How Western Australia is going from boom to cool economy, with a dash of hipster thrown in
Monday, April 20, 2015/
I wrote a blog on SmartCompany several years ago that said: “If we don’t manage our move from a commodity boom economy to a more stable service economy, with retail at its core, we will have a recession the like this country has not seen in decades.”
It may have appeared a little alarmist at the time, as the Australian economy was truly booming, whilst the rest of the world was hurting. However, we now are cooling. Fast. Even with our unexpected 37,000 new jobs boost in the employment numbers last week.
I’ve just spent a week in Western Australia walking retail stores and visiting retail customers. Whenever I visit cities I always talk to two key groups of people in the city, who tend to be good micro-economic barometers: independent retailers and cabbies. Well, reading about the cooling of the mining boom on the east coast and experiencing it on the west coast are two very different things.
In the west the mines are not just cooling, many are closing. Last week, 500 mine site jobs were lost and 75 head office jobs in Perth went with them. There are more job losses to come.
I spoke with a cabbie, a 25-year veteran of Perth and its northern, eastern and southern suburbs. Four years ago he would make $380 net of all his costs at the end of a 10-hour shift. Now he’s happy if he nets $200. Within independent stores the story was similar: lower footfall, smaller average baskets, more promotional and discounting activity to achieve the same weekly sales.
So, it’s all pretty much doom and gloom then? The growth in the west is over right? Well, no. I don’t think so. I think they, the ever optimistic and entrepreneurial “Sandgropers”, whose state capital is the remotest city, on the edge of a desert, bounded by a huge ocean facing the poorest continent, and almost at the bottom of the planet, are doing something very clever. They’re “managing their move from a commodity boom economy to a more stable service economy, with retail (and events) at its core.”
At the micro end of retail, from funky William Street in Perth, home of the Butchers Shop, Tu boutique and a myriad of other very cool, small, privately owned retail stores, to South Terrace in Fremantle, home of hipster coffee shops, hemp clothing stores and art galleries, things are going pretty well. Down in the Augusta-Margaret River area there is a similar quiet optimism. Western Australia’s retail sector can be characterised by three words and one phrase: “Eclectic. Independent. Innovative. With frustrating shopping hours.”
Importantly these retailers are doing well with the explicit, or halo, support of Western Australia’s governments. State and local.
For many years I was a director of CAMS (Confederation of Australian Motor Sport), the sporting body that governs motor sport in Australia. For a while Western Australia, like Victoria, led and understood the economic flow on effect of big sporting events on their state economies; specifically the SME sector.
Like all good things, success breeds hubris and I would humbly suggest that a few years ago some of Western Australia’s government and pseudo government officials lost the plot, and Western Australia then lost some good events. Fortunately the mining boom carried them through. Today I believe they’re back on track to having a calendar of events that attracts visitors from the north and east who stay longer and spend more in the retail sector than they planned to.
It looks like the Western Australian state and local governments are working together via investment in sporting events and revitalised or new retailing space. Fix those frustrating shopping hours and you may just have done what no other state has yet done: planned your transition from boom to normal economy.