MARKETING LAW
Introduction
In any free market, there must be the availability of willing sellers and informed buyers who are able and willing to buy. Even though there are many types of such markets, we shall base our discussion on our Australian perfect competition market. In addition, we shall look at two types of retailers that are popularly known in our retail sector’s market. These companies include JB Hi-Fi and Harvey Norman companies. However, without laws present in the market system, the chances of the sellers manipulating the existing buyers through ineffective products and highly priced products may be experienced. It is for this reason that I shall focus on the description of the existing competition in the Australian market and the consumer protection laws available as well.
The competition present in the Australian market
Description of the market
The Australian market is a mixture of different economies. The market is highly driven by four sectors that include manufacturing, trade, financing, and services. Our case description will not focus on all the sectors rather the trading one since the selected companies emerge from the sector. In this trading sector of the market, there are many traders who offer a variety of goods to the available customers. These traders can be categorized into several categories that may group them according to the products offered, the mode of goods presentation as either online or physical stores, as well as the market size they cover. It possesses a perfect competition market structure as the customers are very well informed of the presence of various goods and their process. In addition, the availability of many sellers in the market completes this condition.
The JB Hi-Fi Company description
A short summary of this company is that its shares are listed under the Australian Security Exchange (ASX) for the public purchases. The company is majorly involved in the selling and distribution of consumer goods from its 2 locations in New Zealand and Australia. The company was founded in the year 1974 by John Barbuto in Keillor East. However, the founder, John, later sold the company to 3 people including Rodd David, Bouris Richard, and Caserta Peter in the year 1983. The three people expanded its operations by turning it into a chain store by the year 2000. As of this year, the company had moved into Sydney and Melbourne and had a total of 10 stores. However, it was listed in the ASX in the year 2003 (JB Hi-Fi 2019).
The Harvey Norman Company description
Just as the JB Hi-Fi Company, the Harvey Norman Company has its shares also listed on the Australian Security Exchange (ASX) for public purchases. Unlike JB Hi-Fi Company, Harvey Norman firm operates in the multi-national level by providing various consumers goods such as electronics, furniture, communication, and other electronics for either commercial and/or personal uses. The company traces its origin to back in the year 1961 when Ian Norman and Gerry Harvey started their first store. By this time, the story specialized on consumer electronics especially the door-to-door delivery of vacuum cleaners. However, the store currently owns more than 280 franchise stores located in different countries including located in Australia, South-East Asia, Europe, and New Zealand (Harvey Norman. 2019).
The competition in the Australian retail sector
As we saw in the earlier section, the Australian market system is composed of various sellers that emerge from both the local and international businesses. Thus, the availability of many consumers in the market makes the available businesses to compete for their share. For example, the introduction of the H&M and Zara, among many other stores, into the market made the dominating business, including Harvey Norman Company, start new ways of promoting themselves and their businesses. Below are the key facts that describe the Australian retail industry and the competition levels in it.
Change in consumer spending habits
Over the recent past, the spending habits of the Australians have changed due to the change in the economic conditions. Looking at the trends in changing consumer patterns from the Australian Bureau of Statistics as from the year 1984, household expenses decreased from 39% in the year 1984 to 33% in 2009 and 2010. Further, spending habits decreased to 30% in the years 2015 to 2016. When looking at the spending habits of the couple households with dependent children, the expenses reduced from 36% in the year 1984 to 28% as of the years 2015 to 2016. This pattern simply means that these companies, including JB Hi-Fi and Harvey Norman, experienced a reduction in revenues despite the constant or increasing values of input costs and inflation (BT Financial Group Pty Limited [AU] 2018). Thus, the retail stores have been forced to maximize their competition levels so as to gain a competitive advantage over their competitors. For example, on October 1st, 2015, the Harvey Norman Company’s New Zealand branch violated the Australian Competition and Consumer Commission’s (ACCC) law on consumer guarantees (ACCC 2018). On this day, the store offered cheap furniture to all its consumers as from midnight to around 8.00 am. However, the company later denied such sales citing that it was a system genuine error and never delivered such goods. This is one of the ways firms are trying to manipulate the little expenditures that their customers make for the benefit of their brand.
Introduction of foreign traders into the Australian market
Since the market is open for every player to join, there has been the introduction of many foreign firms into the market resulting in the increased competition. For example, the giant American online retailer, Amazon, joined the Australian with cheap products and faster means of delivering goods to the consumers. First, the retailer offered a chance to other smaller retailers to make their products visible to every Australian consumer. As a result, more customers had the chance to choose the product they wanted from the hundreds of them that are available. This fact resulted in firms like JB Hi-Fi losing some of their consumers. It is this fact that made JB Hi-Fi Company violate the ACCC’s competition law in the year 2016. To be specific, on 11th August 2016, the JB Hi-Fi Company manipulated the law by trying to acquire the Good Guys Discount Warehouses (ACCC 2016). Even though it was an act accepted in business, many people viewed it as a way that the company was eliminating competitors. Secondly, the introduction of Amazon stores in the country has contributed to the massive reduction in the prices of goods as well as shipping costs. In return, the local companies, including Harvey Norman and JB Hi-Fi firms, to reduce their prices as well. This fact led to another scandal by the JB Hi-Fi Company in the year 2006 against the ACCC’s competition terms (Appliance Retailer 2006). In this case, the company practiced comparative advertising in its catalog presented to the customers. It was particularly seen to reduce its selling prices to match those of their competitors by offering discounts.
The need to adapt to the current situation
Due to the fact that new players have joined the market and that consumers have changed their spending habits, many retailers in the Australian market have got no other option other than adapting to the trends for their survival. As we have seen in the above section, the entry of Amazon into the Australian market has not only offered free shipping of goods but also resulted in acquiring many of the Australian consumers. In order to regain customers, various retailers may practice diverse ways of promotions. For example, even before the introduction of Amazon to the Australian market, the Harvey Norman stores were involved in breaching of the selling and competition terms stated by both the ACCC and the Australian Consumer Law back in the year 2011. First, the store opened a website that required its Irish stores to export video games directly to the Australian customers breaking the business rules on imports and exports. Secondly, the company, Harvey Norman, drove a misleading advertisement that promoted 3D televisions in the same year. In the advert, consumers were lured into purchasing 3D TVs so as to watch the AFL and NRL Grand Finals but they could not even receive the said 3D signals. This action resulted in the company being fined a massive fine of AU$1.25 million.
As the competition is growing between the giant retailer Amazon and the local retailers, the JB Hi-Fi stores have also strategized itself to stay relevant in the same market. As of the year 2018, exactly one year after Amazon was introduced, the company backed itself up through enhancing customers’ experience and training its employees into better use of online stores and database to overcome Amazon’s influence. As a result, the company’s shares were reported to have boomed unlike those of other similar stores (CHEN 2017). It is for the reason of high competition levels that many firms must adapt or simply wait to get out of business.
Conclusion
The Australian market is categorized by high levels of completion among similar businesses. If these competition levels are not well monitored, they may force various businesses to use or implement unethical ways in their daily operations. For example, retailers may end up selling faulty products or advertise their products with the wrong information. Such cases have been seen in the Australian retail industry. To begin with, the Harvey Norman was charged against distributing catalogs with wrong information in the year 1995, selling misinformed 3D TVs that could not receive 3D signals in the year 2010, and denying the truth on offering cheap furniture through the New Zealand stores in the year 2015. As of the JB Hi-Fi stores, it was forced to re-strategize its operations in the year 2018 in order to survive in the market and practice comparative advertising against the ACCC’s completion laws. These are just a few examples that show how much the Australian market is competitive now that it operates under the perfect competition market structure. Thus, the existence of the Australian Competition and Consumer Commission laws, as well as the Australian Consumers Laws, must be present to prevent such unethical acts from befalling the consumers.
References
ACCC. 2016, August 11. ACCC will not oppose JB Hi-Fi move on the Good Guys. Retrieved from https://www.accc.gov.au/media-release/accc-will-not-oppose-jb-hi-fi-move-on-the-good-guys
ACCC. 2018, July 12. Consumer rights & guarantees. Retrieved from https://www.accc.gov.au/consumers/consumer-rights-guarantees
Appliance Retailer. 2006, December 7. JB Hi-Fi investigated by ACCC over comparative advertising. Retrieved 2019, from https://www.applianceretailer.com.au/2006/12/ksogvksgio/
BT Financial Group Pty Limited [AU]. 2018, February 5. Competition for the Australian retail sector may bring upside. Retrieved from https://www.bt.com.au/insights/perspectives/2018/02/competition-for-Australian-retail.html
CHEN, Y., 2017. Estimation of Stock Price: A Case Study of JB Hi-Fi Limited. DEStech Transactions on Social Science, Education and Human Science, (msie).
Harvey Norman. 2019. Harvey Norman | Shop Online for Computers, Electrical, Furniture, Bedding, Bathrooms & Flooring. Retrieved from https://www.harveynorman.com.au/
JB Hi-Fi. 2019. JB Hi-Fi | JB Hi-Fi – Australia’s Largest Home Entertainment Retailer. Retrieved from https://www.jbhifi.com.au/
