Woolies' Dick Smith sale reveals retail online horizons

Brett Kitching
Brett Kitching

MUCH has been written this year about the plight of retailers, and how online sales have eaten into their turnover in recent years. However, as has traditionally been the case, December is the time of the year still that retailers look forward to as Christmas shoppers come out in force.

The sale by Woolworths of the Dick Smith business a couple of months ago perhaps best highlights the plight of retailers. Woolworths purchased the Dick Smith operation around 30 years ago for $20 million. Several years ago the business had an estimated value in the hundreds of millions.

Two months ago Woolworths sold the electronics chain for the same amount it paid 30 years ago - $20m, in the process realising a massive loss in real dollar terms.

To further highlight changing trends in retail, the organisation which bought the Dick Smith franchise did so with a business plan to markedly increase online sales - hence moving the organisation from the traditional retailer to an online retailer.

While online sales organisations have had a strong run over the past couple of years with turnover multiplying by year, a downside of online sales was highlighted last week.

It has been reported that a hacking group by the name of "Anonymous" targeted companies in a campaign called "operation payback", from a UK base between August 2010 and January last year.

The damage done by this group amounted to a loss on just the Pay Pal Company, of $5.6m which included a loss of turnover and costs to implement software and hardware upgrades.

Combine lower consumer confidence and tighter household budgets with the expanding online segment, and it is easy to understand why retailers have struggled in 2012.

However, the next month is the time of the year that retailers look forward to as the traditional Christmas and post-Christmas rushes take place. A good example is the report released from the Western Australia Chamber of Commerce last week noting an 8% increase in retail sales is expected.

The report recognised the difficulties faced by retailers, but noted that excellent customer service is the way to maintain a foothold in the increasingly difficult retail sector.

Upcoming events

IPSWICH Chamber of Commerce & Industry AGM followed by our final Networking After 5 for 2012, Tuesday, December 4, Ipswich Club at 5pm. Members free. RSVP by November 30.

Bookings are essential for all events. Inquiries phone 3282 8688 or admin@ipswichchamber.org.au.

Topics:  better business brett kitching online sales opinion retailers

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