Hold The Phone – Business Has Changed

Hold The Phone – Business Has Changed

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Some would suggest that the global financial crisis (GFC) is over. Some would rightly suggest that today, given many of the remnants that are still unresolved, it is far from over. Eurozone falls into second recession since 2009 and then you have that minor issue called the ‘fiscal cliff’. The cliff is a legislated bundle of government spending cuts and tax increases totalling $US608 billion that are due to take effect automatically on January 1.

So I was fascinated this week to read the latest buzz word – SMBC (small to medium business crisis.) Alan Kohler wrote on Business SpectatorWhat crisis? This crisis “Yesterday’s monthly business survey from NAB should be setting off alarm bells in Canberra and through every bank and big company boardroom in the country: Australia’s non – mining businesses are in serious trouble just as the resources boom ends. There will be nothing to take its place.”

“This is a genuine national crisis, but the problem is that it’s going largely undetected and unaddressed because it is not showing in the broad economic data, which is what the Reserve Bank sets interest rates by. That’s why rates were left on hold this month, and may be again in December.”

Personally, I see the end of Australia’s mining boom as a positive as it will allow our business sector to re-calibrate – especially the building sector that put down tools on building sites to chase work at the then highly profitable mines. Mining’s double whammy to weigh on growth in its statement on monetary policy, the Reserve Bank said weaker spending in the resources sector had prompted it to drop gross domestic product (GDP) growth forecasts for 2013 to below 2.75 percent, compared to 3.0 percent in the August statement.

For a moment forget the mining sector. Australia’s alternate businesses, i.e. those that make up the SMBC, are simply being smashed by one predator – online!

BUY PRINT

Let’s look at the facts that clearly announce where business is headed – startling data I found on the Internet.

  • There are 7 billion people on Earth with 5.1 billion owning a mobile phone.
  • It takes 90 minutes for the average person to respond to an email. It takes 90 seconds for the average person to respond to a text message.
  • 91 percent of all smart phone users have their phone within arm’s reach 24/7.
  • According to Google’s Our Mobile Planet, smart phone penetration in Australia is now at 52 percent; however a report by Telsyte predicts that nearly 90 percent of Australian mobile phone users will have a smart phone as their primary device in 2015.
  • Nearly 60 percent of smart phone users access the Internet everyday on their smart phone and 74 percent don’t leave home without it.
  • A massive 94 percent of smart phone users have researched a product or service on their phone and only 59 percent look at first page results when searching on their smart phones.
    Interestingly, the three most popular places where people use their smart phones, are home 98 percent, on the go 85 percent and in the office, 73 percent.

Online mega sale to lift local retail from next Tuesday Australia will see its first online frenzy when up to 150 retailers will slash their online prices – by between 15 and 90 percent for 24 hours. Shoppers will have to access clickfrenzy.com.au to access the retailers’ online deals and this will be the first of many to come. What we are seeing with this is that finally retailers are acknowledging that online is the future.

As for the real estate industry, it will survive. However, the businesses with the dominant online platforms will succeed and those that don’t understand it will perish – like many other industries.

So what is happening with interest rates? Here is a clue.

Despite the ‘World’s Greatest Treasurer’ believing that the lower the cash rate the better the economy, in 2013 Australia is looking at the lowest cash rates ever seen before. On that analogy, one can reasonably expect that 2013 will be another tough year in real estate.

If this proves to be correct then print advertising (as we know it) will collapse in 2013 and real estate advertising will see online as the major spend. Newspapers are not that smart when it comes to real estate advertising expenditure – they need to focus on the little picture not the big picture. Newspaper advertising in the future is merely a point of introduction to online, not vice versa.

Again the same story in Mosman, where we are seeing a reduction in volume compared to this time last year. This can be easily explained. It is too expensive to move given the trading costs and when homes are sold for less than replacement value – it is not a coincidence that markets then stagnate.

    MOSMAN – 2088

    • Number of houses on the market last week– 114
    • Number of houses on the market this week – 112
    • Number of houses on the market this time 2011 – 136
    • Number of apartments on the market last week – 96
    • Number of apartments on the market this week – 106
    • Number of apartments on the market this time – 118

    CREMORNE – 2090

    • Number of houses on the market last week– 15
    • Number of houses on the market this week – 13
    • Number of houses on the market this time 2011 – 21
    • Number of apartments on the market last week – 18
    • Number of apartments on the market this week – 21
    • Number of apartments on the market this time 2011 – 34

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 19
    • Number of houses on the market this week – 20
    • Number of houses on the market this time 2011 – 15
    • Number of apartments on the market last week – 85
    • Number of apartments on the market this week – 60
    • Number of apartments on the market this time 2011 – 101

    For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral
    Bay real estate, Cammeray real estate.
    • Click Here
    For this week’s open for inspections
    • Click Here

The RBA is hoping that its recent cash rate reductions housing rise to offset mining fall which is an absurd assumption given that housing is performing with absolutely no chance of booming. The real problems that require urgent attention are the mismanagement by states at heart of financial woes. Our business leaders have lost all confidence in the Gillard government which is why they have a strong foot on the break not the accelerator.

The Australian economy is in a holding pattern – where the two predominant words are sale and discount which is more about survival than anything else.

Cheers ^__^

One Response to “Hold The Phone – Business Has Changed”

  • Ann says:

    Hi Robert

    Great article. In Australia around 44% of the google searches are from a smart phone, so not a laptop / computer / ipad etc!!.

    Interested to see your newspaper ad revenue. Last week the readership stats came out. I read them in The Australian but it was interesting the weekday and weekend subscriptions fall of 15% in both categories were not reported in the SMH, for their own paper. Usually they report them every time they are released!!

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