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Normal rules of competition don’t apply in Canberra?

vekta 6 April 2008 32

Something strange is happening here.

The normal rules of competition and commerce don’t seem to apply to doing business in Canberra.

For example, a well-known, central, long-running supermarket close to my home has, since I’ve been here (about 2 years), routinely sold goods that are overpriced and often past their use-by dates, and sometimes just plain off.  When I went out for breakfast this morning in Kingston, I found popular cafes closed on a busy morning when it was hard to get a table anywhere.  Late at night, even major fast food chains are closed, whereas in any other city in this country they would be open.

And most amusingly, food is bad and overpriced, and service is often terrible.  Yet businesses that consistently open “when they feel like it” as opposed to when there are customers, or charge silly prices, or treat customers badly, continue to thrive and prosper for many years in Canberra, whereas in any other city they would fail immediately.  Elsewhere, it seems, businesses are subject to normal laws of competition, and if service is poor or prices laughable, a competitor starts up.  Here, nothing happens.  Business as usual in Canberra.  Nobody even seems to notice.

You can’t vote with your feet if there are limited or non-existent alternatives.

Now I know this city has unique challenges, but doesn’t the ACT government have people who are paid to ensure that local commerce is lively, and that a market, particularly for services, operates and thrives?  An important part of this is regulation and licensing, and maybe these well paid ACT public servants should pay attention to striking the right balance, to allow competition to thrive, and to encourage new businesses

Perhaps it’s time to go back to the drawing board with business regulation and licensing laws in the ACT, to bring this city into line with the rest of the modern world.

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32 Responses to Normal rules of competition don’t apply in Canberra?
vekta vekta 1:14 pm 10 Apr 08

I’ve worked in customer service, I’m the son of a small business owner and operator, so I’m intricately aware of the difficulties running a small business and staff issues. I’m not expecting anyone else to be at my beck and call all the time.

jimbocool, thanks for your post. However, it defies logic that the main problem is low returns (eg %2), yet Canberra cafes still pick and choose when they feel like opening. If returns were so low, the industry would be more competitive, driving up customer service levels, food quality, and increasing opening times when there was demand. As for not opening on Sundays to save money, I would be extremely surprised if that was the case, given Sunday would be one of the busiest days for many Canberra cafes (if they showed up to open their “businesses”). Firstly, wealthy Canberra public servants all go there in the morning for breakfast. Then all day, people would visit the cafe. The fact they don’t open on Sunday is extraordinary.

In terms of the accounting/finance perspective, sure that’s another aspect of this, but overarchingly the way government administers the regulatory/licensing/planning structure, and provides incentives or otherwise, will determine the environment, and have an effect on competition. The accounting/finance part of this represents the micro-level of the problem. Plainly, there is still a broader malfunction at play.

As for S4anta’s cryptic “Ecomnomics lesson”: My argument is there is enough demand for some businesses to open – ask Blind Freddy, but they still don’t. That doesn’t make sense to me. I’m surprised it makes sense to you.

People seem naively keen on pure word-of-mouth, and giving good businesses their custom. But that doesn’t help when the market’s failing anyway. This failure creates limited alternatives, and lowers standards across the board.

Obviously hiring staff, or paying a manager to manage a cafe, costs money. But that, incidentally, is how all business operations happen all over the world and have done for hundreds of years. This isn’t a revelation. And in other places where it still costs money, they still have decent service, decent food and sensible opening hours. Go figure.

Yes, a lot of Canberra businesses (and patrons, it seems) still think they’re in a country town in the 1950s. Surprising, given the levels of education and connectedness in this town.

In terms of damnintellectuals’ post that there are “businesses opening and shutting all over Canberra all the time”, I’d suggest that damintellectuals’ look below the surface to see what’s really happening. A superficial appearance of a market does not a market make.

Dave_K, I’ve experienced that coffee machine situation. Imagine a serious cafe telling you that you can’t have a coffee because they turned off the machine. I went to order a toasted sandwich recently, and was told I couldn’t have one because they had turned off the toaster. Hilarious.

It’s called an “on” switch.

illyria, in terms of staffing issues, perhaps this is partly a problem of useless staff who are too cool to do anything, holding small businesses to ransom. The Federal Government may be partly to blame for dumb IR legislation, and to the extent they regulate tax and employment for small businesses: strangling them in red type, creating inflexibility in HR management, and making hiring staff a liability.

ant ant 12:31 pm 10 Apr 08

Gus’s was amazing, it was so busy, and yet the tables and chairs were always grubby. Things certainly have improved since then.

jenny green jenny green 9:08 am 10 Apr 08

Vekta – if you shop at Dickson Woolworths, I am not surprised you are cranky – I’d strongly recommend Jaimeson Coles if you’re an inner north resident.

Ahhh – Sunday penalty rates – bring back the good old days of Gus Petersilka. Much more fun to threaten workers with the sack than pay penalty rates. Now, HE had the scene sewn up!!! Great pioneer of Canberra cafe cuture…

el el 9:46 pm 09 Apr 08

Agreed 100% Ant.

ant ant 9:43 pm 09 Apr 08

Grrr, Silo. It’s tantamount to a cult! I go down to the Vietnamese bakery a few doors down. That’s a nice old-fashioned bakery, top food, they don’t run out of bloody cakes by 10.30am, and they’re friendly. At lunchtime, it’s 4 deep in there, evidently there’s plenty of people not going to Silo!
I noticed the other day, that the viet. bakery has National Bakery painted on their awning. Cheeky!

sepi sepi 8:56 pm 09 Apr 08

And Vetka, if you really think someone can set up to sell the same products as silo on the 3 days they are closed, and gradually grab all the customers, why don’t you do it?

It just isn’t that easy, or else people would.

illyria illyria 7:44 pm 09 Apr 08

And therein lies the answer Ant. You go back to the places that provide what you want. You blacklist the ones who do not. The good ones make it, the others don’t.

Vekta – expecting people to have other staff run their small business while they have a day off… obviously you have never run a business and experienced staffing issues ie. slept in, forgot to come in, got a better offer, too drunk, too stoned, feel sick, got a better offer bla bla bla. Generally it is not the small business owner that says things to customers like “what do you mean you want chocolate in your chocolate milkshake” or “we have lives too you know”. It is their staff, who have a better offer, want to go home, etc……..

I must admit that I have put Silo on my blacklist several times for poor service and general arrogance issues, but lets face it, those vanilla brulees are just soooooooo good……….

Have you seen the episode of Seinfeld with the Soup Nazi? It’s the same at Silo but with bread and pastries.

ant ant 1:31 pm 09 Apr 08

Dave K’s comment reminds me of some months back, trying to book a lunch at a certain fine dining restaurant, as we were entertaining a minister from a foreign government.

Due to his prior meeting with our minister, the lunch needed to start at 1.30pm. Whereupon the restaurant person helpfully advised me that they’d be closing the kitchen at 2pm, as “we have lives too, you know”.

I had visions of them clearing out the lunch settings and setting up for dinner around our VIP, and cancelled, and booked the affair with The Waters Edge, who understood the situation somewhat better and provided sparkling service. Canberra’s reputation was saved.

Dave_K Dave_K 1:22 pm 09 Apr 08

One of my biggest gripes about service in Canberra relates to those restaurants – often in Manuka – which try and boot you out around 10 on a weeknight, at the same time the staff are sitting down for a meal or drink as they close up. I don’t begrudge anyone who has been on their feet all day a feed or a drink after finishing work, but it’s a bit much when the entire staff start packing up and chilling out when you’re still finishing your own meal. Then to be told “we’ve cleaned the coffee machine and switched it off.” On one occasion, I had to rouse the staff from their table to pay our bill. Should have just walked off, I suppose. Needless to say, I haven’t been back to those places – which is the most effective way to send a message about your satisfaction, or not, with a business.

KingMonty KingMonty 1:12 pm 09 Apr 08

I’d have to say that after leaving Canberra after 20 years, the general service is pretty ordinary in the ACT compared to other cities. Probably a good thing that the industry needs a bit of a wake up. Those cafe’s that do have great customer service get good word of mouth and do well.

damnintellectuals damnintellectuals 7:18 am 08 Apr 08

hang on a minute … my comment is my opinion, and that is how I choose to voice my opinion. Tut tut damnintellectuals … Let me express my opinion one more time, just so you get the message this time …

Thanks for the clarification, CanberraResident. I didn’t realise you were one of those that don’t back up their opinion with action.

RuffnReady RuffnReady 2:00 pm 07 Apr 08

Jimbocool nailed it. This is not a regulatory issue, nor a problem the government can fix. If you want to criticise government for anything, it would be the Federal government for over-regulating small businesses in general.

There are businesses opening and shutting all over Canberra all the time. Competition is alive and well.

Observing Observing 12:43 pm 07 Apr 08

Reading all the comments, I do see where vekta is coming from and where other people are coming from too. Rules of economy and competition do apply even in Canberra because you have SOME cafes, restaurants or other shops that do a lot better than others due to word of mouth. For whatever reason (service, quality products, whatever), people go back to them and I’m sure they get more than a 2% return on their finances because you see hordes of people in their shop whenever you walk past. They provide something better than their competition, therefore their profits are higher.

But on the other hand, there are lots of other stores and cafes who do think its ok to serve you with an attitude like “If you don’t like it, leave!” or “I’m not your slave, so enjoy what I give you!”. No, they are not their slave, but the result (and law of competition) would be that if you think what you paid for is not worth it, you go elsewhere. Unfortunately, the way it is in Canberra compared to most big cities is that if you go to another store/cafe, you would more than likely get the same treatment.

As was pointed out above, I think Canberra is still a country town sleepily waking up from a dream that its really a big city. Lots of people want it to be on par with Sydney, Melbourne and other big cities, but its not(which may be good in many ways). You don’t get the glut of new stores opening up in a small location where out of the hundreds, one might catch on that good service does get results.

Regulation would only stifle competition. If people think that they have a niche market (they can do better through better service, better opening hours), then you will get a decent business running. Maybe not a goldmine, but you will do better than average!

In the meantime, find out who does give you value for money and spread the word around. People do listen. Or otherwise ask around for what businesses people think provide good service and try it yourself. Word of mouth works both ways.

mutley...again mutley...again 12:00 pm 07 Apr 08

I’m intrigued as to why you’ve got so much sand in your vadge over a business owner’s decision.

If I had a choice between running a business 7 days a week or running it 4 days a week and still get acceptable returns, I know what I’d do, and it wouldn’t be pandering to someone who thinks that I should be at his beck and call just because I opened a business.

Hiring a manager to cover the extra days is an added expense, particularly as the owners probably don’t draw a salary themselves, so why do that?

If you don’t like it, don’t go there on the days they are open. Boycott, tell your friends.

ant ant 10:36 am 07 Apr 08

Thanks for the voice of reason, jimbocool! It IS annoying when you get poor service, or you see a business seeming to squander possible profits (and we all see this all over the town). And it is oK to voice frustration about things like this. But realising that cafes etc aren’t goldmines is important, too.

When you see some busineses trying, and giving great service, and others that aren’t, then the best thing to do is to make sure the good businesses get all your custom, and spread the word! Put a review up on Riot Act, and reward teh good business by putting more custom their way.

S4anta S4anta 10:35 am 07 Apr 08

@ Vekta
“Imagine being posted here from a place like Rio de Janeiro or New York.”

I am relatively sure that the fact that you can walk down the street in Canberra, have a backyard (or what is left of them), let your kids play in the street, not get kidnapped or have planes smashing into sky scrapers overhead would more than compensate for the lack of activity from small businesses on a freaking Sunday.

Ecomnomics lesson: As soon as a small business opens the front door, they are behind the eight ball for that day. If there is not enough demand, they wont open. Makes sense to me. Dont like it? Go to a pub, have a steak and beer for fcuks sake.

jimbocool jimbocool 10:19 am 07 Apr 08

Having spent a bit of time working in both Chief Minister’s Dept and Urban Services (now called TAMS) which are the two main depts involved in cafes I’d say that there is nothing happening there that is causing this ‘problem’ – Cafe regulation is almost non-existent and pretty much anyone can have a licence. There was a bit of stink when the fee for outdoor dining went up, but that’s about the worst of it. The main problem is that the median return on a cafe/restaurant is 2% – people are much better off putting their money in an online savings account at 8% getting a better return without the heartache. If the cafe owners in Kingston were making huge profits others would enter the market – the fact that they don’t means that they are scraping by on their 2% and not opening on Sundays in order to save money. You porbably need to look at this from an accounting or finance perspective rather than an economics one to understand why it’s happening.

CanberraResident CanberraResident 10:14 am 07 Apr 08

damnintellectuals said :

For people who put up the “If you don’t like it, then leave” argument: If you don’t like a citizen voicing a complaint then take your own advice and move to China. Community members have a right to voice their opinion. Public discourse makes a better community.

I’m guilty of that! BUT … hang on a minute … my comment is my opinion, and that is how I choose to voice my opinion. Tut tut damnintellectuals … Let me express my opinion one more time, just so you get the message this time … if Vekta doesn’t like it here, choose a highway and byzeez! (Maybe Vekta could go live in one of the poorer countries in South America or Africa; that way he might get a bit of an idea of how good he has it living in Canberra …

Nemo Nemo 9:07 am 07 Apr 08

“But Canberra can get better”

They said that about the schnitzels at the Tradies too.

Thumper Thumper 8:58 am 07 Apr 08

Shop workers also like to have some time off. Why the fcku should they be on beckon call 24 hours a day, seven days a week?

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