Latest / What the Flux / ACCC explores Coles & Woolies breakup | Nike tripping over its own laces | AppleTV+'s $1 billion burn

Transcript

ACCC explores Coles & Woolies breakup | Nike tripping over its own laces | AppleTV+'s $1 billion burn · What the Flux

• 0:05
  Speaker 1: This is what the Flux. I'm Brett and I'm justin
• 0:07
  Speaker 1: and it's Monday, the twenty fourth of March, doesy boy.
• 0:10
  Speaker 2: The average basket size of online shopping orders has dropped
• 0:13
  Speaker 2: to a new ten year low, and that is according
• 0:16
  Speaker 2: to Australia Posts.
• 0:17
  Speaker 1: They would know. I get this.
• 0:18
  Speaker 2: The basket size has dropped to ninety five buck per order,
• 0:21
  Speaker 2: which is lower than any other year recorded and that
• 0:24
  Speaker 2: doesn't even adjust for inflation. So Australia Post reckons that
• 0:27
  Speaker 2: consumer spending will start to look more normal in the
• 0:30
  Speaker 2: back half of twenty twenty five.
• 0:32
  Speaker 1: Seeing Fox Am, have you had the term dollar cost averaging.
• 0:35
  Speaker 1: It's an investment strategy that relies on consistent investments over
• 0:39
  Speaker 1: a period of time. And we cover the pros and
• 0:41
  Speaker 1: cons of dollar cost investing in the Flux app this
• 0:43
  Speaker 1: week and it is an absolute belt out. So if
• 0:45
  Speaker 1: you're interested investing in twenty twenty five, this is one
• 0:47
  Speaker 1: of the articles that you need to check out.
• 0:49
  Speaker 2: Three belt worthy stories today, Dozzy boy, let's do it
• 0:52
  Speaker 2: for our first. The agable See has warned that Cole's
• 0:55
  Speaker 2: and Woolies will not be broken up, but they will
• 0:58
  Speaker 2: face a whole lot of screw.
• 1:00
  Speaker 1: You know that feeling when you're at the self check
• 1:01
  Speaker 1: out and suddenly the attendants hovering over your shoulder. B Man,
• 1:05
  Speaker 1: pretty much where Colson Woolies are right now with the
• 1:07
  Speaker 1: atrial seed.
• 1:07
  Speaker 2: So, Josie, wait, we know that Coles and Woolies are
• 1:09
  Speaker 2: the big Kahunas of the Australians supermarket industry.
• 1:13
  Speaker 1: Yeah, they've got more than sixty five percent of the
• 1:14
  Speaker 1: supermarket market share. They definitely dominate the market.
• 1:18
  Speaker 2: Or, as the ah Trible C calls them, the oligopolies
• 1:20
  Speaker 2: of the supermarket universe.
• 1:22
  Speaker 1: Now be Man. Just over a year ago, the ah
• 1:24
  Speaker 1: Trible Sea, which is a competition to watch Shog, began
• 1:26
  Speaker 1: investigating the supermarket chains.
• 1:28
  Speaker 2: With a very real threat that they could have been
• 1:30
  Speaker 2: forced to break up its divisions.
• 1:32
  Speaker 1: The idea would be to make the supermarket industry more competitive,
• 1:35
  Speaker 1: the Joseie woit.
• 1:35
  Speaker 2: Late last week, the ah Trible C's four hundred and
• 1:38
  Speaker 2: forty one page report was released as well as its
• 1:41
  Speaker 2: twenty recommendations and in.
• 1:43
  Speaker 1: The report be Man they speak about how Coles and
• 1:45
  Speaker 1: Woolies as some of the most profitable supermarket businesses in
• 1:47
  Speaker 1: the whole wide world, and it also speaks about the
• 1:50
  Speaker 1: rise of shrink flation to obscure pricing transparency. But b man,
• 1:54
  Speaker 1: there was no recommendation to break up the big dogs.
• 1:57
  Speaker 1: Next minute, the share price of Coals and Woolies both
• 1:59
  Speaker 1: jumped over.
• 2:00
  Speaker 2: Very keen to know, jusey boy, what is the key
• 2:02
  Speaker 2: learning here?
• 2:03
  Speaker 1: Tri Inflation is when a product gets smaller but the
• 2:06
  Speaker 1: price stays the same or even goes up.
• 2:08
  Speaker 2: Like when you open a bag of Chippy's and realize
• 2:11
  Speaker 2: it's eighty percent air and twenty percent regrant.
• 2:15
  Speaker 1: It's a sneaky tactic that's used by companies to protect
• 2:18
  Speaker 1: their profit margins without technically increasing their shelf prices.
• 2:21
  Speaker 2: Instead of charging more for a block of chocolate, for example,
• 2:24
  Speaker 2: they might reduce it from two hundred grams to one
• 2:27
  Speaker 2: hundred and eighty gram.
• 2:28
  Speaker 1: Hoping consumers won't notice the change, But.
• 2:31
  Speaker 2: The double whammy is even worse. A real example, jusi boy,
• 2:34
  Speaker 2: is Jiff bathroom cleaner your personal favorite? It was two
• 2:37
  Speaker 2: dollars fifty for seven hundred meals. That was in twenty
• 2:39
  Speaker 2: twenty two, but.
• 2:40
  Speaker 1: By twenty twenty four, it was four dollars for five
• 2:42
  Speaker 1: hundred meals.
• 2:43
  Speaker 2: May I just confirm here that that is sixty percent
• 2:46
  Speaker 2: more expensive for forty percent less jiff and that is.
• 2:49
  Speaker 1: Not a one off. B Man and the Ah Triple
• 2:52
  Speaker 1: ain't happy about this little one.
• 2:53
  Speaker 2: They want clearer labels so shoppers are not pamboozled at
• 2:57
  Speaker 2: the checkout.
• 2:57
  Speaker 1: Because let's be honest, be man, no one wants to
• 2:59
  Speaker 1: pay more for less.
• 3:01
  Speaker 2: For our second story, Nike has seen its revenue dropped
• 3:05
  Speaker 2: by nine percent in the last quarter and has warned
• 3:07
  Speaker 2: investors that there is more pain to come.
• 3:10
  Speaker 1: Nike tripping over its own laces. Here, be man, so
• 3:12
  Speaker 1: tell me what's going on.
• 3:13
  Speaker 2: Nike was founded back in nineteen sixty four and has
• 3:16
  Speaker 2: grown to become the world's largest sportswear brand.
• 3:19
  Speaker 1: We're talking global sales topping fifty one billion US dollars
• 3:22
  Speaker 1: a year.
• 3:22
  Speaker 2: Fun fact, Nike's Swosh logo was actually designed by a
• 3:26
  Speaker 2: UNI student in nineteen seventy one for just thirty five dollars.
• 3:29
  Speaker 1: Imagine if she took stock instead.
• 3:31
  Speaker 2: Now, jazz boy, Nike has just released it's third quarter results,
• 3:34
  Speaker 2: which were better than last quarter but still not great.
• 3:37
  Speaker 1: Yeah, It's revenue filled nine percent year on year to
• 3:39
  Speaker 1: eleven point three billion US dollars for the quarter.
• 3:41
  Speaker 2: Now, interestingly, the decline was less than what investors were
• 3:45
  Speaker 2: actually expecting here.
• 3:46
  Speaker 1: But be Man, Nike warned investors to lace up because
• 3:49
  Speaker 1: its revenue and profit will likely decline even further in
• 3:52
  Speaker 1: the next quarter.
• 3:53
  Speaker 2: But ultimately it came down to the inventory that they're holding.
• 3:56
  Speaker 2: It just ain't going down fast enough, be Man, and
• 3:58
  Speaker 2: as a result, Nike share price nearly five percent following
• 4:01
  Speaker 2: this news.
• 4:02
  Speaker 1: So what is the key leading here?
• 4:04
  Speaker 2: Inventory management is the fine art of having just enough
• 4:07
  Speaker 2: stock to meet demand without drowning in unsold gear.
• 4:10
  Speaker 1: For a business like Nike, managing infantry effectively is critical
• 4:14
  Speaker 1: for their profitability.
• 4:15
  Speaker 2: You see juz boy. Having too much old stock in
• 4:18
  Speaker 2: the warehouse increases cost significantly.
• 4:20
  Speaker 1: It might mean they need bigger warehouses to hold the
• 4:22
  Speaker 1: old stock and new season stock. At the same time,
• 4:24
  Speaker 1: it means longer time for stock to be sitting on
• 4:26
  Speaker 1: the shelf and often extra handling fees as well, So
• 4:29
  Speaker 1: businesses can lose out on potential sales of newer, higher
• 4:32
  Speaker 1: margin products.
• 4:33
  Speaker 2: In Nike's case, inventory dropped by two percent this quarter,
• 4:36
  Speaker 2: but sales declined nine percent.
• 4:37
  Speaker 1: Meaning they're still working through their surplus old stock.
• 4:40
  Speaker 2: And to sell the stock they need to discount and
• 4:42
  Speaker 2: do promotions, and basically they're giving away the old Nike.
• 4:45
  Speaker 1: Wheel, which no company really wants to do.
• 4:47
  Speaker 2: So solving its inventory challenges is essential for Nike to
• 4:51
  Speaker 2: not only boost its financial performance but also to stay
• 4:54
  Speaker 2: competitive in a very crowded sportsware market.
• 4:57
  Speaker 1: Yeah, for our third and final story, Apple TV Plus
• 5:00
  Speaker 1: is reportedly losing over one billion US dollars a year,
• 5:03
  Speaker 1: even after cutting back on its content spending and winning
• 5:06
  Speaker 1: big awards.
• 5:07
  Speaker 2: Not even winning big awards pays the bills. Juzzy boy,
• 5:10
  Speaker 2: So what is going on here?
• 5:11
  Speaker 1: Okay, so we know that after the success of Netflix,
• 5:13
  Speaker 1: every media company and the dog decided to launch their
• 5:15
  Speaker 1: own streaming service as.
• 5:17
  Speaker 2: Well as non media companies. Don't forget Apple and Amazon.
• 5:19
  Speaker 1: But so far, be man, Apple has been pretty successful
• 5:22
  Speaker 1: with the shows that's produced.
• 5:23
  Speaker 2: We'd be talking Ted Lasso The Morning Show shrinking, but bbman.
• 5:27
  Speaker 1: Apple TV Plus is reportedly losing more than one billion
• 5:30
  Speaker 1: US dollars a year. According to a new report by
• 5:33
  Speaker 1: The Information.
• 5:33
  Speaker 2: Get This, Apple has spent more than five billion dollars
• 5:36
  Speaker 2: a year on content since launching Apple TV Plus in
• 5:39
  Speaker 2: twenty nineteen.
• 5:40
  Speaker 1: But last year it cut it spending by around five
• 5:42
  Speaker 1: hundred mil terrain in.
• 5:44
  Speaker 2: The costs down to a measly four and a half
• 5:46
  Speaker 2: billion US dollars per year.
• 5:48
  Speaker 1: If that be man. Apple TV is supposedly Apple's only
• 5:51
  Speaker 1: non profitable service, but.
• 5:53
  Speaker 2: Does it way before you start crowdfunding for the poor
• 5:55
  Speaker 2: people at Apple. Keep in mind Apple pulled in three
• 5:58
  Speaker 2: hundred and ninety one billion dollars in revenue last year, so.
• 6:01
  Speaker 1: Apple TV is more of a lost leader.
• 6:03
  Speaker 2: For them, absolutely, So what is the key learning here?
• 6:06
  Speaker 1: A lost leader is a product or service sold at
• 6:08
  Speaker 1: a loss to attract customers into the store or the ecosystem.
• 6:12
  Speaker 2: Apple TV plus is playing the role of a loss
• 6:14
  Speaker 2: leader within Apple's wider ecosystem of products and services cv man.
• 6:18
  Speaker 1: Apple TV plus may not be profitable on its own,
• 6:21
  Speaker 1: but it enhances the value of Apple's broader offering.
• 6:23
  Speaker 2: It can increase stickiness for Apple device users, and it
• 6:26
  Speaker 2: also drives revenue into Apple software division.
• 6:29
  Speaker 1: Like iCloud, Apple Music, and the App Store.
• 6:31
  Speaker 2: And this division is worth more than twenty six billion
• 6:33
  Speaker 2: dollars in revenue if you don't mind Jazy Boy, the
• 6:36
  Speaker 2: classic playbook, lose a bit here, rake it in over there.
• 6:39
  Speaker 1: But at some point or another, every investor is asking
• 6:42
  Speaker 1: when is the best time to invest. We cover dollar
• 6:44
  Speaker 1: cost averaging in the Flux app this week, a very
• 6:47
  Speaker 1: savvy investment strategy to smooth out price bumps in the
• 6:50
  Speaker 1: share market. Make sure to check it out if you
• 6:52
  Speaker 1: want to learn more.
• 6:52
  Speaker 2: Thanks for listening and we'll see you on Wednesday.