I am gobsmacked and flabbergasted that NARTA would have had the audacity to even apply to the ACCC for an exemption from what could be seen as uncompetitive and cartel like behaviour. For the sake of competition and common sense we better hope that the draft decision becomes law real soon!
So what is this all about and why should you care?
If you are interested the application and documentation filed with the ACCC is here and while it is not light reading it should have consumer groups and commentators chaffing at the bit to oppose this application.
The exemption would compel all NARTA members representing hundreds if not thousands of retail and on-line outlets to advertise the same price for particular new release, premium or home branded products such as televisions, cameras, white goods, espresso machines and ovens.
Why this is bad?
Let me recount a personal experience when I was a shareholder in a substantial independent computer store in Brisbane which closed in 2010 after 30 years of ethical retailing – there was no money left in computer sales.
My company was one of the first to offer on-line shopping in the early 2000’s. I advertised a popular name brand power suppression board for $120 that at that time was selling for around $200 RRP (recommended retail price) at the major bricks and mortar retailers. My buy price was $100 and at the time I considered a 20% margin was adequate – clearly major retailer’s need more as they do more and I don’t deny they have higher costs to cover. I also know they were buying at a much lower cost than I was.
Within 24 hours I got a call from the manufacturer saying that I had to advertise their products at RRP and if I did not I would not be able to obtain further supplies. Within days a number of other manufacturers / distributors (who coincidentally also supply NARTA members) contacted me and said that they could not supply if I attempted to advertise their goods below RRP. In short I was not allowed to destabilise the market and deny larger retailers a profit.
At that time my company was also making “white-box” PC’s for a number of major electrical retailers in Queensland and I became privy to the workings of that chain (which is a member of NARTA). Let’s just say that to do business with them you had to sign a very long and confidential contract that would make very interesting reading to consumer advocates.
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What’s NARTA and why should we care?
NARTA (The National Associated Retail Traders of Australia) established in 1965 is a buying group of 32 “independent” electrical goods retailers (see the list below).
In 2010 retired Fisher & Paykel CEO, John Bongard, recommended that the group consider a global future in the USA, UK and Europe, with membership outside Australasia. “NARTA has a huge role to play in the ongoing strength and survival of independent retailers in Australasia…” He added thart “A combined Australasian/North American/European buying group would put this group on an equal if not better scale than the likes of Sears, Lowe’s and Home Depot.”
NARTA MD Kay Spencer is on record saying her group is facing the biggest challenge in the last 20 years and recommends retailers adding value through service and high end products to avoid commoditisation and irrelevance.
In my opinion Narta are not evil – they are very smart business people that are doing the best for their members that collectively controlled 25.3% of the retail market value (RMV) in FY11/12. Their web site states it has a combined buying power of more than AUD3 Billion. That’s a lot of “power” to yield responsibly. My wise dad (who was also a successful sports goods retailer) always said “Don’t let the foxes mind the chickens” (but I am sure ACCC knows that).
To give you some perspective non-members of NARTA like Harvey Norman Group had 27.5% RMV followed by the Good Guys and Woolworths Group (Masters, Big W, Dick Smith ) each at 14.7% and on-line coming in last at 2%. I am not sure of the remainder but it would include Coles, Bunning’s, Target, K-Mart and Myer.
So this move is bad because it could allow Narta to exert the same type of pressure on its members and reduce market competition and more importantly could allow NARTA to exert the same pressure on suppliers not to supply retailers outside the established buying groups. What this means is that the brands that Narta controls will be less likely to be discounted further than the individual store choses to do to win a sale.
Brands contracted to NARTA include:
1. Acer
2. AEG
3. Altise(Omega)
4. Asko
5. ASUS
6. Beko (Narta home brand)
7. Belkin
8. Beracove
9. Beyonwiz
10. Blanco
11. Bosch
12. Braemar
13. Breville
14. Buffalo
15. Canon
16. Chef
17. Compaq
18. Conair
19. Convair
20. Crest
21. DeLonghi
22. Digitel
23. Dimplex
24. Dishlex
25. Dyson
26. Electrolux
27. Fisher & Paykel
28. Franks
29. Fujifilm
30. Fujitsu
31. Gaggenau
32. GE
33. Glen Dimplex
34. Haier
35. Highland
36. Homecast
37. HP
38. ILVE
39. Insinkerator
40. IXL
41. Jenn-Air
42. JVC
43. Kambrook
44. Kelvinator
45. Kenwood
46. Krups
47. La Germania
48. LG
49. Liebherr
50. Logitech
51. Maytag
52. Miele
53. Nikon
54. Mitsubishi
55. Morphy Richards
56. Moulinex
57. Musicway
58. NEFF
59. Olympus
60. Omega
61. Palsonic
62. Panasonic
63. Philips
64. Remington
65. Sampford IXL
66. Samsung
67. SanDisk
68. Sharp
69. Simpson
70. SMEG
71. Sony
72. StGeorge
73. Sub-Zero
74. Sunbeam
75. TCL
76. TDK
77. Tefal
78. Toshiba
79. TreSemme
80. Uniden
81. Videl Sassoin
82. WeightWatchers by Conair
83. Westinghouse
84. Whirlpool
85. Vintec
From my preliminary research these brands and the many sub-brands and products they make are less likely to be advertised at any member store or on-line at anything other than approved “negotiated” prices.
Retailers who are members include: (this list of members may have multiple store names and outlets)
1. 2nds World
2. Appliances online
3. Betta Electrical
4. Big Brown Box
5. Bing Lee
6. Bi-Rite Electrical
7. Camberwell Electrics
8. Carlson Marketing Group
9. Clive Anthonys
10. Coogans Stores
11. David Jones
12. Diamonds Camera, Video and Digital
13. Downtown Duty Free
14. E&S Trading
15. Electrical Discounters
16. Elite Appliances
17. JB Hi-Fi
18. Kambos
19. Keith Bowden Electrical
20. Kitchen HQ (KHQ)
21. Kosmos Electrical and Furniture
22. Lexar
23. Michaels
24. Michaels Appliance Centre
25. Mitchell & Brown
26. Nuance Group
27. R.T. Edwards
28. Radio Rentals
29. Retravision
30. Sony Centre (Bing Lee)
31. Spartan Electrical
32. Status Plus
33. Ted’s Camera Stores
34. Videopro
35. Warehouse Sales
36. Whitfords of Five Dock
37. Wills
38. Winning Appliances
And in NZ *(where the web site says they have 5 members but a lot of stores)
1. 100%
2. Aorangi Electrical 1998
3. Appliance Connexion
4. Arthur Barnett
5. Austin Bros 1980
6. Beds R Us
7. Chaineys Wanganui
8. Farmers Trading Company
9. Fenns Appliances
10. Fergus Appliance Spot
11. Golden Bay Services
12. Graham Electrical
13. Hewsons Radio Service
14. Hughie Hughes Electrical
15. JB Hi-Fi NZ
16. Lodge Electrical
17. LV Martin & Son
18. Magness Benrow
19. Managh Electrical
20. Matty's Electrical
21. Morris & Ockhuysen Appliance Spot
22. Murupara Electrical Centre
23. Ohakune TV Electrical Ltd
24. Powerstore
25. Richmond Electrical Ltd
26. Selectrix
27. Smiths City
28. Sturrock & Greenwood
29. T & H Appliances
30. The Appliance Shed
31. Vince Roberts Electrical
32. Wairarapa Electrical & Appliances
33. Wairoa Appliance Centre
Summary: This issue needs much more air and journalists, consumer groups and advocates must make their opinions heard. We know that regardless of the ACCC ruling NARTA members and suppliers will tacitly comply (they have doing this since 1965 anyway).
The internet allows us to be more savvy shoppers and with a little digging you can see what prices many of these goods command overseas and start to bring win-win negotiation back into the retailer equation.
