Join my conversation about Uniqlo

Hi patient blog readers,

I’ve been making noise over at The Conversation again, this time about the arrival of various international retailers to Australia, including one of Japan’s finest: Uniqlo.

“Japanese fashion label Uniqlo and homeware store Muji will enter the Australian market next year, following other recent arrivals H&M, Topshop and Zara. Despite the purported decline of brick and mortar stores, Australian shoppers will finally be able to shop at stores they’d once only encountered overseas. It seems a far cry from only a few years ago…”

Read more here, make comments, tell you friends etc…

Advertisement

Making a case for Aldi

While I’ve been criminally quiet around here lately, two of my colleagues (one a coauthor, one my PhD Student) have been busy penning a mighty fine teaching case about the Aussie endeavours of German supermarket giant Aldi.

For a lengthy discussion of Tom Osegowitsch and Markus Goelz’s Aldi Australia case see here.

Of course, I’ve been blabbering on about said mob for ages (back when I used to blog!), although mainly in the US context (weirdly):

See here, here and here.

See Dick jump, see Dick rant

Perennial soundbite provider Dick Smith has been very vocal in the past couple of days about the prospect of his namesake retail business falling into ‘foreign hands’. Despite him selling the electronics chain to Woolworth’s two decades ago, he is threatening to ‘trash the brand‘ if some foreign mob tries to buy it.

The logic he throws around on this (and other ‘buy Australian’ campaigns) is spurious at best.  It is very unclear why so much importance is placed on the specific ownership structure of such businesses.  Perhaps it reflects Dick’s own background as a business owner (and therefore someone who derived their income from the ‘surplus’ or profits of the firm). But for almost all stakeholders in the firm, and the overall health of the economy, the question of the location of the major shareholders (and principal decision-makers) should be of little importance.

Consider the Dick Smith Electronics case.

The firm operate 433 stores across Australia and NZ (we’ll get back to this Trans-Tasman dimension in a second), and made $1.8b in sales last year.  The economic and societal impact on Australia of these operations is most heavily felt in terms of the 5300+ employees and the wages they earn (and then spend/invest), the flow of moneys to landlords, supply chain participants and other ancillary service providers.  The ‘earnings’ of the firm (i.e. the ‘surplus’ or ‘profit extracted by Woolworth’s) last year was a paltry $20m or so.

If Dick Smith Electronics were sold to a non-Australian entity, they would be buying the right to extract such profit, but also taking on the role of paying a wages bill that presumably exceeds $250m, and feeding through a lot of income to the other parts of the Dick Smith sphere of activity.  The firm would still pay taxes, rents, and provide consumers with access to products. The firm might remit profits offshore, but it’s just as likely said profits would be reinvested in Australian in an attempt to improve the business and its performance. This is hardly a case of ‘selling the farm’.

There is also one clearly irreconcilable contradiction in the jingoistic rants of Smith and other mercantilists: outward foreign direct investment.

If the logic says Aussie interests are hurt by any sort of inward investment (e.g. by acquisitions of local firms by big bad foreign folks), then surely any instance when an Australian firm expands offshore is similarly deleterious to the host nation. Where was Dick when his namesake firm made their imperialistic entre into NZ?  And when they signed agreements to ally with Tata in India?

Anyone see a 7-Eleven around?

I’m here in Bangkok for my annual supervision of the Global Consulting Project.

And again, I have been struck by the ubiquity of 7-Elevens in this city.  On the relatively quiet street of our hotel there are four branches of said store within a stretch of about 250 metres, including two pretty much directly across the (narrow) road from each other.  Just 400m in the other direction there are another three stores in a 60m stretch.

This obviously generates lots of discussion. One student said he’d seen similar density in Taiwan.  That got me searching for some data to check out which locations in the world have the most of these stores per person.

And here’s what I found.  In terms of population per 7-Eleven store (i.e. national population/number of stores), Thailand is in the top five globally (with ‘top’ meaning not many folks per store, or, put differently, the most stores per person):

I included Australia, simply for illustrative purposes.  We’re a fair way down the ranks (see here for the lengthier store count list – the US (c6,500 is missing)). The table identifies what appears to be the ‘natural home’ of the convenience store – densely populated urban centres around Asia.

For those who have missed the back story, 7-Eleven originated from the US, but was bought out globally by the firm’s Japanese master franchisee almost 25 years ago.

Japan had a pretty big head start on Thailand (opening in 1974, versus 1989 for Thailand), but Thailand is catching up fast.  I saw an estimate that there are over 3,000 stores in Bangkok, which equates to about one store for every 4,000 residents in this megacity (and comfortably defeating city state Singapore).

The Thai franchisee is doing something right, with profits reportedly up fivefold in three years. No wonder there’s talk said firm is chasing the franchise rights for Laos, Cambodia, Vietnam, Myanmar (and also some regions of China!).

I do start to wonder how far such expansion within a given city can go.  Could we eventually see a Bangkok headline like this one (mocking Starbucks’ rapid growth)?

These two stores are within 50 metres of each other in Silom, Bangkok

A little yuletide conversation

I’ve broken my blogging silence by voicing my opinion on the woes of Xmas retail over at the fancy Conversation website.

It kicks off like this:

The lead up to Christmas inevitably draws our attention to the actions and performance of retailers. This December there have been very few tales of cheer.

It gets better! Read on here.