NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Small Business

Nathan Field: Tough times for store owners in the internet age

By Nathan Field
NZ Herald·
14 May, 2012 05:30 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Well-stocked locations and knowledgeable staff are no longer the competitive advantages they once were. Photo / Thinkstock

Well-stocked locations and knowledgeable staff are no longer the competitive advantages they once were. Photo / Thinkstock

Opinion

Retailers need to accept the landscape has changed, writes Nathan Field.

On a recent US holiday, my wife and I found ourselves hunting for an Apple power cable in a Best Buy store (think of an aircraft hangar-sized Dick Smith).

When a sales assistant led us to the right section, we balked at the US$85 ($108) price tag, since we only needed the cable for a few weeks.

The assistant then whispered a solution - as long as we kept the box and the receipt, we could use the cable for the duration of our road trip, then take it back to any Best Buy store for a full refund.

Perfect, we said, and hurried to join the long checkout queue.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

But after a few minutes of slow progress, we realised we'd joined the returns line, chock-full of people doing exactly what we were planning to do in three weeks' time.

The checkouts were on the other side of the store and they were virtually empty.

The experience drove home just how tough it is for traditional retailers to compete in the internet age.

It's often said that stores like Best Buy are turning into show rooms for Amazon but it's even worse than that.

Customers can not only sample a product in-store, they can take it home, make sure it works to their satisfaction, then claim the refund and buy it cheaper online.

Discover more

Business

NZ Post to assess GST for overseas website shoppers

25 Apr 05:30 PM
Retail

Web-based retail sales tipped to peak

29 Apr 05:30 PM
Retail

Countdown launches iPhone shopping app

10 May 09:00 PM
Retail

Retail sales slump after Cup boost

13 May 11:00 PM

No wonder Best Buy's share price has fallen 33 per cent over the past year.

And it's not just Best Buy finding things tough - electronics retailers around the world have been suffering from the rise of online competition.

Advertisement
Advertise with NZME.

The previous number two in the US, Circuit City, went bust in 2009, Dixons in the UK has been furiously rationalising its network, and earlier this year, Woolworths announced plans to close up to 100 Dick Smith stores in Australia and New Zealand.

There's not much sympathy out there for retailers like Best Buy.

Consensus opinion seems to be that they're out of touch with changing consumer needs, much like other big-box casualties such as Borders and Virgin Megastores.

Having well-stocked locations and knowledgeable staff are no longer the competitive advantages they once were.

The new generation of customers expects to milk those services for free and the retailer who invariably rings up the sale will be the one with the best price.

Best Buy argues, with some validity, that Amazon has an unfair price advantage because it doesn't collect sales tax in many US states.

Advertisement
Advertise with NZME.

Amazon has been running around striking deals with these states, using jobs as a bargaining chip in order to preserve its tax exemptions.

But once the sales tax arbitrage is over, it's inevitable that some of Amazon's price advantage will disappear, especially with shipping costs on the rise.

So will a level playing ground revive Best Buy's flagging fortunes? Not necessarily.

Amazon's competitive advantage isn't totally based on avoiding tax.

It also has convenience and economies of scale in its favour, not to mention a remarkably patient shareholder base that allows management to pursue top-line growth at the expense of profits.

To compete with a thin margin beast like Amazon, Best Buy needs to think outside the box.

Advertisement
Advertise with NZME.

It's certainly trying - closing down large stores, boosting its online offering, rewarding its best customers - but judging by the ugly share price action the market doesn't think it's moving fast enough.

New Zealand retailers are facing similar challenges, and like Best Buy, they're pointing the finger at the politicians.

They argue that because consumers don't pay GST on imported online goods under $400, the system isn't fair and equitable.

However, lowering the threshold to include every online purchase is likely to be both fiddly and costly.

And even if a new collection system could be implemented effectively, it wouldn't stop the march of online retail.

Arguments about the unfairness of online competition are taking place the world over. It seems like a losing battle.

Advertisement
Advertise with NZME.

Ultimately, store-centric retailers are going to have to deal with the fact that consumers, not governments, are pushing sales online.

It's a bitter pill to swallow for those who've invested in a physical footprint, but crying foul isn't likely to win any customers back. Accepting that the retail landscape has changed is the only way forward.

Nathan Field is a senior equity analyst at Gareth Morgan Investments. Any opinions expressed in this column are Nathan Field's personal views. These opinions are general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial products. Readers should seek independent financial advice before making an investment decision.

Save

    Share this article

Latest from Small Business

Premium
Business|small business

Controversial Kiwi start-up, once worth $38m, folds in New York

19 Jun 02:37 AM
Premium
Small Business

Small Business: Weaving culture and quality with Nodi Rugs

15 Jun 05:00 PM
Premium
Media and marketing

‘Fastest to $20m revenue’ - Tracksuit's rapid growth, $42m raise

11 Jun 05:00 PM

Jono and Ben brew up a tea-fuelled adventure in Sri Lanka

sponsored
Advertisement
Advertise with NZME.

Latest from Small Business

Premium
Controversial Kiwi start-up, once worth $38m, folds in New York

Controversial Kiwi start-up, once worth $38m, folds in New York

19 Jun 02:37 AM

It says it's collateral damage in the city's war on Airbnb and will try again elsewhere.

Premium
Small Business: Weaving culture and quality with Nodi Rugs

Small Business: Weaving culture and quality with Nodi Rugs

15 Jun 05:00 PM
Premium
‘Fastest to $20m revenue’ - Tracksuit's rapid growth, $42m raise

‘Fastest to $20m revenue’ - Tracksuit's rapid growth, $42m raise

11 Jun 05:00 PM
Premium
Small Business Q&A with Willy Benson of PortaSkip

Small Business Q&A with Willy Benson of PortaSkip

Help for those helping hardest-hit
sponsored

Help for those helping hardest-hit

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP