25 July 2012: Retail percentage of online sales stats and Coke and McDonald's slipping

Challenge for carbon tax Productivity Commission in assessing business compensation aid for carbon tax.  Says it will be difficult to separate carbon tax impacts from other factors such as currency fluctuations, unrelated changes in costs and the normal ebb and flow of business. [CR: Speaks to chaos theory as applied to business. Take all of the “normal” interconnected economic complexities affecting organisations. Now exponentially increase those interconnections by adding a variable of the carbon tax.]

Opera Australia model for exclusive tickets to Ring Cycle: As part of a “Ring Leader” program, Opera Australia offering buyers to donate $3,000 to $12,000 to get priority access to tickets before they go on sale. Tickets are additional at $600 to $2000 for a full four-opera cycle of the Wagner opus. The scheme was successful, with only C and D reserve tickets available when single-ticket sales opened. Over 50% of Ring Leaders had not previously donated. The scheme raised most of the $19 million budget. When asked if the Ring Leaders program unfairly quarantines tickets for the richest segment of the population, CEO Adrian Collette said “it should be seen in the context of everything else the company did to ensure broad access to opera. “It is the biggest artistic challenge the company could undertake, and this was the only way of getting it on. The choice was this or nothing.” [CR: Reads like the ends justify the means. Will be interesting to see if the model is an ongoing trend, and if so the extent that concession will be made to “lottery” in those to the inner circle who may not otherwise have the opportunity.]

Disability plan debate numbers: Meeting today to review proposed National Disability Insurance Scheme planned for next July. Proposed to cost NSW an extra $250 million and Queensland an extra $360 million to offer same services available to Victorians. Fedral government committed $1 billion to initial trials, full scheme needs an additional $6 billion. Queensland Premier Campell Newman said his government would not pay extra to be a part of the scheme and Canberra would have to cover the cost of the Queensland trial. Queensland spends the lowest on disability services based on its population. Other states have committed millions to be a part of the trial. [CR: Frustrating that the political debate is about whether they will spend the money, rather than leaders getting personal with the problem and focusing on a resolution.]

Facebook founder and PayPal co-founder Peter Thiel buys into Sydney start-up ScriptRock, Theil’s Valar Ventures joined other investors in contributing $1.2 million. Three ScriptRock co-founders to move to the US and expand AU operations. ScriptRock sells tools that cut down on IT expenses by automating work that traditionally needs a lot of manual input. [CR: By that definition, it sounds like it will build my applications for me... Good on ‘em. I do wonder how long this start-up cycle will continue, or if this is the new paradigm.]

Europe’s debt crisis update: Spain: fears that spiralling debt will force it to seek a $353 billion bail out from the EU and IMF. Interest rates on Spain’s 10-year borrowing rose to 7.59%, the highest since the euro was created. The stock market in Madrid fell by 5%. Greece: hints from politicians that Germany preparing grounds for Greece to leave the euro. Europe already spent 270 billion trying to rescue Greece. Germany largest economy, followed by France, Italy, then Spain. Italy: Ten cities risk bankruptcy, schools may not be able to open. Cities in southern Italy plagued by mis-management, corruption, wasteful use of EU funds, and infiltration of the Mafia. Plans to dissolve 64 of Italy’s 107 proveniences. [CR: Puts things in perspective from a macro-national level and a micro-project level. AU’s problems are minor by comparison, and any project challenges you are managing are a hiccup when placed next to whole cities going bankrupt. Now would be a good time to say your three points of gratitude.]

Virgin Australia to slow capacity expansion: In 11 months to May, domestic capacity rose 9% and peaked at 15% year on year increase for some months.  Capacity growth in 2011-12 was about 5% to 6%. Qantas maintains about 65% domestic market share, including Jetstar and QantasLink, and has also increased capacity, leading to lower fares potentially impacting industry profitability. An all-out price-war has not happened as yet, COO Sean Donohue states Virgin has a lower cost base and working on greater efficiencies. [CR: Here’s a question: If the airlines have a price war, what does that do to their capacity to fund R&D into alternate sustainable fuels? If we then encourage a price war with our travel dollars, are we then not telling subsequent generations we gladly trade their environment for our trip to Bali? Just sayin’.]

Retail percentage of online sales stats: store name (% online sales of total sales, Growth in 2011): John Lewis (16.7%, 37%), Nelman Marcus (16.3%, 14%), Saks (9.2%, 28%), Nordstrom (9.1%, 35%), JC Penney (8.7%, 2%), Debenhams (8.2%, 73%), Macy’s (7.4%, 40%), Marks & Spencer (5.6%, 31%), Kohls (5.4%, 37%), House of Fraser (4.5%, 130%), David Jones (<1%, n/a)

Supplier management perspective from David Jones group executive, merchandise, Donna Player: The current difference between overseas and AU prices from international suppliers is 30% to 50%, aiming for 10% to 20%. Player led price harmonization at Big W to price reductions between 15% to 20%. Led Big W’s omni-channel business, which is leading in the AU retail market. David Jones CEO Paul Zahara said in March net profit for the year would fall 35% to 40% and David Jones faced years of lacklustre earnings as it reinvested heavily to transform into a fully integrated omni-channel retailer.Player: “There’s an opportunity for us as a business to engage without customers more so than any other time in my career. I want to give them more reasons to love the David Jones brand.” [CR: Two take-aways: 1) Player on board for 12-days, important to champion the vision of the CEO; and 2) I love the term “omni-channel”, reminds me of when I started in “multi-media”.]

Coca-Cola and McDonalds slipping: Coca-Cola Enterprises reports net income fell 17%in Q2 2012, Chairman and CEO John Brock said it faced a “unique combination of unfavourable weather and ongoing marketplace challenges”. Western Europe’s main Coke bottler earned $US205 million in April-June quarter compared to $US246 million the year prior, volumes fell 6%. McDonalds income fell 4% in Q2 2012, same store sales increased 3.7%, compared to same store sales increase same period last year of 5.6% and increase in Q1 2012 of 7.3%. [CR: I always have struggled with the noton of perpetual increases in same store sales.]

Stats on Australia’s richest individuals from financial services research group: There were about 340,000 high-net-worth individuals in 2011. The number increased to 410,000 in 2012, with net wealth climbing from $645 billion to $825 billion. By 2017, expectations are that Australia’s wealthiest will be more than 600,000 and collectively be worth more than $1.2 trillion. 33% of the wealthy have a private banker. Interesting part of client profiling at Macquarie is to look at where they spent their formative years of 18 to 25, as these circumstances affect the way the bulk of ptoeple make decisions and risk appetite for life. [CR: Yes, that is interesting. Look at how you spent your formative years. Can you see how that affects you now?]

Stats on employee-owned companies performance: UK Employee Ownership Index published by law firm Field Fisher Waterhouse says companies owned by more than 10% of their employees outperform All Share companies each year by 10% on average. Over successive five-year periods, they outperform by 79%; over three years by 41%. US General Accounting Office study of 110 firms found that participatively managed, employee owned companies increased their productivity growth rate by an average of 52% per year. [CR: Give them autonomy, mastery, purpose. You won't lose.]