Tuesday, 27 January 2015

The 120-day trade credit norm – an eventual turnoff for the consumer?

As Diageo become the latest major company to extend the credit taken from their suppliers to between 90 and 120 days, the law of unintended consequences begins to kick in...

Passing extended credit burdens back up the pipeline can be regarded as a way a supplier can attempt to neutralise the cost of the credit they have to give their customers. However, as you know, a high added value company can never hope to fully pass on to their suppliers the cost of credit they give their customers.

This is because, in the case of a supplier where bought-in ingredients represent say 10% of their £75 trade price, when their customer on a trade margin of 25% delays payment of that trade price, the supplier would have to delay payment of their suppliers by ten times to cover the cost of the customer’s credit.

The key issue here is not just the pain they inflict upon a trade partner who cannot afford to pass on the cost to their supplier, if any.

What really matters is that, as 120 days becomes 'a common industry norm', so too the major retailers will be tempted to extend their credit periods to 120 days, 150 days or even 180 days, with payment every six months becoming a possible settling point...until the major suppliers attempt to catch up.

When even a savvy consumer accepts that credit over 30 days (itself an abuse of power when value can be exchanged in five days) is unacceptable, and eventually results in higher prices on shelf, they will attempt to exercise their ‘walkaway’ option, probably en masse…

In the way consumers are becoming increasingly critical of global companies finding locally legal ways of side-stepping their tax obligations, so too they will eventually make a connection between supply chain abuse and what they have to pay on shelf, and begin to boycott both brands and retailers...

Meanwhile, the only answer for a supplier faced with excessive credit demands in this generic world is to offer a package so unique and of such value that one earns the ability to deal a ‘walk-away’ card onto the table, and mean it….

Thursday, 22 January 2015

Tesco's New Supplier Network - some opportunities to miss?

Tesco’s interactive online supplier-collaboration platform is a step that could easily be converted into a leap forward.

How about Tesco becoming the first really transparent retailer, revealing aspects of the UK business that are usually kept hidden ‘because of commercial sensitivities’…?

Think what productive use suppliers could make of the following:
  • UK Credit periods: average days, and proportional split of payments in advance, on delivery, and 20, 30, 45 and 45+ days… (+ rationale)
  • Brand/Private-label split, overall and by category
  • Sales/sq. ft. by category
  • Gross & Net Margin split, by category
  • Trade investment/Commercial Income: Tesco definitions of each bucket, their purpose, KPIs and method of accounting
  • Split of back & front margin

Tesco have begun a refurbishment of their supplier-relationships, in what will continue to be a challenging and distracting environment (SFO fall-out, increasing consumer sensitivity to David-Goliath corporate relationships…). 

Instead, why not go for a fundamental fact-based renewal of those relationships, via a unique context of openness that will allow and encourage suppliers to design and deliver proposals that will directly address the fundamentals of the supplier-retailer partnership?

Naïve? Of course it is naïve, as with any leap in the dark…
...a darkness where suppliers currently operate, building in +/- buffers to cope with best guesses on key retailer drivers and measures, instead of being able to fine-tune proposals that are tailored to help trade partners to optimise ROCE, in the interest of meeting consumer-shopper need, a primary driver for both parties…    

Tuesday, 20 January 2015

Supermarket sales volumes up for the first time in 18 months - but how was it for you?

Latest data from Nielsen showing  that sales volumes in the UK’s leading supermarkets increased 0.6% during the four weeks ending 3 January 2015 produced a collective sigh of relief, and possibly a feeling to the effect that 'it’s all over now, back to business as usual'.

However, suppliers that have never had a better year, and are hoping that no-one, least of all the ‘down-to-us’ retailers, has noticed, will have realised that it is always ‘business as usual’, with success coming to those that can factor any market conditions into customer strategies, and maintain growth.

For them, structural changes are simply a re-balancing of demand on the way to what will probably end up as Tesco 25%, Sainsbury’s, Asda and Morrisons sharing 40%, with the remainder going to the middle-squeezers…

Meanwhile, those suppliers that are still shell-shocked following seven - yes seven - years of flatline demand, having cut to the bone, are licking their wounds, yet hopefully finding time to continually run the numbers on every aspect of the trade investment package, in a constant search for ways of optimising cost and value..

Despite the punishment, they need to summon the energy to dig into the Nielsen data in order to compare category volume growth with customer equivalent and ideally confirm their fair-share of any improvement in sales.

Then comes a re-assessment of their competitive appeal vs. other category players, as a basis of re-engineering their entire trade investment package, by customer.

Given the forensic intensity of the trade investment spotlight (SFO), coupled with the need for high-intensity price-cutting by the mults, it is vital for suppliers to anticipate significant shifts from back to front margin, everywhere…

Only then can we assume that we are ‘back to normal’ in supplier-retailer trading relationships…in anticipation of mults' claims that, having dealt away the increases in front margins via price-cutting, there is now a need for 'a little extra to create some excitement in store' ... 

Monday, 19 January 2015

Busting to win custom - the real fall-out in price-wars

News that the supermarket price war could force more than 100 food suppliers out of business was not news to key stake-holding NAMs...

In fact, anyone with a half-open eye on the UK retail trade will know that a package comprising Trade investment of 20%+ of supplier sales, Trade Credit of 45+ days and Deductions of 7% - all contributing to lower-cost food wastage in the home - can have only one conclusion…

Whilst Begbies Traynor, a corporate rescue and recovery practice, understate this via ‘experiencing financial distress’, being driven into liquidation, or ‘forced into going bust’ probably describes the situation in a way to which NAMs can more easily relate.

Given the price-cutting turmoil in the market, the key issue for NAMs is to establish the state of their own company’s finances, compare with other players in the category, and then find ways of taking remedial action.

In practice, this means accessing Companies House web-check service (online @ £1/company) and downloading your latest annual report.
Remembering that this is the version that the buyer sees, it helps to conduct the analysis from that perspective. In other words, the customer is not interested in the extent to which you are being driven towards the edge, but is more concerned with the resultant impact on continuity/availability… 

You, meanwhile, will have the added benefit of category and customer insight from a supplier perspective.

As you check through YOY Sales and Net Margin, compare these with your performance with individual customers.

Next calculate average trade credit and compare with individual customers to discover the sources of your growing stress/anger...

Assuming that your ex-factory prices are - or should be - 50% of your prices to the trade, you can then calculate the impact of your trade investment  on your net margins, on average, and using your detailed inside-knowledge, assess the extent of ‘fair shares’ incorporated into your individual trade partnerships.

A quick check on the open-domain finances of your category competitors will further confirm the fair-share splits by individual customers.

Finally, a checking of the customers’ finances will then point at key beneficiaries of the monies being squeezed out of your trade partnerships to benefit the consumer…

You are then in a position to ensure that - using open domain-fueled insight, and every tool in the bag - your company is going to survive...

After all, why go bust because your customer does not understand fair-play, or finance...?

Thursday, 15 January 2015

Tesco gets new junk status credit rating, proving that the 'first cuts were not the deepest...'

Last week's Tesco moves that included shutting 43 stores, moving the head office and ending its pension program, along with the sale of the Blinkbox movie-streaming unit, price cuts and £250m of cost savings, were judged insufficient to prevent S&P downgrading their credit rating from investment grade to junk status.

Following on from Moody's equivalent downgrade last week, it now remains to be seen whether the third major agency, Fitch Ratings, will follow suit.

What is a 'junk bond'?
Junk bonds are fixed-income instruments that carry a rating of 'BB' or lower by Standard & Poor's, or 'Ba' or below by Moody's. As you know, junk bonds are so called because of their higher default risk in relation to investment-grade bonds. In other words, the rating is used by the market to assess the degree of risk for those prepared to engage with a company via purchase of its bonds, investment in its shares, or extending them credit.

In return for the perceived risk, the company will usually have to pay more for the assistance, in terms of interest, or offer earlier payment. This means that the cost of running the business will rise, thereby impacting the bottom line...

What does it mean for Tesco?
Given that the above ratings were given after the announcement of the turnaround plans, it means that the ratings agencies believe that Tesco are not taking sufficient steps to deal with the structural changes in the market, and the discounters in particular...

Action for Tesco?
Tesco now have to add extra moves to the action-list in order to attempt to reverse the junk ratings, ideally before Fitch follow S&P and Moody's.

Possible options include:
  • Extension of the headline 'up to 25%' price-cuts on 380 branded products to perhaps an extra 400 brands to fully replicate Discounter product portfolios
  • Acceleration of asset sales (Tesco Bank, SE Asia interests, perhaps an additional 40+ store closures) in order to pay down debt and reduce the interest burden
  • Searching for, say, an extra £250m in cost savings within the business
NB. the moves have to be sustainable and 'spectacular' in order to counteract the junk ratings, and neutralise the increased costs of doing business.

'Ignoring' the ratings would probably result in additional pressure on the share price.

The Tesco moves also have to be translated into bottom-line KPIs, spelling out how each move will impact net margin, and ROCE, minimum... And all of this in the shadow of the ongoing SFO investigation.

What it means for NAMs?
For speed and clarity, Tesco have to shift the emphasis from back to front margin in order to impact the consumer-shopper.

In order to avoid much of their trade investment ending up in front margin buckets, NAMs need to reassess their competitive appeal relative to other brands/products available to the consumer, in terms of Product, Price, Presentation and Place.

A couple of 'what-ifs' re the impact of a 25% price cut on their brand - or a competitor - in terms of  relative competitive appeal within the category, might help in kick-starting colleagues' focus on the issue...

Next, each element of the investment package should be re-assessed in terms cost to the business and value to the customer, in order to help Tesco to see and quantify the link between brand investment and bottom line impact...

Anything less may be seen as simply another potential cost-saving in a transactional relationship... 

Tuesday, 13 January 2015

Dalton Philips - a casualty of a time-warp breakout?

Appointed to pull Morrisons into the 21st Century via an injection of IT, global vision and democracy, Philips managed the five-year programme of heavy lifting, but was undone by the middle-squeezing impact of Waitrose and the discounters, at a time when a return to basics was required in retail…

In the interim, with his down-to-earth, common-sense approach, Andrew Higginson will reduce the Morrisons’ message to basics and go for growth via a shift from back to front margin, a focus on pricing and a search for a like-minded replacement CEO.

The new team will build on Philips’ improvement in operating systems, and moves into convenience and online.

Within the business, the new chairman and CEO will sound and feel like Ken Morrison, which will not only provide internal reassurance, but will also ensure a couple of years’ silent tolerance from at least one key shareholder…

Back to the future for Morrisons?
Meanwhile, NAMs need to anticipate a return to the old Morrisons, but manage a retailer that is super-charged with the benefits of a visit to the future… 

Monday, 12 January 2015

The Hungarian Revolution in retail competition legislation - Why this matters to the UK NAM...

Following on from yesterday morning's post re the new trade law in Hungary re closure of unprofitable supermarkets (below), it is obvious that the Hungarian competition authorities have evolved a very effective way of neutralising some of the scale-power of major retailers.

A new model in the management of anticompetitive behaviour
Unlike more 'sophisticated' markets where a set of rules is established, and transgression is detected, proven and penalised, the Hungarian authorities have identified the ways in which large companies can exercise scale-power and are taxing such uses in order to neutralise their impact on smaller players, fast.

This is a much simpler process that does not need the help of whistle-blowers to make a case.
Details are given in the posting below of the steps already taken in taxing large companies' ability to cross-subsidise unprofitable store locations, ways of promoting (advertisement tax), provision of food services (food supervisory fee, from 0.1% of sales) and forbidding the sale of some categories (tobacco).

Application of the process to trade credit abuse
It follows that when they come to the issue of trade credit, the Hungarian authorities will not - unlike UK legislators - miss the point of trade credit abuse by penalising breaches in 'on time' payment of invoices i.e. the customer is entitled to negotiate a period of their choice -  45 to 90+ days on a 'take it or leave it basis' and be in breach only if the agreed time period is breached.

Instead, if they follow their current approach, the Hungarian authorities will calculate a method based on transfer of value time-period, plus say 5 days handling to allow for banking system 'efficiencies' which in the case of  weekly deliveries would work out at approximately 15 days from date of delivery.

The authorities would then simply apply a commercial rate of tax - say 5% minimum p/a - on any period in excess of 15 days, thus neutralising the scale power of the customer re credit period. Monies collected in this way could be then re-cycled to subsidise smaller players...

Credit period was never intended to morph from covering the gap between receipt of goods and payment by the customer's customer, to becoming  a source of free credit or working capital, at the expense of a supplier too powerless to object...

Hungarian Lawmakers Pass Law On Banning Unprofitable Supermarkets, in the name of fair competition

According to Xpatloop, lawmakers have approved a government law on banning from 2018 supermarkets and hypermarkets that fail to make a profit for two consecutive years.

Given that the new law was this morning cited by Tesco, Hungary's biggest supermarket chain and third-biggest employer, as the reason why they will close 13 shops in Hungary in order to remain profitable for the long term, it can be seen that the new legislation is being taken seriously.... 

The government makes the moves as part of a policy to eliminate of factors that enable large supermarket chains to abuse their preeminent positions. Steps already include a 15-fold rise in the so-called food supervisory fee, the recently introduced advertisement tax, and the ban on tobacco shops in some big supermarkets.

It can thus be seen that the Hungarian government have gone farther than other countries in attempting to combat unfair competition, in that they have reached to the heart of how large companies exercise scale-power and focused on what they regard as root causes of unfair advantage, namely the ability to cross-subsidise unprofitable store locations, ways of promoting (advertisement tax), provision of food services (food supervisory fee, from 0.1% of sales) and the sale of some categories (tobacco).

In other words, these moves should be seen as a progression towards ensuring fair dealings by large retailers and suppliers in an attempt to reduce anti-competitive pressure on medium and smaller trade partners.

It remains to be seen how soon competition authorities in other countries take similar steps, in the search for fair dealings for all...

Meanwhile, time for UK suppliers and retailers to anticipate the inevitable, vis appropriate 'what-ifs'? 


Friday, 9 January 2015

Tesco's Fightback Plans – a Live version for the guys that count

Whilst we bated our breath and crossed our fingers in anticipation of Tesco’s announcement yesterday, and thankfully had our natural optimism endorsed via a subsequent 15% surge in the share price, Dave Lewis greatest challenge was convincing a room full of City Analysts that he meant business.

This live session is now available online:
Watch the webcast here

The Presentation:
The real benefit for NAMs lies in the fact that the 1.5hr session gives a real demonstration of how Tesco has been dealing with the crisis. In a 60 minute presentation via 42 slides, Dave Lewis explains in some detail the key moves now reported in the media. 

However, as salesmen, NAMs have a special advantage in watching the man in action, with body-language providing additional insight and supplying the pieces of the perception-jigsaw that enables suppliers to enhance anecdotal learnings picked up in face-to-face encounters with the buyer.

The Q&A session:
Whilst it could be said that the opening presentation was rehearsed and fluent, the Q&A session (at approx. 55 mins into the webcast) reflected some of the more obvious issues affecting the audience, and this session gave the analysts (and the viewer-NAMs) access to CFO Alan Stewart and caused Tesco to think on their feet, another learning opportunity for NAMs…

With up to three questions per analyst, and careful observation of the manner in which the answers were handled, the 40 minute session has to yield some individual nuggets for perceptive NAMs.

The questions were mainly financial, reflecting the priorities of Tesco’s current situation, but the over-riding impression for observant NAMs is that whilst Tesco sees its issues and opportunities in terms of meeting consumer need, the key lens they will use will be risk-reward and cost vs. value relationships.

In other words, the numbers will count, big-time!

I could give you chapter and verse re the entire session, but nothing beats the value of finding 1.5 hours over the weekend for those NAMs prepared to invest a little 'leisure-time' in seeing how your career will pan out over the next few years.

Yesterday’s webcast showed the new Tesco culture in action, and if successful, a pointer for the future of UK retail…

Thursday, 8 January 2015

Tesco Re-boot - Dave's work-in-progress...

Given the combination of store closures, asset disposals, capital investment cut-backs and appointment of Matt Davies as UK CEO, it is now obvious that baggage-free Dave Lewis means business.

However, these moves are being made in order to shore up the Balance Sheet and cover some of the Pension Fund deficit. Closing 43 loss-making stores and selling dunnhumby and Blinkbox will yield no more than £2.5bn.
Therefore it is best to see this morning’s announcement as part of an overall disposal programme that has to see the disposal of Tesco Bank, and their SE Asia interests in order to give Lewis sufficient elbow room to tackle the real agenda - The neutralisation of the discounters…

In fact, the announcement of up to 25% price-cuts on 380 branded products could be seen as ‘one for the multiple team’ aimed at using big-gun brands to impact Aldi and Lidl's equivalent surrogate-brands. Note that there was no attempt to make the price-cuts via Tesco private label…

It follows that the other mults will need to follow suit to avoid becoming side-dishes on the menu… 

Two issues remain:
  • What discounter categories will Tesco tackle next via what brands, in order to address the full discounter portfolio?
  • Given Dave’s generation, will this first cut be the deepest….?
Time for suppliers to run the numbers on the inevitable scenarios in order to anticipate and factor in Tesco’s obvious determination to meet their customers’ needs for “simpler, lower and more stable prices”?

Wednesday, 7 January 2015

Sainsbury's - Elephant-management in the main aisle...

With a less than expected fall in its third quarter, and confirmation of their convenience and quality credentials, there are many things right about Sainsbury’s.

Bearing in mind that the reported results reflect the whole of Sainsbury’s business, NAMs will have already compared their brands’ performance to check fair shares at category level.

However, in order to optimise opportunities, it is necessary for NAMs to go beyond Mike Coupe’s understated warning that "The outlook for the remainder of the financial year is set to remain challenging…” and explore possible issues and implications, ideally ahead of the competition.

Essentially, Sainsbury’s have to be considering the following:

Space redundancy
Like the other multiples, Sainsbury’s are probably occupying retail space that is 20% in excess of need, especially out-of-town. This means they will close and sell off some low-profit outlets. (See impact here )

However, this leaves some outlets that are too big for purpose in terms of the company’s current offering. These require re-engineering in terms of possibly franchising redundant space for complementary categories that might benefit from Sainsbury’s pulling power.

Meanwhile, there are instore theatre opportunities for suppliers in appropriate categories, providing that the resulting numbers exceed current-use performance…

Commercial Income
With Tesco re-negotiating its supplier contracts (see yesterday’s KamBlog below) it is likely that other multiples will have to follow suit.

This could mean that significant amounts of supplier trade investment will transfer into front margin, with a strong possibility (as you know, in current retail, only yesterday is certain!) that this will result in price-cuts sufficient to neutralise the discounters….

Whilst Sainsbury’s will probably edge upmarket to optimise their strengths at Waitrose end of the field, they will need to keep one foot firmly in mass retail and follow Tesco…

Meanwhile, the multiples and their suppliers need to re-assess their use of trade investment /commercial income as per the UK Financial Reporting Council (FRC) warning (see details).

Hopefully, proactive management of these two elephants will leave some time to deal with other distractions like food price deflation, flat-line demand and increasingly savvy consumers…

Tuesday, 6 January 2015

Tesco Supplier Contracts - a ‘back to front’ move in trade relationships?

On Thursday, Tesco is expected to announce that it is making major changes in supplier contracts by shifting its emphasis from back-margin to front-margin.

In practice, this has to mean that commercial income (trade investment) will be translated into sales-based reward, and presumably negotiated into trade margin and volume discounts. Given the sums involved, with trade investment running at 20% of their sales for many suppliers, and average trade margins at 25% of a retailer’s net sales, it is imperative that suppliers enter these re-negotiations, well prepared.

In effect, this means that a supplier has to be very clear about the actual cost to the business of each element of the supplier trade investment package, the purpose, the KPIs and the terms of compliance. Converting these sums into the incremental retail sales (ex VAT) that they represent, based on the retailer’s current net margin, will help in adding value in negotiation.

More importantly, it will remind the NAM that any transfer into front-margin has to be linked with appropriate levels of incremental sales.

In other words, as front-margin currently consists of a mix of the retailer’s trade margin and unconditional volume discounts (!) it is vital that any additional volume-based discounts should be made conditional upon specific initiatives hitting pre-agreed KPI targets, and paid in arrears – a reward for additional effort by the retail-partner, the original purpose of trade investment.

If Tesco manages to make this fundamental change in their supplier relationships, and unless suppliers are able to tie the incentives to specific in-store initiatives, it is probable that much of the monies will transfer into price support.

This means that other multiples will have to follow suit, or risk loss of market share.

Time for a fundamental re-assessment of the TOTAL support package your brand needs in making itself available to the consumer?


Monday, 5 January 2015

The Squeezed Middle - a surplus opportunity for 2015?


As we enter an unprecedented trading year, it is tempting to regard last year’s and 2015’s anticipated cut-backs as negative, and even causing some nervousness for those that are experiencing unprecedented sales growth, perhaps we should view the new market differently?

Instead of regarding the prolonged downturn in demand as a continuing spiral, how about regarding it as the elimination of surplus, with demand gradually working through the surplus that has resulted from 30 years of credit-fuelled growth?

In other words, in the way that post-Christmas dieting has already begun to yield results for some, so too the savvy consumer has spent the last year re-assessing and modifying their purchasing behaviour in the following ways:
  • ‘Making do’ with existing food/non-food stocks and leftovers
  • Food wastage being ’corrected’ by the weekly shop
  • Less ‘wasteful’ car journeys to out-of-town superstores when a local shop can be more convenient, a source of exercise and helps to reduce car running costs...
  • First-hand discovery that discounters are ok, that private label is worth including in the ‘making-do’ repertoire, and can even be ‘better than brands’ in some cases...

Where is this headed?

The above has combined with retailers’ discovery of the under-used tail in large-space retail, a fall in land-bank values, the inevitable closure of at least 20% of mult’s existing selling space, to point us at unprecedented cut-backs in consumer and retail demand in 2015, in order to absorb the now unwanted surplus. In the process, the retailers will rationalise ‘over-lapping’ brands in many categories, in order to simplify the retail offering at point-of-sale

How does it affect you?
‘…if you need to ask….’

What to do about it?
Patently, there is a need to reassess fundamental demand for your brand, vs available alternatives, and cut back obvious surplus, before the consumer/retailer does it on your behalf...

But keep in mind, we are talking about ‘surplus to demand’.

In other words, if we cannot make a case within the business for a real place for our brand, in a deal that is ‘obviously’ better that that available elsewhere, we are simply delaying the inevitable.

But, the consumer still needs our product. Now we need to help them re-appreciate our brand...

At long last we have reached a trading year that will eliminate the surplus and as a result, holds genuine opportunity for those that have the courage to go back to the fundamentals of consumer and trade need-management, faster and better than the other guys…

Monday, 22 December 2014

Coles ordered to pay $11.2m in penalties, legal fees for mistreating suppliers

According to reports in ABC Au News, the ACCC said the supermarket giant had set up the Active Retail Collaboration (ARC) program to make 200 small suppliers pay rebates to boost the company's profits. Details of specific charges here.

Even more importantly, the court used the word ‘unconscionable’ to describe Coles behaviour.
Unconscionable conduct is generally understood to mean conduct which is so harsh that it goes against good conscience. 

Under the Australian Consumer Law, businesses must not engage in unconscionable conduct, when dealing with other businesses or their customers, following a Federal Court decision to uphold an Australian Competition and Consumer Commission (ACCC) settlement over supplier mistreatment.

The ACCC used its compulsory information gathering powers, forcing suppliers and Coles to provide information about the claims.
.
Why this is serious
There are a number of factors an Au court will consider when assessing whether conduct in relation to the selling or supplying of goods and services to a customer, or to the supplying or acquiring of goods or services to or from a business, is unconscionable.

These include:
- the relative bargaining strength of the parties
- whether any conditions were imposed on the weaker party that were not reasonably necessary to protect the legitimate interests of the stronger party
- whether the weaker party could understand the documentation used
- the use of undue influence, pressure or unfair tactics by the stronger party
- the requirements of applicable industry codes
- the willingness of the stronger party to negotiate
- the extent to which the parties acted in good faith.

This is not an exhaustive list and it should be noted that the court may also consider any other factor it thinks relevant.

The key idea is that the Au authorities are using legislation and language that will guarantee the wide publication of the details in consumer media, in terms of criticism of retailers for abuse of power, especially with regard to small suppliers.

Application to the UK
Despite a distance of 10,500 miles, the case has to set important precedents for UK authorities….

Apart from the obvious pointers for strengthening UK rules, the case clearly demonstrates the ‘teeth’ that have been given to Au competition authorities, meaning that UK will have re-assess all current supplier-retailer practices in anticipation of eventual application here.

The Tesco SFO investigation will provide a platform and act as a catalyst in defining and accelerating appropriate change in the UK.

The problem for UK retailers is that the combination of 45+ days credit, trade investment of 20+% of purchases, deductions of 5+% and price-cutting currently result in Net Profit margins of approximately 3%, meaning that retailers will be unable roll-back any of these sources of income without diluting their profits…

It remains to be seen how early in 2015 the pace of equivalent change will begin to accelerate in the UK…

See here for guidance on How to avoid becoming a victim of unconscionable conduct, How to avoid engaging in unconscionable conduct, Penalties and remedies, and links to appropriate Au law.