Compiled by Patrick Avenell

In the third part of our feature excerpts from Appliance Retailer magazine's Mid-Year Report Card, we visit with Australian Retailers Association chief Russell Zimmerman to find out how retailers can respond to a tough market and catch up with Canon director Jason McLean to hear his thoughts on how to deal with the grey market.

Part One - Margin Calls: industry insights from Whitfords and Sampford IXL
Part Two - Sales Talk: Pro forma perfoming while price erosion is biting

Russell Zimmerman
Executive Director
Australian Retailers Association

How has the first half of 2012 been for the retailers you represent?

Retailers have had a tough start to 2012, with retail trade subdued, stagnant and/or negative. Retailers started the year after a soft Christmas sales period with a month-on-month decline in sales for December and yearly growth below the rate of inflation.

Recently electrical retailers have been at the forefront of Australian dollar fed deflation, which has impacted retailing in dollar turnover.

Retailers have faced the challenge of consumer confidence as well as their own costs for the first half of the year.  It’s clear consumers have been bracing themselves for extra taxes and charges as well as uncertainty around how the Carbon Tax will affect their budgets.

The ARA will continue to fight for retailers to protect jobs and achieve growth and innovation in a $240 billion economic sector.

What are your predictions for the second half of the year?

The ARA predicts retail growth will be slow to zero for the second half of 2012. Retail confidence is expected to take a further hit in July with the introduction of the Carbon Tax, the third increase to the Modern Award and now a 2.9 percent increase in the minimum wage.

The Federal Budget announced some short term relief for low income earners in the way of cash injections, however, the lack of long term relief for middle-to-high income earners means retailers won’t see lasting growth as a result of these initiatives.

The concern for retailers moving into the second half of the year is that although there will be little to no growth in retail sales, the cost of doing business will continue to increase. Retailers face some of the highest costs in the world when it comes to expenses such as rent, wages, insurance and utilities.

What opportunities do you see for the electrical retailing industry and for retail in general?

Provided retailers can keep unnecessary costs at bay, there is great hope for retailers to innovate and grow their businesses through the opportunities created by mobile ecommerce and online shopping.

Australia has the highest smartphone penetration in the world behind Singapore, and it seems Australians are not afraid to use their smart phones to make purchases and access apps.

We have seen many retailers embracing the opportunities provided by the online space and taking a multichannel approach to doing business with both existing and new customers.

Electrical retailers can especially take advantage of these opportunities given consumers can easily merge in-store and online experiences, as well as use their social media networks in order to make a final purchase.

What’s your favourite product of 2012 so far?

My favourite product I have purchased in 2012 so far is a Nespresso coffee machine, which gives me the perfect cappuccino at breakfast time.

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Jason McLean
Director – Canon Consumer Imaging
Canon Australia

How has the first half of 2012 been for your business?

We’ve been fortunate to have far more stable trading conditions this year compared with the first half of 2011. General retail has been very tough this year, but our consumer imaging products business has performed well under the circumstances. Supporting our performance, this year we kicked off Canon’s 75th anniversary with a raft of category-defining products across both the camera and printer segments.

What are you predictions for the second half of the year?

The second half will continue to be tough as the industry deals with consumer uncertainty and increased online competition from overseas. The Australian market has adjusted considerably to compete with overseas competition, but we have to deal with competitive disadvantages inherent in our market including markedly higher costs of doing business and the GST exemption on imported products under $1,000. This is putting significant pressure on Australian businesses and may threaten the viability of local operations, so we are keen to engage in the upcoming Parliamentary Inquiry into technology pricing to examine and resolve these issues. In the meantime, we continue to work with our retail partners to offer Australian consumers great value, locally.

What opportunities do you see for the electrical retailing industry?

In the context of online competition, there’s tremendous opportunity for local retail to own the consumer experience. For us, the recent Digital Show demonstrated how much interest there is in the complete imaging experience from capture through to output. Presenting imaging ‘solutions’ for consumers based on their needs is an opportunity to create value. The combination of knowledge, service, product bundling and personal relationships creates real value that cannot be replicated online.

What’s your favourite product of 2012 so far?

That’s a difficult question given the range we’ve launched so far. The new PowerShot D20 tough camera is going to do great things for the category this year. The tough segment has strong growth and higher than average ASPs, but there has been consumer frustration around lens fogging. The D20 solves this with Canon’s Anti-Fog Technology, so there’s no need for compromise.