04/02/2009 - 22:00

Retailers back core values in slowdown

04/02/2009 - 22:00


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Small retailers find service and customer loyalty pay dividends in a downturn.

IF there is a positive to be taken from the current economic climate, it is that Western Australian small businesses appear to be returning to core values.

Food retailer Kakulas Brothers and clothing retailer Marchesi Menswear both report quality, service and customer loyalty are seeing them through tough times.

Marchesi Menswear co-owner Ian Marchesi said demand remained steady, with trading over the holiday period comparing favourably to last year.

Mr Marchesi's family-owned clothing store styles itself on the traditional retail values of quality product combined with customer service.

"If you treat people as you expect to be treated yourself, people will come back to you," said Mr Marchesi.

"We've been running for 70 years. Being a long established business has been a major benefit," he said.

Kakulas Brothers co-owner Evan Kakulas, whose family has run the food retailer for 80 years, said companies with a longer lifespan would weather better.

Mr Kakulas reported an increase in trading and believed people came to stores like his, which provide essential food items at lower cost, more during economic slowdowns.

"We import direct, we have low margins and we own our own property. We are able to pass on those savings," said Mr Kakulas.

Mr Kakulas noted a change in spending, with consumers moving away from the gourmet foods.

Pressure in the economy was most evident in the jobs market, which had undergone a massive swing over the past six months.

"Six months ago, I advertised a job and I got two applicants. A few weeks ago, we had a job going and I got forty applicants," he said.

Economic analyst Shane Kelly said when consumer and shareholder confidence were down, being a listed company could be detrimental.

"What we're seeing in the context of the global financial crisis is the businesses that have strategic value can be absolutely hammered in the market through no fault of their own because they're a listed stock," Mr Kelly said.

"That's not happening to the unlisted companies. They're able to go about their business without losing 70, 80, up to 90 per cent of their value and going down the gurgler."

At the big end of business, low-cost retail chain Woolworths reported Christmas sales were up $2.1 billion, while sales at Big W increased by 9.5 per cent.

High-end retailer David Jones experienced a downturn in sales of 7.5 per cent.

Non-essential trading appeared to be suffering, with blind retailer Kresta Group issuing a downgrade, car audio equipment retailer Strathfield going into administration, and Fantastic Furniture expecting a meagre profit growth of less than 10 per cent.

At the budget end, Australian Discount Group, which owns Crazy Clark's, Sam's Warehouse and Go-Lo, has gone into administration.


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