Valuable lessons from the US recovery for Australian business

There was much disagreement from two of the major US banks on the recent announcement that the US Treasury would pull back on its stimulus package early in 2014.

The view of the two largest banks was that the US isn’t yet out of recession, pointing to several high level indices. World stock markets fell, as many feared that US shoppers would stop shopping, and this would lead to a slowing in the key Asian manufacturing economics. The Aussie dollar also took a tumble.

Now I know that I may sound like a broken record, but down at the lowest level of the economy, where the shoppers meet the tills, things in the US are just fine.

No matter where you go in US malls, the vast majority of stores are busy and trading well. Volumes are good, and prices are rising. This is coming through in the gross margin and company profit numbers in the US. And no matter where you go in the OECD, US manufactured, or US designed and made somewhere else, products are doing just fine. Bought a Jeep? Wearing Levi’s? Using an Apple product or service?

All of these sales growth numbers come from a managed weak dollar, proactive focus on creating more productive companies and a strong domestic and export sales focus.

Export sales focus from the US? That traditionally meant US manufacturers selling their US-manufactured products to distributors or retailers in other countries for on-sale to shoppers.

Well, “export from the US” from 2009 onwards means selling US-designed products to shoppers anywhere in the word by whatever means available. It doesn’t matter where they are made, it matters where they are designed, how strong the brand is, how well priced they are, and how easy the products or services are to buy – in store or online. Place of manufacture or place of purchase now means little if anything to a shopper, as long as the price, convenience and service are good.

Why does this trend mean anything to us in Australia?

Well, we still live next door to the largest and fastest growing markets in the world. We have great brands, good designers and are close to the lowest cost factories on the planet. We also have well-run small to mid-sized factories in new and slightly niche sectors. High quality processed food, wine, microbreweries.

And we have world class land for growing stuff on and in. But we have some of the highest labour costs in the world, due in part to our high Aussie dollar.

As our Aussie dollar continues to fall, it will negate the impact of our high labour rates. We then need individual entrepreneurs, business and land owners to harness all the good areas in our product development mix, and our economy will change and blossom, in the same way as the US has.

CROSSMARK CEO Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores.