EXTRA >> RESEARCH from an unusual source ‘close to the coalface’ of consumer spending is predicting steady growth in Australian consumer confidence – and therefore retail spending – leading up to Christmas 2015.

The founder of Cashrewards, the Australian cashback website, with more than 700 retailers on its shopping platform, Andrew Clarke, said about 58 percent of consumers expected to spend more in 2015 over last year and shoppers in the 18-24 years age bracket were still driving the majority of online sales. 

“The outlook for retailers through until the end of 2015 is looking very positive,” Mr Clarke said. “Spending has always been a barometer of consumer confidence in the economy, and low interest rates may be a contributing factor towards the positive sentiment about spending.”

He said the 58 percent increasing their spend – not including groceries – for 2015 would do so in both online and in-store shopping. The 2015 spend trend is dominated by the 18-24 age bracket, with 64 percent of that group expecting to spend more this year than last.

The young age bracket, not surprisingly, also plans to increase online spending the most by the end of 2015 (38% of respondents), in contrast to the over-55s, where 37 percent planned to spend more in-store.

Mr Clarke said in line with the increased online spending by younger demographics, the survey revealed the 18-25s age bracket was the one most motivated by online cashback incentives (59%), followed by 25-44s (55%), then 45-54s (49%), and over 55s (38%).

The Cashrewards survey panel of 1000 Australians reflected consumer confidence and good news for the Australian economy in the lead-up to Christmas, Mr Clarke said.

The survey found NSW residents were slightly more confident about the economy than those in other states, with 61 percent saying they would spend more this year, followed by 58 percent of Victorians, Queenslanders (58%), West Australians (56%) and South Australians (56%).

 “The fluctuating employment rate and Australian dollar certainly don’t seem to have deterred spending by the 18-25s, which may indicate that this age bracket isn’t as affected – or just that they don’t allow it to affect their planned spending,” Mr Clarke said.

“This could be because they’re very savvy with their online shopping and look for discounts and cashback for all their purchases.”

A key insight from the survey showed that across demographics, 90 percent buy on sale or through a promotion. Shoppers are mostly enticed by discounts (73.8%), coupons (32.3%), and rewards (38.9%).

“Having said that, when it comes to online shopping, 49 percent prefer online cashback over points schemes,” Mr Clarke said.

www.cashrewards.com.au

 

Cashrewards backgrounder

The online cashback concept works like this. With over 700 retailers across categories, Cashrewards claims to offer Australia’s highest cashback rates. It’s free to join and members can browse, compare prices, and get on average (it is claimed) 10-20 percent cashback on every item purchased; adding coupons to special discounts, shoppers are said to be able to save up to 50 percent.  Shoppers click through cashrewards.com.au to the retailer website of their choice to purchase as usual, then Cashrewards credits the cashback directly into the shopper’s nominated bank account. Where it varies most from points schemes is that actual cash comes back to the shopper, rather than waiting for points to accrue for a reward.

Cashrewards says new deals are available daily, from Australian and international retailers including Woolworths, Coles, eBay, Chemist Warehouse, Priceline, The ICONIC, ASOS, David Jones, Saks Fifth Avenue, Lorna Jane, Virgin Australia, Telstra, Vodafone, Booking.com, Avis, Microsoft, Sony, Groupon, Living Social, Dan Murphy’s, Uber, Menulog and EatNow.

The Survey

* Survey of 1000 Australian respondents on online shopping habits, conducted by Pure Profile for Cashrewards, August 2015. 

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A NEW Asia Pacific-wide Population Ageing Research Hub has been established at the University of New South Wales (UNSW), providing a regional forum for research collaboration on population ageing.

Asia is the world’s most rapidly ageing region, according to UNSW deputy vice-chancellor for research, Les Field. 

Led by the ARC Centre of Excellence in Population Ageing (CEPAR), the Association of Pacific Rim Universities (APRU) Population Ageing Research Hub was formally launched by Professor Field, who is also the vice-president of UNSW, where CEPAR is based.

Prof. Field spoke at the inaugural Hub conference last week, which hosted more than 40 researchers from more than 20 countries in the region.

"Population ageing is generating increasing research and policy attention, and this dedicated Research Hub will focus on improving collaboration amongst experts to address one of the greatest social challenges of the 21st century," Prof. Field said.

"UNSW is proud to have taken the initiative to establish this Hub."

CEPAR director John Piggott welcomed the opportunity APRU now presents "to bring together world class researchers from different disciplines to consider the social and economic impacts of key demographic changes".

“It is absolutely vital that we understand the changes taking place in our region and their implications both for the countries involved and for Australia," Prof. Piggott said.

"The significant rise in ageing populations throughout Asia will create greater pressure on the capacity of both families and governments to provide support for the ageing demographic.

"CEPAR is looking forward to contributing to collaborative research initiatives with global significance across the APRU network. 

"By building and delivering insight into socio-economic and health and aged care impacts, we can help policy makers and service providers to identify needs and develop resources to meet them," Prof. Piggott said.

CEPAR is a unique, independent, ARC-funded research centre bringing together academia, government and industry to address one of the major social challenges of the 21st century, he said.

www.cepar.edu.au

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CYBERSECURITY and succession planning are two of the main strategic deficiencies in Australian family businesses, a global business report by EY has flagged.

EY’s Oceania family business leader, Ian Burgess said the report was a warning that family businesses, as an essential source of prosperity and stability to both local and global economies, needed to ensure they were not “putting their heads in the sand” when it came to the two critical areas of succession planning and cybersecurity. 

“Australian family businesses have a generally positive outlook when it comes to business conditions, with over two-thirds believing that their markets will expand in 2015 and over half expecting to expand their workforce,” Mr Burgess said.

“While it’s heartening that Australian family businesses have a generally positive outlook, they’re behind on two key issues that they should be addressing to ensure their continued sustainability and growth into the next generation and beyond.”

The Staying power: how do family businesses create lasting success? report, launched by EY and Kennesaw State University’s Cox Family Enterprise Centre in June, surveyed 25 of the largest family-owned businesses in each of 21 global markets, including Australia.

ONLINE RISK

The report revealed Australian family businesses were lagging behind their global counterparts when it came to their awareness of cyber risk.

About 41 percent of Australian family businesses reported having no knowledge of the impact of cyber risk on their company – much higher than the global average of 25 percent.

Even Australian respondents who were aware of the risks were fairly evenly divided about the scale of its potential impact on their business, with 32 percent rating it as low and 27 percent rating it as medium to high.

Mr Burgess said in an increasingly connected, digital world, family businesses needed to place greater emphasis on their cyber security.

“Even with the near-constant news of cyber breaches, leaks and the resulting financial losses, Australian family businesses seem to be worryingly relaxed about the risk of cyber threats and potential impact on their business,” he said.

“By their nature, family businesses face some particular increased risks beyond the usual hacking and data breaches, such as social media risks, reputational risks and personal safety concerns. For this reason, cybersecurity should be at the top of the agenda for any family business.

“Around the world, there are thousands of cybersecurity breaches each year – it’s the new reality of doing business. The biggest hurdle to family businesses in this space is recognising the most critical threats and understanding how to address them,” Mr Burgess said.

“The good news is that, due to their concentrated ownership, once family businesses are aware of the risks they have the advantage of being able to make and implement decisions quickly. This allows them to put effective plans in place to help minimise cybersecurity risks.”

EY’s Asia-Pacific information security leader, Mike Trovato said learning to anticipate cyber-crime was critical when it came to organisations transforming themselves from easy targets for cybercriminals to more formidable adversaries.

“Too many organisations fall short of mastering the key components of cybersecurity,” Mr Trovato said.  “Organisations lack focus at the top and the right procedures and practices to anticipate new threats. This is a major concern.”

WHO LEADS THE FUTURE?

EY’s Oceania leader for family office services, Richard Boyce said, with half of all the Australian family businesses surveyed still in the hands of the first generation, having a strong and clearly defined succession plan in place is essential to their continuing success

“Succession is arguably the most critical issue a family business has to face, yet it is often one of the most difficult to navigate,” Mr Boyce said. “Complicated family dynamics and the emotional connection that business leaders and family members feel towards their companies can make addressing the issue a potential minefield.

“Our survey found that Australian family businesses most commonly left succession planning in the hands of the CEO (42%), followed by owners or family council (32%). This is in contrast to the global results, where 44 percent of businesses surveyed said their board of directors had primary responsibility for succession planning.”

“If the intention is for the business to remain in family hands, succession must be considered a process, not an endpoint. It needs to be embedded into the day-to-day operations of the business, through training and education of the next generation.

“Succession is also about creating an enduring business model that can evolve and innovate, therefore the leadership required to be able to last through generational change is far more sophisticated and experienced than ever before.

“Family members must be willing to address the issue of succession planning head on through an open and ongoing dialogue. Getting this right will free up the CEO, board and council to focus on the wider business,” Mr Boyce said.

SHAPE OF FAMILY BUSINESS

The Staying power: how do family businesses create lasting success? Report also revealed a great deal about the shape of family business in Austalia.

About 50 percent of Australian family businesses currently have a first generation leader, 25 percent second generation, and 13 perent are led by third and fourth generations.

Australian family businesses rank lowest in terms of the number of countries they operate in, with an average of 2.3 compared to the global average of 15. In contrast, family businesses based in Germany operate in an average of 39.4 countries, Canada in 13.8 and China in 19.3.

About 90 percent of Australian family business respondents were satisfied with the performance of their board of directors, rating it as either good (60%) or excellent (30%).

Average return on equity for Australian family businesses is about 5 percent – on par with Spain and South Korea.

Corporate social responsibility and giving back to the community is important to Australian family businesses, with 73 percent engaged in philanthropic activities.

www.ey.com/au

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AUSTRALIAN entrepreneurs may have a lot going for them – ideas, passion, skills and the guts to start a business – but financial and operational savvy is rare.

New research, commissioned by cloud accounting specialists Intuit, has revealed Australian start-ups need a helping hand when it comes to financial know-how in order to boost their chances of long-term success. 

The Intuit Financial Fitness Startup Study, launched recently by Intuit Australia with the support of NSW Minister for Regional Development, Skills and Small Business, John Barilaro, was conducted by Galaxy Research and surveyed 400 start-up owners nationwide to find out how much they knew about managing their business finances.

The research methodology included a 10-question quiz on key accounting concepts like the role of the balance sheet, accruals and depreciation, and how to improve short-term cashflow.

The research results revealed that only a few scored highly, while the majority (58 percent) did not pass. Highights were:

  • Just four in 10 (42 percent) managed to score five out of 10 or more.
  • One in 10 (8 percent) could not answer any questions correctly.
  • 12 percent scored only one out of 10.
  • Only three percent of start-up owners answered all questions correctly.
  • Men outscored women, with 48 percent passing compared with 38 percent of women.
  • Gen Y start-ups proved least financially savvy – just a quarter (26 percent) passed, compared with four in 10 (44 percent) Gen Xs and six in 10 (63 percent) Baby Boomers.
  • The majority could not correctly identify the role of a balance sheet (65 percent) or define accruals (70 percent).
  • Only around half (56 percent) identified that depreciation does not affect the cash position of the business and two thirds (64 percent) knew that collecting receivables on time improves the short-term cashflow of a business.

Intuit Australia managing director Nicolette Maury said there were more than 500,000 Australians involved in start-up activity at any point in time and that the findings highlighted the need for more support for the nation’s entrepreneurs.

“According to the Australian Bureau of Statistics, around one in four start-ups close their doors in the first year and only half make it through their third,” Ms Maury said.

“However, with a solid financial foundation, we know budding talent can build stronger, more resilient businesses that will stand the test of time and help build a prosperous economy,” she said.

BUSINESS FINANCES CHALLENGE

As part of the Intuit study, start-ups were asked to rate their own financial management skills and outline how they manage their accounts.

The research revealed just one in 10 (12 percent) business owners claim to have a thorough understanding of their finances and only four in 10 (40 percent) believe their business is well managed. Most (60 percent) recognise they could do a better job with their finances:

  • A quarter (25 percent) admit they should pay more attention.
  • 16 percent claim they don’t pay much attention to managing their finances as it tends to take care of itself.
  • Two in 10 (19 percent) look after their business finances even though there is a lot they don’t understand.

Half of all start-ups (53 percent) are keeping their own financial records up to date and preparing their BAS, even though four in 10 (40 percent) only have a basic understanding of finances. Two in 10 (19 percent) use an external accountant and one in 10 (12 percent) employ a bookkeeper or finance manager. Of significance, among those who failed Intuit’s financial skills test, half (51 percent) prepare their own BAS.

Ms Maury said the results confirmed many are yet to discover and use the wide range of affordable, easy-to-use online financial management solutions, including cloud-based software.

“Most start-ups still use time consuming and error prone methods to manage their finances including spreadsheets (42 percent) and manual methods such as ledgers, and even pen and paper (22 percent),” she said. “Just 13 percent use desktop software and 9 percent use cloud-based accounting software.”

She said products such as Intuit QuickBooks Online enable start-ups to run their businesses from wherever they are “and get the insights they need in real time to make informative busines decisions”.

SUPPORTING START-UPS

According to the research, there is also a range of options that start-up owners believe could improve their business finances but only some recognise the need for targeted financial skills support:

  • 19 per cent of start-ups said a mentor would be most helpful.
  • 16 percent opted for a financial management course.
  • 12 percent noted an accountant or bookkeeper would be their top option.
  • 12 percent voted for online tutorials.

Ms Maury added that Intuit’s long-term plans for boosting financial fitness includes developing a Financial Fitness Bootcamp program that would provide resources and expertise for entrepreneurs and would run at selected Start-up Weekend Australia events.

“Intuit is the national sponsor of Start-up Weekend Australia and we’re committed to being part of the start-up and entrepreneurial ecosystem in Australia, working with range of stakeholders including government,” Ms Maury said.

Sam Birmingham, the national director of Start-up Weekend Australia, said, “Financial literacy plays a major role in boosting the success rate of young companies. Arming Aussies with the tools to build and maintain a healthy business is vital and will ultimately contribute to long-term economic growth and innovation.”

www.intuit.com.au

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NEW research on the Internet of Things (IoT) by logistics provider DHL and global information technology (IT) group Cisco points to gains of up to US$1.9 trillion for the supply chain and logistics industries over the next decade.

The DHL/Cisco Trend Report also estimates the overall value to the world economy of IoT integration could be as high as US$8 trillion over the next decade – and most of those gains come directly from the fact that there will be 50 billion devices connected to the internet by 2020 compared with 15 billion at present.

The optimistic projections were made at the release of the DHL-Cisco Trend Report at the DHL Global Technology Conference in Dubai in late April. 

DHL also revealed it was collaborating with Cisco Consulting Services on a joint IoT innovation project that will improve decision-making in warehouse operations with near real-time data analytics based on wi-fi connected devices.

“At Deutsche Post DHL Group we have a deeply held belief in the positive powers of global trade,” DHL Express CEO and its board technology sponsor member Ken Allen said.

“Yet, as our Global Connectedness Index 2014 revealed, the overall level of global connectedness remains surprisingly limited. There is huge potential for countries to further increase their connectedness and prosper through trade, integration and technology.

“We believe the Internet of Things will be a primary enabler of this global transformation.”

The Trend Report estimates there will be 50 billion devices connected to the Internet by 2020 compared with 15 billion today, and it looks at the potential impact this technological revolution will have on business.

Mr Allen said the value at stake, combination of increased revenues and lower costs that is created or will migrate among companies and industries when new connections are made, reveals the huge potential when the internet and networks expand their connections to warehousing, freight transportation and other elements of the supply chain. 

For any organisation with a supply chain or logistics operations, IoT will have game-changing consequences, from creating more ‘last mile’ delivery options for customers, to more efficient warehousing operations and freight transportation, he predicted.

According to Cisco’s economic analysis, IoT will generate US$8 trillion worldwide in ‘value at stake’ over the next decade. This will come from five primary drivers: innovation and revenue (US$2.1 trillion); asset utilization (US$2.1 trillion); supply chain and logistics (US$1.9 trillion); employee productivity improvements (US$1.2 trillion); and enhanced customer and citizen experience (US$700 billion).

“Digital disruption is all around us and it’s having massive implications for business,” Cisco’s EMEAR president Chris Dedicoat said.

“Digitization and the expansion of the Internet of Things is a catalyst for growth, which is driving new economic models and enabling organizations to remain competitive and embrace the pace of change happening globally.

“This report clearly demonstrates that digitization and the IoT will deliver long term efficiencies and growth opportunities across a wide range of industries,” Mr Dedicoat said.

According to the report, over the next decade, the logistics industry could unlock higher levels of operational efficiency as the IoT connects in real time millions of shipments being moved, tracked and stowed each day.

In warehousing, connected pallets and items will be a driver for smarter inventory management.

In freight transportation, tracking and tracing of goods becomes faster, more accurate, predictive and secure while analytics of a connected fleet can help to predict asset failure and to schedule maintenance checks automatically.

Connecting delivery personnel with surrounding vehicles and people can become a way of monetizing and optimizing the return trip to improve efficiency and service in last mile delivery, the report points out.

For customers, this means DHL can provide an even faster, more reliable and cost-effective service, DHL vice president  for innovation and trend research, Markus Kückelhaus said.

“The Internet of Things is the connection of almost anything – from parcels to people – via sensor technology to the web and both Cisco and DHL believe this will revolutionise business processes across the entire value chain including supply chain and logistics,” Mr Kückelhaus said.

“To get the maximum global economic benefit, we’ll need to understand how all components in the value chain converge and this will require a comprehensive collaboration, participation and the willingness to invest to create a thriving IoT eco system for sustainable business processes.

“The new Trend Report is another step towards making sure DHL delivers the benefits of IoT to our customers.”

Cisco Consulting Services and DHL are now also collaborating on a joint IoT innovation project that will improve decision-making in the warehouse operations through near real-time data analytics based on wi-fi location data of selected devices.

The solution is based on Cisco’s Connected Mobile Experiences (CMX) which uses the high-density wireless network to collect aggregate location data on Wi-Fi connected devices.

www.dhl.com.au

www.cisco.com

 

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EXTRA >> Download the DHL-Cisco Trend Report on the Internet of Things. The report predicts IoT will boost the supply chain and logistics industry by US$1.9 trillion within a decade.   

According to Cisco’s economic analysis, IoT will generate US$8 trillion worldwide in ‘value at stake’ over the next decade. 

This will come from five primary drivers: innovation and revenue (US$2.1 trillion); asset utilization (US$2.1 trillion); supply chain and logistics (US$1.9 trillion); employee productivity improvements (US$1.2 trillion); and enhanced customer and citizen experience (US$700 billion). 


DOWNLOAD HERE >>  DHLTrendReport Internet of things (8.79 MB)

www.dhl.com.au

www.cisco.com

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LIFTING productivity must become a priority in 2015 or gains in our standard of living could be significantly eroded as the terms of trade continue to decline and our population ages, according to CEDA’s 2015 Economic and Political Overview released in Sydney on February 13.

Releasing the annual publication, CEDA chief executive Stephen Martin said there were positive signs the business community was taking action to lift productivity but there needed to be greater focus on innovation and investment in people. 

“Economic reform will also be vital to keep our economy healthy as terms of trade continue to fall post the mining boom,” Professor Martin said.

“On the political front, key issues will also result from our changing economic fortunes with rising unemployment and underemployment, particularly youth unemployment, and industrial relations.”

Other key economic forecasts anticipate:

  • GDP growth will remain below average in 2015 before returning to around average in 2016; 
  • the rate of decline in resources investment is expected to increase this year; 
  • housing construction’s contribution to growth will fade in 2015 without further rises in building approvals; and
  • a sustained pick-up in household spending growth is needed this year to support the non-mining sectors.

In addition to the economic and political forecasts, this year’s publication also looks at finance and funding of Australia’s future growth and funding social equity.

“As debates continue on access to healthcare and education and rising unemployment in particular youth unemployment, social equity is likely to become a major issue in 2015,” Prof. Martin said.

“Analysis provided in the CEDA report highlights areas where changes are needed such as Newstart, education and health.

“Importantly it also provides areas where savings could be made in the Federal Budget to help fund the changes needed including:

  • changing the Pharmaceuticals Benefits Scheme to reduce ineffective subsidies and over-pricing of drugs, potentially saving billions of dollars;
  • reducing tax breaks for superannuation; and
  • increasing the preservation age for access to superannuation to encourage people to stay in the workforce longer.”

Prof. Martin said financing in Australia has been examined because this is likely to significantly change in the coming decades, particularly with the growing pools of funds managed through superannuation and likely increasing foreign capital flows, in particular from China

“It is important that Australia is on the front foot about how these changes will impact business more generally but also financing for major projects such as infrastructure,” he said.

“Unfortunately the political instability currently being experienced federally, and at a state level through changes of government, is impacting on debates and implementation of reforms and major projects we need to keep our economy on track.

“It is also concerning that there has been a lack of appetite for national debate on areas of reform that need to be examined now such as broadening or increasing the GST, corporate tax loopholes and Federal/State fiscal arrangements.”

CEDA’s EPO, which has been produced annually for more than 30 years, provides analysis and discussion from leading economic, political and academic analysts on key issues that will have a significant impact on Australia in 2015.

CEDA 2015 EPO contributing authors are:

  • Economic outlook – Warren Hogan, chief economist, ANZ; Justin Fabo, senior economist, ANZ.
  • Political outlook – Michele Levine, chief executive officer, Roy Morgan Research.
  • Funding social equity – Cassandra Goldie, chief executive officer, Australian Council of Social Service. 
  • Finance and funding – Rodney Maddock, adjunct professor, Monash University; vice-chancellor's fellow, Victoria University.

The EPO was launched in Sydney through a keynote address by NSW Premier Mike Baird.

Other speakers at the launch event include Jane Halton, secretary, Federal Department of Finance and Warren Hogan, chief economist ANZ.

The launch event is to be followed by a series of events being held in Brisbane, Hobart, Adelaide, Canberra, Townsville, Melbourne, Perth and Darwin.

www.ceda.com.au

* CEDA - the Committee for Economic Development of Australia - is a national, independent, member-based organisation providing thought leadership and policy perspectives on the economic and social issues affecting Australia. The organisation prides itself in its "rigorous and evidence-based research agenda" and by staging forums and events that deliver lively debate and critical perspectives.

CEDA's membership includes more than 700 of Australia's leading businesses and organisations, and leaders from a wide cross-section of industries and academia. An independent not-for-profit organisation, it was  founded in 1960 by leading Australian economist Sir Douglas Copland. Funding comes from membership fees, events, research grants and sponsorship.

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