Wow, just wow.

ive mates that own kite shops, the way they operate are completely different, 1 is focused worldwide with small profits and big turnover uk based, the other is a small local business relying on local sales aus based , the latter is struggling, not all roses though for overseas retailers, ive a mate who closed shop after 14 yrs,

Sorry to be the dumb arse late comer , is it the Clontarf Kitepower that shut down ? I am sad to hear it , yet I am not surprised ! I ordered a brand new kite from them , paid online , then I asked if they might have a 'freebie ' to chuck in with the order , eg : stickers for my young fella ! What I got was a busted pack of insect repellent that bled through my new equipment ! Ha F:;/ken Ha !

sir ROWDY said...

Freddofrog said..

sir ROWDY said..

The skate industry (retailers) had a massive hit when the Australian dollar was high, kids would buy overseas for almost half the price it was in the local shop due to the shops having to pay overheads, import duties/ taxes etc. Now the Australian dollar is dropping again and kids are returning to the stores, sadly for some shops it's already too late and they closed up. Retail is a vicious cycle, you really have to be on-top of things and have some decent luck to stay ahead.

The retailers could have chosen to pass on increased margins when the dollar was high, but most just pocketed the increase. Happens everywhere.

Now the dollar is weak, they will hike up prices to maintain their margins. No wonder people get fed up and shop overseas.

Its sad to see any local shop close but for better or worse, the global marketplace is here to stay.

Wrong. Hate to say it but you obviously have never worked in retail (well at least not skate retail that's for sure).

Most shops don't work like you ellude to because they buy from a distributor not direct from the US, thus prices will only fluctuate marginally. For example a $110 dollar deck (RRP) would end up being $100 (RRP) dollars when the exchange rate was good, nothing close to the 50 or so dollars it could be bought for direct from US online stores. If retailers or distributors matched those prices (or even close) they would never make any money.

So, you're saying a retail store pays more for a product than we can get it online? I hope not cause that would make for very silly people in business.

I use shops, I dont mind paying a small amount for the ability to touch, feel and test run a product before settling on a purchase. I think our taxes should be fair for locals competing with online international purchases. I do mind rediculous markups.

The retail climate and how we do commerce has changed.

I have worked in retail for a long time. I dont know if you have seen the Bunnings Model I will explain.

Initially Bunnings asked suppliers to "Fill our store with your products" We will pay you a fair rate and we will cop the margin.

Bunnings then established their "Brand Bunnings" made people aware of the "cheap prices" and moved in to start to force manufacturers to make their own "in house exclusive to Bunnings" products.

Slowly they forced out the margins and started to dictate the prices. This is how they have forced their way to move out the distributirs and manufacture in china or have companies "Pitch" for work.

Woolworths and Coles have been done for this recently for forcing "distributors" and "manufacturers" to wear the cost of their "red spot special" campaigns. The ACCC got onto this and fined both of them.

The whole argument is to do "Price VS convienince and service" if the convinience and service is not there so people look at price.

I feel for the Kitepower guys as small business is wearing the brunt of online VS bricks and mortor.

RPS is Melbourne closed its doors recently, I purchased a lot of gear from them, But there are 2 other stores in Melbourne which have much smaller premises right on the beach. Their business model is about instruction, advice and purchase. This might change as the demographic changes.

I have worked in Skatebaord and Snowboard retail for years. Trust me there is no margin at all. We used equipment to get people in so they would buy clothes where the markup was much more in our favour.

The great thing about the internet is that now small manufacturers can have there own store and make money. I have heaps of mates that have bespoke tshirt brands that with bricks and mortor would never work.

I would readily admit that I holidayed up at broadbeach last year. I visted both shops Kitepower Qld and Briskites. I found I was much better serviced at Briskites than the other store. This was not just over one visit either. Subsequently I have purchased gear from Briskites. You have to focus on service to do well in bricks and mortor, then back it up online.

Cal said..
So, you're saying a retail store pays more for a product than we can get it online? I hope not cause that would make for very silly people in business.

Yes, depending on product.
People could buy a single skate deck online from USA for $50, when a retail store in Australia was paying $60 for it from the AU distributor, after that the markup then takes it to around $100RRP in store (should actually be $110-$120). The AU distributor has to pay taxes on importing all of the goods, a single buyer with imports under $1000AUD wouldn't.
If you don't understand how this can happen with fluctuating exchange rates (like when our dollar was 1.1 USD) then you need to research it, I'm not going to explain it.

p.s.
Once again the whole reason this was an issue here and not so much in other countries is the high threshold for taxes on personal imports into AU.

In that case every Australian owned business selling product is a bad business model when the dollar skyrockets or bites the dust (depending on whether you are importing or exporting)... . This type of stuff is inevitable and totally un-predictable, sadly it's not as easy as just closing up shop or changing your business structure in an instant when you're left in the lurch with inventory to last you six months (purchased at a higher price) and rental agreements and loans etc.

You're correct that it's not all the problem of Tax and Regulations, but AU could sure do a better job of protecting our dollars going overseas and AU jobs disappearing... (something in-line with other countries).

p.s. Maybe these shops should employ captain hindsight to help them out next time? Or maybe you should write good business models for these guys, you could probably make a killing.

p.p.s.
Here's my quick business model for those wondering;
1. Don't go big into retail of goods under $1000AUD in this country.
2. ?????
3. Profit!

Is there a closing down sale? Or is the stock just being moved to Sydney?

Over
Ccccccc

nikmcc said..

Is there a closing down sale? Or is the stock just being moved to Sydney?

There was a 50% sale, i think it has finished by now though

Doesn't the chinese government subsidise postage as well.
Pretty clever, it's like a whole country participating in a price war - even if it can be produced for the same quality & price elsewhere, it will always be cheaper from china due to the postage. That way china kill off their competitors and become a manufacturing superpower to an even greater extent.

In regards to the comment about bike shops facing similar pressures and the majors opening up their own branded shops, it's worse than that.
All of the major brands are US based.
At the moment they have access to incredibly cheap interest rates.

This allows a major brand like Trek to open up stores in Australia with wholesale pricing and low startup/fitout costs and cost cut any other independent shop already here.
The small local bike shop WILL disappear.

Not only does money cost too much for Australian independents, but pre season lock in ordering, forward payment of orders and seasonal introduction of new models devaluing floor stock means that most bikes on the floor loose money.
The workshop and still good margins on small parts and accessories is the only earner in the store.

Now with places like Chain Reaction discounting the small parts, the only thing left soon will be workshop repairs using parts supplied by the customer as wholesale parts from the likes of Shimano Australia are more expensive than online prices, and less likely to be in stock.

The retail market is certainly changing.
At the moment it is a win win for the customer as small retailers offer low margins and extra service to survive.
This will not continue forever and the they will close doors.

If you walk into a large manufacturer driver store, you will find workshop prices incredibly high, there is no such thing as fit parts for free or a free bike fit.
These things are all charged out but they do have low new bike prices.
Because they are owned by the manufacturer, they have control of overseas availability and pricing structure.

This is what the consumer has asked for and is what they are geting.

sir ROWDY said..
p.p.s.
Here's my quick business model for those wondering;
1. Don't go big into retail of goods under $1000AUD in this country.
2. ?????
3. Profit!

A management consultant would charge for that!

kiteboy dave said..

loftsofwind said..

nikmcc said..

Is there a closing down sale? Or is the stock just being moved to Sydney?

There was a 50% sale, i think it has finished by now though

I went for a look today, took an extra hour on my lunch break to drive over and .... they're closed mondays anyway


Had a look in the window, lots of stock still there, not so many kites tho..

any foils? maybe they missed the foil craze was their undoing

Guys, sorry if this is a daft statement but I’m going to throw it out there; Is it really the overseas purchases that are putting pressure on local shops or is there simply too many local stores to share the amount of local sales.

I’ve been in the kitesurfing scene for nearly 3 seasons now and haven’t talked to one person that has purchased outside of Oz. Admittedly I haven’t talked to many outside of my local beach area but “none??” Most of us purchase from the south east Queensland area and without even thinking to hard I can count 10 stores in this area and I’ll bet there’s more than that…