Competing on cost
We are a blessed country.
Something many of us take for granted.
On an asset per capita basis, we are the richest country on the planet by a considerable margin.
We have a low population base and a very big land mass. We have every natural resource you could dream of.
We enjoy a form of democracy that ensures relative political stability. Our economy is the envy of the developed world and much of the rest of the world.
There is a DNA to Australia that makes it unique and wonderful.
We struggle as a nation to fully recognise that and to celebrate it.
Something the French, the Italians, even the Americans have no problem with.
This country has no volume. This country has high labour rates.
This country has many unique things, but it is a long way from major population centres.
We will never win trying to be a low cost operator. It is impossible for us to compete against bigger countries with low labour costs, low taxes and even lower costs of doing business on a ‘cheapest price’ basis.
So why are we trying to emulate the strategies of competitors who will always beat us?
Why are we trying to be a cheap tourism destination when the value of the dollar and our cost of doing business will never make that work?
We have a unique Australian culture, beautiful natural resources, the world’s largest and most amazing marine park (the Great Barrier Reef) to name but one delight we could leverage more productively, and at a time when the demand for unique, magical, immersive, indulgent travel is increasing we keep building cheap, bland infrastructure to fight on the wrong battlefront.
This country is almost made to deliver high cost, low volume immersive tourism that is among the most desirable in the world.
The same is true in retail. Australia must globalise our retail industry.
The low price volume market will consolidate and stabilise with linkages between major, global players that can leverage volume and rationalise international pricing.
We don’t fit. Where we do fit is facing up to our input costs as France does and realising that where we can win is in valuing up not pricing down.
Finding our own unique voice and learning how to tell engaging stories that global shoppers are attracted to and value.
Building world class customer value propositions, customer experiences, and seductive products and services that fit squarely in specialty retail for a world market.
Price down and you’ll get killed by the global giants.
Value up, find a global customer base and right size your business and you’ll win.
It is as clear as that.
* Peter can be contacted on (02) 9481 7215 or at www.redcommunication.com.