Here it is, September 1st, 2010 and two things jumped out at me this morning after reading some business news. Newspapers still think they have something solid going, and Mall’s are still being touted as a good investment. With all the evidence that traditional business is failing in most sectors, those incredibly smart people are making critical errors in judgement.
Yesterday, a company called POSTMEDIA/Network announced that they have a new logo. Now it’s not the logo that has me scratching my head this morning. Former President of Roger’s Paul Godfrey is the President & CEO of Postmedia Network, this group’s list of brands should make you wonder why they continue down the futile path of print. Considering that Newspapers are dropping like flies these days, the predicting doom of book stores and other outbound media, why would you or anyone else invest in this venture? Not one but 11 brands under the Postmedia Network umbrella, all newspapers! They handle the National Post, Times Colonists, The Vancouver Sun, The Province, Calgary Herald, Edmonton Journal, Leader-Post, The StarPheonix, Ottawa Citizen, The Windsor Star and The Gazzette. These are probably the most read newspapers in Canada, and are also failing.
You can find Canadian Newspapers listed in iPad, you can’t read them, the list is of their websites you have to go visit, this will have to change if they want to survive. Newspapers should scrambling to make as many mobile apps as possible, build other ways of generating revenue. The online ad market is staggeringly huge, but for some reason print & TV are merely poking a stick at it. They will all but be forgotten when the other 3 billion people come online in the next 2 -3 years.
Another confusing move this morning, I was actually surprised how I responded when I read that a Mall in Surrey, B.C., Canada was sold for $91 Million, that’s cheap by today’s standards but it still sold. But a mall? Granted this mall is anchored by some heavy weights, SAVE-ON FOODS, Canadian Tire, Staples, Winners, HomeSense, Cactus Club and HSBC, plus 26 other businesses. Back in the 70’s & 80’s, he who owned the channel of distribution, had a secure future, would never be in danger of being out of business. Now, we still need some box stores, we will need warehouses, forklift drivers and so on. But you can also see where most of these mall businesses will either be 100% online or gone.
So the questions begs to be asked, why would you buy a mall? The investment of the land? Maybe. The longevity of these businesses remaining long time anchors in a mall? Maybe, but I doubt it.
These moves in of themselves are not life threatening or even bad for that matter by today’s standards, but in the next 3 – 5 years, I suspect they will be asking themselves what they were thinking.
Consider these two small movements today, and I quote, profits in Canada’s non-residential construction sector will fall to a five-year low this year, that’s according to a report by the Conference Board of Canada. Pre-tax profits for this year in this sector will be 1.2 billion, down from $1.4 billion in 2009, and will not recover to pre-recession levels until 2014, at it’s earliest, it’s survey forecast. If at all I wonder.
In Washington there is more bank demise, the number of problem-ridden US banks rose to the hihest levels in 17 years, just in the second quarter! The number of institutions on its “problem list” rose more than 7 percent in the second quarter.
Traditional business is still in denial, they keep doing business as usual thinking everything will turn out alright. Really? Do you really think things aren’t changing, do you really believe that a global population who screams to be heard, to be served the way they want to be served, they want it to be almost free or extremely low cost, they want it in an Open & Free Business Model. Today’s public will look until they find it the way they want it, no longer can you force people to do it your way big business, you best pay attention, because if you won’t, someone will pay attention and take your business. Wake Up!
On a positive note, today the Bank of Canada interest rate hike has been delayed : )