Breaking news from the Financial Times:
‘Electrolux, the Swedish appliance maker, is exploring starting an “Uber for laundry” in which consumers would use their own washing machines to wash other people’s clothes.’
Your editor has never used an Uber. We’ve never used an Airbnb, either.
So the chances of us using an ‘Uber for laundry’ are pretty close to zero.
The idea intrigues us, though, so we’d like to see how it plays out.
The hotel and taxi lobby groups have done a good job trying to shut down upstarts like Uber and Airbnb.
As a result, governments are issuing fines against the businesses, and even against individual purveyors of these services. The Economist reports:
‘The phoney war between home-sharing websites and Barcelona seems to have come to an end. After months of sparring between the parties, this week Barcelona levied finds of €600,000 each on Airbnb and HomeAway, which it says have been offering to rent properties that do not have a tourist licence to holidaymakers.’
In October, New York governor Andrew Cuomo signed an anti-Airbnb law. As Bloomberg notes:
‘The fines for those who advertise vacant apartments in a multi-unit building for 30 days or less could be as high as $7,500 for repeat offenders, threatening the company’s operations in the state.’
The government tells you who can stay in your house. The government tells you who you can drive in your car. And if Electrolux goes ahead with ‘Uber Wash’, the government will soon tell you whose undies you can swish around in your washing machine!
Are there no depths to which a government won’t sink? Apparently not…
In this urgent investor report, Daily Reckoning editor Greg Canavan shows you why Australia is poised to fall into its first ‘official’ recession in 25 years…
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No pricing power
Last Thursday was the Thanksgiving Day holiday in the US.
Last Friday was the Black Friday shopping day in the US. Although, based on what we’ve seen both online and at bricks-and-mortar stores, Black Friday has now become a global shopping day.
It’s not difficult to see why.
In the pre-internet days, it didn’t matter a hoot to Aussie retailers what US retailers got up to. It certainly didn’t matter to them if US retailers held a major sales campaign.
But today, it does matter.
If you’re used to buying goods online, especially from US online retailers such as Amazon.com, you can see why Aussie shoppers may now base their buying patterns around overseas shopping holidays.
Myer, David Jones, and JB Hi-Fi aren’t just competing with other Aussie retailers. They’re now competing with US retailers. Not just indirectly, but directly too.
Online retailers know where you’re shopping from. They can offer discounted or free shipping as an inducement to buy from their online store on that particular day.
And because these offers are available online to ordinary Aussies, bricks-and-mortar retailers have to respond. Hence the experience of seeing ‘Black Friday Sales’ posters in suburban Melbourne shopping malls over the weekend.
So, just how big was this ‘Black Friday’ sales period for US retailers?
Based on one headline we saw over the weekend, it was the biggest sales period ever, with some online retailers actually discounting prices on Thanksgiving Day, rather than the day after.
This would all seem to fit in with the resurgent optimism of the markets following Donald Trump’s election win. But is it really a bright outlook?
Perhaps not. Bloomberg reports:
‘Americans went bargain hunting during the Thanksgiving holiday weekend. More than one-third of shoppers said all of their purchases were on sale, an increase exceeding triple the total from last year. Consumers spent an average of $289.19 over the four-day weekend, including both online and offline purchase, the National Retail Federation said on Sunday, a drop from the $299.60 spent a year ago.’
In an economy that’s supposed to be growing, consumers sought and found more discounts.
And not only that, on average, they spent less.
Two things are clear.
It doesn’t appear that US businesses have much in the way of pricing power. If they did, they would surely increase prices, or not offer as many discounts.
And if consumers were genuinely flush with cash, even if they sought more discounts, you would expect overall spending to be higher than the year before.
Yet, it was not.
Is it possible that, even with the market’s optimism of a Trump win, that there is still a two-speed economy? The haves and the have-nots?
As we write, the Aussie market has just closed down over 43 points. The index is still well above the recent Trumpian lows, immediately following his election win.
It’s possible that the market may have gotten ahead of itself. Especially in its over-optimism about the economy, and the prospects of a US Federal Reserve rate rise in December.
There are, after all, more than two weeks until the Fed’s meeting. As you’ve learned in recent months, anything can happen in that amount of time. Not least Italy’s constitutional referendum, set for this coming Sunday.
They say things come in threes: Brexit. Trump. Italy?
For The Daily Reckoning
Publisher’s Note: This article was originally published in Port Phillip Insider.