more difficult situation than:
Sinong directly acknowledged that Target "underperformed" in the current market environment, and the clearest evidence is that Target has closed 14 stores so far in the current fiscal year and is likely to close another in the second half of the year.
As a response, Target may be change in the future, focusing on clothing, interior decorations and toys.
Although price war for the consumer for the time, but in the past, eventually form a vicious circle.
The editor still hopes that the Australian economic can get better soon, and the money in everyone`s bags can be more and more!
