6 July 2012: Telstra charge increase and Retailer strategic response to online competition

Telstra to increase mobile charges: New range of “Every Day Connect” plans incorporate a 10% increase in call rates to $.99 per minute, a $.05 increase to flag fall rates to $.40, and lower data allowances, which are 500 meg a month lower.  Cheapest smartphone plans increased from $49 per month to $60 per month. Telstra says traffic on wireless network is doubling every 12 months. Telstra signed up 958,000 new mobile customers pushing market share to 44%. Telstra’s annual capital budget at 14% of sales at $3.5 billion, $1 billion of which goes into mobile network infrastructure.  Telstra’s 4G network covers 40% of the population, Optus expected to activate 4G in capital cities in coming weeks and Vodafone committed to launching services next year. (John McDuling)

Commonwealth Bank Facebook banking: CBA plans Facebook banking by end of the year to enable payments to Facebook friends, mobile numbers, and email addresses. Customers will be able to make BPAY payments and transfer funds or check account balances and transactional histories. Android and iPhone Kaching app has been downloaded more than 365,000 times, used to transfer more than $1 billion. [CR: Puts new emphasis on someone “hacking your Facebook”] . (Brian Corrigan, Paul Smith)

Wheat price increase: Drought across US midwest cropping belt drives prices up 31% in past fortnight to 10 month high.  Wheat is at $US8 per bushel, was at $US9 per bushel in 2010 during the Russian drought and below $US13 per bushel of the soft commodities boom four years ago. Expected to continue to increase and affect food prices globally unless weather conditions change. Farmers resistant to forward sell due to threat of El Nino associated with drought in Australia. Last year was a record Australian wheat crop harvest of 29.5 million tonnes, this year is expected to be 24.1 million tonnes. [CR: Wonder if the price increases will be blamed on the carbon tax?] (Sophie Morris)

Salvos Stores increase 8% in sales over 64 stores in NSW and ACT over the past year. Those shopping for fashion reasons account for 15% of the increase. Australian Bureau of Statistics said retail sales rose 0.5% in May, the biggest rise since 2010. Total retail sales rose 3.3% over the year. Influenced by satorialist-style blogs capturing people wearing street style. [CR: Social media influencing retail, although I suspect the government carbon tax payment may have an impact on certain socio-economic areas, as noticed a few days ago.] (Lisa Carapiet)

Flight Centre increase: Boost in corporate and leisure sales contributed to profit before tax upgrade of 18% on prior year. Focus for the year will be on growing business organically by opening more stores and recruiting additional sale staff.  Expected to employ 1000 new sales consultants and open it’s 2500^th shop and business.  [CR: Good to see an article about employment numbers going the other way for once.] (Michael Hobbs)

US retailers respond to online: Competing against “showrooming”, where shoppers check out products in stores then buy online.  Best Buy responds by replacing standard bar codes with Best Buy-only bar codes on big ticket items so they cannot be scanned and compared online.  Walmart, Macy’s Best Buy, Sears, and the Contain store now add web return centres, pick-up locations, free shipping outlets, payment booths, and drive-through customer service centres for online sales. Over 50% of sales through Walmart.com are picked up at Walmart stores. In April, Walmart started offering cash sales online, accessed a new type of customer. 40% of customers who paid with cash online used non-cash methods to pay such as check or debit card when picking up in store. The service accounts for 2% of online sales. Sears offers drive through for same day pickup of web purchases.  Container Store VP of stores John Thrailkill: Online orders tend to be larger than in-store purchases, customers who picked up orders in store visited 50% more often than customers who only shopped in store. (Stephanie Clifford)

2 July 2012: Australian dollar predictions and Carbon tax impacts

Australian dollar predictions: In 2011-12, AU dollar spent four times as many days above parity as below, averaging US$1.03 over the year, hit a high of US$1.10 in July and a low of US$.95 in October. Macquarie and ANZ predict dollar will hit $US1.07 in a year, Macquarie predicts dollar will stay above parity until 2015. [CR: In the same article the ANZ rep says the old prediction model placed the dollar at US$.89. We can’t predict 6 months out, and we are stating numbers for three years out?]

Advertising win for SBS Tour de France: SBS sold all advertising slots for Tour de France weeks before it began. In 2010, SBS secured broadcast rights until 2017 for an undisclosed sum, believed to be $2m to $3m. Analysts speculate value of advertising to SBS is between $4m and $5m.  Average daily audience in Australia is 700,000 viewers, higher than in the US.  As a public broadcaster, SBS is restricted to screening only 5 minutes of advertising per hour.

Carbon tax impacts: Wesfarmers CEO Richard Goyder says while Coles will take a hard line on supplier’s price rises, at some point prices will start to rise as a result of the carbon tax. Myer CEO Bernie Brookes estimated tax will cost Myer $4 million per year. Said they tendered for new electricity business and the wining tender was 37% higher than last year.  Energy Retailers Association of Australia CEO Cameron O’Reilly says carbon price will push up price, but increase also a result of rising infrastructure costs.  Treasury modelling shows carbon tax will increase prices by 0.7% in 2012-13, food to increase by less than 0.5%. Australia Industry Group survey shows 40% of manufacturing businesses, 40% of services businesses, and 44% of construction businesses will try to pass the cost to consumers.  [CR: Difficult for businesses needing to raise rates as a result of high labour costs, will be lynched for taking advantage of the carbon tax.]

Telstra Corp’s venture capital buys stake in IPscape for less than $5m: North Sydney-based IPscape was established in 2007 and is a global provider of contact centre applications, Telstra to incorporate IPscape’s technology  into its own virtual contact centre (VCC) solution for large corporate clients. Telstra’s venture capital division recently led a $35m round of financing for California-based video streaming service Ooyala and also invested in restaurant booking service Dimmi. [CR: The crazy world of tech start-ups and acquisitions.]

Barriers to Indigenous in education: Over 150,000 Australians hold an accounting or book-keeping qualification, 11 self-identify as indigenous Australians. Aboriginal and Torres Strait Islander people represent 2.5% of the total Australian population.  Australia’s three main accounting bodies (CPA Australia, the Institute of Chartered Accountants in Australia, and the Institute of Public Accountants, also known as the Joint Accounting Bodies) launch an initiative to attract 1000 indigenous people into the Accounting profession. Cultural barriers include a reluctance to leave traditional lands, different notions of property and ownership, and strong ties to clan and kin. [CR: Interesting to note the challenges faced.]

Business lending increases: Total lending to AU and NZ businesses by banks increased 0.8% in May. Business credit increased 3.3% over the past year, fastest annual growth since 2009.By comparison, home loan lending increased by 0.3% in May. Home lending has grown 5.1% in past year, slowest annual pace in 34 years. [CR: Increased business capital flows and decreased consumer debt... that’s good, right?]

Japan solar: Japan’s third-largest mobile company said to build nation’s largest solar plant (111 megawatts) to start operating in FY 2014. [CR: Solar is not a nuclear killer. By comparison, the recently restarted Ōi Nuclear Power Plant in Japan has an 1180 megawatt capacity.]

28 June 2012: Survey of Australian income perceptions and China air quality

Palmer buying Tourism: Billionaire Clive Palmer, Australia’s eighth richest man, purchased a Club Med in Tahiti for $10m, part of buying frenzy to boost tourism sector and gain exposure. Over $100.6m has been spent on sales of island resorts since 2006.  [CR: Most people just rent a cabin]

Mining women in the workforce and shift work: To increase productivity, Griffen’s Colloe coalmine has a nanny crew,  introduced to take meal shift from 11:30am to 3:30pm. Boddington has a female outfit trained for work from 9am to 2pm.  PWC research found there were 40,000 women working in the mining sector, 18% of mining roles. Women represent 45% of Australian workforce.  Rio Tinto stops employees flying before 6am before a 12-hour shift, creating a grey-zone shift arrangement.

Retailers issues with internet competition: Harvey Norman, Big W., Bunnings, Coles, Super Retail Group cite trading hour restrictions, $1,000 tax- and duty-free threshold for imported purchases, and penalty rates.  Harvey Norman CEO Katie Page, “I don’t care who buys what from which country but I absolutely do believe that whoever ships in this country must pay the tariffs, must pay the GST, the GST collection, the compliance costs, the on-costs for wages, the carbon tax and the company tax.” [CR: Makes buying online feel like stealing.]

Survey of Australian income perceptions by Fidelity Worldwide Investments:  5,186 residents across Asia-Pacific, 500 from Sydney. 85% of Australians underestimated their income bracket, viewing “high income” as $136k (government reference point is $180k). Similar sentiment in China and India, whereas Japan and South Korea have a better sense of relative wealth.  38% of Australians anticipate an income boost in the next decade, 17% expect a decline. 92% expect their children will be high or middle income earners by the time they are in their 40s as a result of good education and that their kids will “work hard”.  Those expecting a low income for their kids cite causes of lack of economic opportunities and poor education.39% of high income earners expect their kids to drop, 83% of low income earners expect their kids to increase. 8% identified friends and colleagues as high earners.  Almost 66% expect the income gap to widen in the next decade. [CR: Are we as rich as we think we are?]

Telstra stops recording mobile site visits: Telstra has 13.2 million phone users, was recording websites visited sans personal information and sending to Netsweeper as part of a mobile voluntary internet filter called Smart Controls. Has now stopped after customer protests and Greens senator Scott Ludlam. [CR: Then again, what do we have to hide?]

Governor of Bank of England says Britain faces five more years of financial pain. Mervyn King: “We’re facing an enormous economic problem”. [CR: Not looking pretty for the 92% who think their kids are going to do better.]

China air quality: China releasing reading for hazardous fine particulate matter (PM2.5). The Shanghai Environmental Monitoring Centre draws data from 10 monitoring stations, the US consulate has one station.  China reporting an Air Pollution Index of 28, US consulate of 57.  0 to 50 = good, 51 to 100 = moderate, 301 to 500 is hazardous. Reading on 27 June was 115: US embassy website stated “People with heart or lung disease, older adults, and children should avoid prolonged or heavy exertion”. China said it was illegal to publish the information. US State department said it had no plans to stop publishing the information.

Carbon tax offset being spent: Super Retail Group says same store sales increased from 3% to 4% in past few weeks, when first payments of the government’s average $476 Clean Energy package were made available to low and middle income earners and pensioners.  Woolworth’s Big W saw increases in baby good’s and children’s wear, consumer electronics, and women’s apparel. Coles CEO says consumer sentiment is at its lowest in 20 to 30 years, excluding the GFC downturn. [CR: Does this really help?]

Vivendi to focus on cutting costs at French wireless unit SFR., said CEO of seven years Levy. Vivendi  owns Universal Music Group, Activision, Blizzard, and phone operators in France, Morocco, and Brazil.  Vivendi is at second lowest investment grade of BBB, stocks near the lowest in nine years.  European regulators to rule by September 6 if Universal can acquire EMI Group’s recorded music business, which would create a company nearly twice as big as the next nearest competitor. [CR: Needs more World of Warcraft players.]