Business podcast: May 18th
John Collins talks to Niall Gibbons of Tourism Ireland about state visits and Suzanne Lynch discusses Disney’s Dublin opening. John McManus finds out about DCU’s new enterprise advisory board.
Current Account »
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Business podcast: March 31st
Conor Pope on Tesco’s price cuts that weren’t price cuts, Stuart McLaughlin of Business to Arts on crowdsourcing funding and Andrew Hetherington of Repak on the challenges for the recycling sector. John Collins is your host.
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Zappers and credit cards lurk in details of Finance Bill
Despite the Finance Bill being the focus of intense political debate and disagreement (although some level of consensus seems to have emerged tonight) it’s doubtful that many of our politicians have actually read the full document. At 223 pages long you could forgive them for not having read it in full. The Department of Finance provides a handy 22-page explanatory memorandum which does provide some guidance as you plough through the hundreds of pages of legalese. (more…)
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All I want for Christmas is a his ‘n’ hers light aircraft
The Society for the Containment of Christmas won’t be too happy, but with postal strikes hitting the UK and the possibility remaining of a fresh econaclypse / swine flu outbreak between now and December 25th, there’s not a moment too soon to turn your attention to this year’s Christmas runners and riders… the grown-up gifts that are not as boring as “grown-up gifts” sounds… the goodies that probably won’t be coming my way, but somebody somewhere will have the joy of giving/receiving sometime before we leave this debacle of a decade behind us.
1. An e-reader: With a new generation of tablet devices on the cusp of being launched into the techie-verse, the long-term practical benefits of single-function e-readers are far from certain. But then the ghosts of Christmas past are haunted with gadgets of varying degrees of dodgy-ness. Amazon says its Kindle e-reader (circa €240) is currently its top-selling product – more popular even than Dan Brown. Buyers will have to weigh up the aesthetic pleasures of, say, a metallic hot pink Sony Reader Pocket (€199) versus a smartly jacketed hardback.
Pros: You get to flatter your intended gift recipient by alluding to the fact that they’re a big reader without actually having to make a hazardous guess as to their taste in literature.
Cons: They’re no iPhone.2. Nintendo Wii: Despite the best efforts of erstwhile children’s TV presenters Ant and Dec to flog the delights of Nintendo’s goodies to thirtysomething kidults, sales of the Japanese company’s flagship Wii consoles are something of a dwindling fire, according to a trading update issued this week, which blamed a lack of strong software titles. Now Wii Fit Plus, the new edition of Wii Fit, has been given official backing from the NHS, which should help introduce the joys of virtual hula-hooping and ski slalom to fans of living room fitness.
Pros: Excellent “gateway drug” to real games, apparently.
Cons: Avoid the Wii Fit add-on if you want to avoid “do you think I’m fat” style accusations of insensitivity on Christmas day.3. An Icon A5 light sport aircraft: As advertised in the Christmas catalogue for upmarket US retailer Neiman Marcus. The “his ‘n’ hers” light aircraft will set you back €167,000 and comes with luxury fittings and flight training for two. Over to the brochure: “The kids are healthy. The careers are under control… You’ve earned something special, just for the two of you… Something amazing, exciting, and most certainly romantic. How about turning sci-fi into reality with a his & hers luxury sports vehicle – in the air.”
Pros: The wings fold up for easy storage. If you’ve got a massive garage.
Cons: Won’t be delivered until 2011.4. Gold bars: Ditch the ice, this year there’s nothing that says recession-proof like a slab of shiny gold – and no one can say you’re not staying true to the spirit of Christmas. The price of gold has soared this year to more than $1,000 an ounce, as super-rich investors failed to find anything as steadfastly valuable as precious metals to pour their cash into. Now Harrods is selling bars of pure Swiss gold bullion, ranging from a lipstick-sized 1g to a standard issue 12.5kg block, and they’re all on display in a mini-vault on its lower ground floor.
Pros: Will cost at least six digits, but if gold prices keep climbing, you can make a profit if you decide to bring it back to the shop. Maybe.
Cons: You could pick up Gold: The Best of Spandau Ballet for less than a tenner instead.5. Nothing: Dislike the commercialism of Christmas? Not really in the light aircraft league? Express your disdain by purchasing a big ball of Nothing this festive season, courtesy of iwantoneofthose.com. The tagline: “This lovingly crafted vial of emptiness is filled to the brim with unfettered nothingness. Free from the burden of possessions, the weight of responsibility, Nothing is as idiotic as it is brilliant.”
Pros: You can get Nothing gift-wrapped.
Cons: Might prompt an awkward ”very funny, now where’s my real present” response. -
These aren’t just any jobs…
The long, wide queue snaking around onto O’Connell Street from Findlater Place was a curious sight from the top deck of the bus this morning. My first thought: Which reality television show was holding auditions in Dublin? But they weren’t fame-seekers, they were highly qualified job-seekers. Clutching their CVs and references, they were lining up to stake their claim on one of 588 temporary part-time jobs in Marks & Spencer’s 20 Irish stores at walk-in interviews being held in the Academy Plaza hotel. First come, first served applies to job candidates as well as customers at M&S, apparently.
The jobs may just be for the bumper Christmas period, but for many workers turned dole collectors, the 16-hour a week positions could mean the financial lifeline that gets them through to the new year. What M&S’s seasonal recruitment drive – which amounts to 20,000 part-time jobs across the UK and Ireland – doesn’t signal, however, is the end of the retail slump.
Christmas, after all, is supposed to be that bit busy on the tills. If M&S wasn’t planning ahead this way, murmurs would start that its 30th year in Ireland was its last. And, of course, the good thing about hiring temporary workers, from any employers’ point of view, is that it’s easy come, easy go. If there is no queue of customers to match the queue of job applicants, then the early birds who secured a job today will find themselves out in the cold again.
But in terms of offering stable employment, M&S is still likely to be a better prospect than many retailers. Its latest sales update showed that like-for-like sales in its UK stores declined 0.5 per cent in the third quarter: negative, but barely, and a marked improvement on previous quarters. Its performance is often viewed as a bellwether for the British retail sector and wider economy. It hasn’t got the same scale or reputation here, but executive chairman Stuart Rose’s comment that “people feel better about life” does mirror the mood that emerged from today’s KBC Ireland / ESRI consumer sentiment index: things still seem bad to the average consumer, but they don’t seem quite as horrendous as they did before. (Until you’re the one to lose your job.)
Whether it’s the popular “dine in” foodhall offers, its cute 150-year anniversary vintage products or the launch of yet more womenswear ranges (the 30-plus range Indigo and the 45-plus range Portfolio), M&S always seems to have some new campaign up its moderately stylish sleeve. With often disgruntled shareholders to answer to, it has to look like its doing something to rake in the sales. Its insistence on stocking lamb flown in from New Zealand hasn’t gone down terribly well with Irish farmers in recent years, but in its favour, M&S has also been noticeably fairer about passing on the weaker sterling to euro customers than many other British retailers.
Rose has warned of a “tough” 2010, with continued “pressure on pockets”. The desperate jobseekers who arrived too late to snatch an M&S job today know all about that. These weren’t just any jobs. If you’re unemployed, they’re pretty much the only jobs in town.
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Are you hot enough to work at American Apparel?
Is it a pencil skirt or a boob tube? It’s American Apparel, so it’s probably both. The body-con, block-coloured clothing emporium opened its first outlet in Ireland earlier this month, bringing stretchy 70s-flavoured basics to the mid-market. But the big question (well, perhaps not the big question) is are its Dublin staff good looking?
This is not a cruelly random inquiry. American Apparel chief executive Dov Charney, a man who collects lawsuits the way other CEOs collect vintage cars, has been accused of engaging in “beauty profiling” - hiring and firing on the basis of someone’s looks rather than their ability.
A US staffer-cum-informant last month emailed the Gawker gossip blog the following insight: “One week, he (Charney) went on a huge tirade and made stores that weren’t doing well send in group photos. Why, you ask? He made store managers across the country take group photos of their employees so that he could personally judge people based on looks. He is tightening the AA ‘aesthetic,’ and anyone that he deems not good-looking enough to work there, is encouraged to be fired.”
The company has denied that it screens for looks and said it’s style that matters. According to a spokeswoman, its T-shirts, tunic dresses and leggings are really “art supplies” that need to be shown off in suitably cool way. But appearance-based discrimination has long been common throughout fashion retailing, as well as an unspoken truth across a number of workplaces, from the shop floor to the boardroom.
Customer-facing businesses want their customer-facing staff to have, well, nice faces. Researchers have found that beautiful people are paid more. Now this scary, eugenics-tinged practice is making its unapologetic way into retailers’ official HR handbooks with alarming alacrity (witness the outrageous “look policy” at Abercrombie & Fitch, which yesterday lost its wrongful dismissal case against a student with a prosthetic arm).
Popping into American Apparel’s new Dublin branch opposite Trinity College to see if its staff were really that gorgeous, I was distracted at the entrance to the shop by a stand displaying an article from green culture website Beanstockd, with the unnerving headline: “It’s ok to like American Apparel.” Uh huh. So there are reasons not to like American Apparel, an innocent and totally un-bothered customer might think before heading straight for the canary yellow waist belts.
In recent months, I’ve been massively entertained by the bizarre legal spat between Charney and film director Woody Allen, which went something like this: they used Allen’s image without consent, he called their ads “sleazy” and demanded compensation, they said you’re calling us sleazy, the judge said yes and your problem is?
However ethical their clothing procurement policies may be, it is never good to lose the moral high ground to Woody Allen. But I’m willing to bet that 95 per cent of the people who cross American Apparel’s threshold in search of a humble hoodie have never heard of Dov Charney, much less that he has had a number of sexual harassment cases taken against him. (Every single one of his relationships and sexual encounters with staff has been consensual, okay?)
Given what Beanstockd refers to as its “lo-fi pornographic ad campaign”, it’s not hard to conclude that sex and even accusations of sleaze are part of the sell. I think American Apparel’s ”art supplies” - the various shades of a colour detergent ad clothesline – are fabulous if you’re having a thin day or are under a certain age. There’s got to be a time and a place for gold hot pants, even if that time and place is largely confined to a Kylie Minogue music video, circa 1999. But if I buy a short skirt, I want it to just be a short skirt, free of connotations: not part of some roller-disco corporate ethos hatched by one of those tedious cult-CEO types, and especially not one with no concept of employer-employee boundaries.
American Apparel’s clothes are tight, tight, tight. If you’re usually a “small”, don’t even think about trying on anything less than a “medium”. If you’re usually a “medium”, well you might just about scrape into a “large”. And if you’re a woman over size 12, forget about it: one look at the bandeau-style underwear will tell you everything you need to know about its target customer: young and/or flat-chested.
So were the sales staff stunningly attractive? Of course. Forget about brushing up your CV, job-hunters: book a session with your local portrait photographer and get some smartly lit “portfolio” pics taken. We’re all models now.
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Ikea – fiscal stimulus or predatory giant?
Ikea finally opened its doors in Ballymum this morning after years of, in my opinion, over the top media attention and speculation. Apparrently about 3,000 people passed through the doors during the first two hours of trading at the Swedish home furnishings giant. That’s pretty respectable in the teeth of a recession. Of course if they had opened at the height of the Celtic Tiger, as they hoped to do, the scences would probably have been similar to the chaotic opening in Edmonton, North London in 2005 which saw five people hospitalised and the store closed after 30 minutes.
The possible economic impact of Ikea on an already decimated furniture sector will be watched closely. Gerry Harvey, the Aussie businessman behind Harvey Norman, has been telling anyone who will listen about how his 14 Irish stores are hemorrhaging money, while high profile stores and chains such as Habitat, Arramount, Land of Leather, Classic Furniture and Jim Langan have got into trouble or ceased trading.
Luckily Irish entrepreneurs are seeing the potential in the arrival of the kings of the flatpack. If you don’t like allen keys and confusing intructions take your choice between any number of out of work carpenters and handymen who will do the task for you such as FlatpackUnpack.ie and Notboxes. Personally my favourite is the slightly crudely named Simple Assembly Me Hole.
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Chunky sandwiches, even chunkier rents
Where has it all gone wrong for O’Brien’s Irish Sandwich Bars? Was it the unfashionably carb-heavy trademark thick-cut bread? Was it simply that competing franchises were newer, smarter and tastier? After O’Brien’s was placed in examinership by the High Court yesterday, its founder Brody Sweeney was in no doubt that the collapse of the property boom was the fly in the ointment – or the cockroach in the sandwich, as it were. It may have been chunky bread stacked behind its deli counters, but those were even chunkier rents that its franchisees were seeing drain away into the bellies of over-nourished landlords.
“We have had to close a number of stores as some landlords remain intransigent and refuse to reduce rents and some of our franchisees have been struggling to pay their rents for the same reason…” Sweeney is quoted as saying in today’s Irish Times report. You can also read Barry O’Halloran’s analysis and background to the High Court move here.
Of course, it’s not over yet for O’Brien’s: under an examinership, it will be temporarily protected from its creditors while it works on a rescue plan.
If only these same intransigent landlords with their cursed upward-only rent reviews would adopt the same relaxed approach to negotiation that Sweeney claims to have done when he expanded the O’Brien’s franchise overseas. In Making Bread: The Real Way to Start Up and Stay Up in Business, his (perhaps unfortunately titled in retrospect) “how I made it” book, Sweeney describes how in 1997 he was settling into a master franchise deal for 11 countries in Asia with a Singapore-based gentleman by the name of Hugh Hoyes-Cock:
“Just as we were about to sign the agreement, Hugh said to me: ‘What about Laos and Cambodia?’ ‘Go on then,’ I said, ‘you can have them’ – and thus I ‘gave away’ two sovereign countries for nothing!”
These days, we might count ourselves ridiculously lucky to get a free biscuit with our comfort coffees. If that does happen, be aware that the franchisee may merely be de-stocking itself of all O’Brien’s-branded produce as part of a grand plan to start over with a new name on the shopfront – and presumably cheaper lunches for these deflationary times.
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Woolly thinking from Woolies
It would be easy to view Woolworths’ decision to accept calls from distressed company specialists Hilco as further evidence of the economic malaise that’s sweeping the retail sector just in time for Christmas. And it is, to some extent. But it is also a glaring example of what happens when companies fail to innovate and respond to new competition.
The 800-store strong British retailer, affectionately known (until now) as Woolies, has no direct equivalent in Ireland’s shopping precincts, so if you haven’t graced one, here’s an idea of what they sell: DVDs, toys, baby buggies, hair straighteners and the occasional book. My first Sindy doll hailed from the Torquay branch of Woolworths circa 1985. She wore, as I recall, a monochrome animal print dress with hot pink PVC leather jacket. This is probably about as racy as Woolworths has ever been. Since then, like Sindy herself, the company has been overtaken by fitter and leaner rivals – most obviously when the likes of Tesco discovered they could trouser super-margins by stocking their shelves with non-food items.
Times, and consumer habits, changed. Woolworths’ fondness for offering cut-price CDs stopped being quite so smart when music sales migrated online, while selling sweets and the kind of tat that can be found for cheaper in pound shops became increasingly anachronistic. Now Woolworths itself, just one year shy of its centenary, may be purchased for £1.
There is an Irish connection. The key players in any Woolworths sale will be GMAC Commercial Finance and a company called Burdale Financial. The latter is a division of Bank of Ireland. Together they lent Woolworths £385 million last January, which must have seemed like a good idea at the time.
In what seems like a tragic mistake in hindsight (although the deal may not have been completed in time), Woolworths rejected a bid approach worth £50 million for its stores in August. The approach came from a consortium led by Icelandic investor Baugur, which thanks to the collapse of the Icelandic economy is now in the business of flogging off parts of its retail empire rather than adding to it. Now Burdale and GMAC have appointed Deloitte to represent them in talks with the stricken shops. They may have more success trying to spark a Sindy revival.
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The price is right
Aren’t prices coming down supposed to be a good thing? Yes, if you’re looking for a cut-price Christmas. And yes, if you hold the reasonable (if not always realised) expectation that retailers will adjust their price tags down when sterling weakens and petrol stations will pass on the full value of, say, a halving in the cost of crude oil.
But what if the global forces of recession mean prices just keep on falling? Figures from the Central Statistics Office (CSO) today show that retail sales continued to decline in September at a rate that’s close to August’s 24-year low, with very little pick up in shopping activity after a washout summer that did not exactly send the tills buzzing. The result is that half-price tins of biscuits are likely to be in long supply this Christmas.
Those of us who like a good bargain will appreciate the odd short-term bout of desperation on the part of (with apologies for the jargon) consumer-facing businesses – you know the kind of thing: discounts on discounts, 32 inches of flatscreen glory for the price of 26, seat sales. But if these mutate into a sustained period of deflation, it could create a very different kind of headache for cash-strapped, indebted households. Rather than suffer the pain of seeing their spending power eroded by inflation, in a deflationary era, they could see the real value of their debt increase.
Ominously, a debt-deflation spiral was the defining feature of the Great Depression.
In Ireland, we’re some way off hitting even a temporary period of deflation – yesterday’s CSO consumer price index shows that while prices are falling fast, inflation is still running at the rather high annual rate of 4 per cent. This rate won’t drop into negative territory until next May, one economist predicted yesterday. Even then, the dip into deflation mode will be largely the result of interest rate cuts and an unwinding of 2008’s spike in energy and food prices.
So it would seem that there’s plenty of time for policymakers to step in, slash interest rates further and stop consumer demand from going into total freefall. Still, it’s entirely possible that this time next year, rather than complaining about “rip-off Ireland”, we will actually be praying for prices to start going up.
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