14 September 2012: Myer strategy and iPhone NFC discussion

Health industry largest employer in the country: 440,000 jobs in Health created since May 2003, almost 12 percent of the workforce. One-fifth of the 2.3 million jobs created in the last decade have been in health care. Greater shift towards services sector, common across developed world as countries become more service-sector oriented as they become richer. Retail slowed, from 75,000 new jobs between 2003 to 2007, to 5,300 jobs from 2007 as households become more cautious about spending, offshore competition increases, and technology places pressure on the sector.  Mining added 181,000 jobs but only accounts for 2.3 percent of all Australian jobs. Manufacturing hit the hardest but still fourth largest employer at 8.4 percent of all Australian jobs. [CR: Interesting that retail job slowdown attributed to technology, I wonder if this is reflected in an increase in tech-related jobs.]

Myer investment in staff paying off but not in share price: Investment of $17 million in extra staff, contributed to 14.3 percent decline in net profit to $139.3 million for 12 months ending July. Bottom line profit fell 12.7 percent due to higher wages, occupancy costs, and utility bills. Sales slipped 1.3 percent to $3.12 billion due in part to existing catacgories such as white goods and gaming consoles. Five-point strategy: 1) improve customer service; 2) grow exclusive brands; 3) close marginal stores; 4) strengthen customer loyalty; and 5) build a fully integrated ecommerce business. Online sales doubled in 2012 but still represent less than 1 percent of total revenue, target to increase to 10 percent in five years. CEO Bernie Brooks: "If we hadn't invested in customer service, we would have lost our customer franchise and exposed ourselves even more to the world wide web. We had to take our medicine and balance that against the long term view." Result: customer complaints are down, conversion rates improved, average spend rose for the first time in five halves, and sales growth higher for stores that hired extra staff. [CR: Related to observations made on David Jones "style advisers" back in July.]

iPhone NFC discussion: Apple  not including NFC chip in iPhone 5.0 could be seen as as controlling the market, given its 80 percent market share. Global standard for NFC has been in place since 2004, chip included in Samsung Galaxy phones for more than a year. Commonwealth Bank of Australia shows exponential growth since introduction of NFC in 2011, its Kaching application required iPhones to have an iCarte sleeve. Westpac is trialing NFC solution Tap and Pay, roll out date is undecided. Of Westapc's 8 million customers, 3.4 million are actively using online channels, 1.5 million using mobile banking channels. One reason for the expected delay is that Apple is determining how to lock payments up in the Apple ecosystem. [CR: As soon as the technology is there, the applications will proliferate across the market.]