Business stories of interest this week

Business stories from the past week, compiled by Jason Maywald:

1. Woolworths wins form Coles spin off 

Coles will struggle to compete with arch-rival Woolworths once it has been spun-out into a separate company and has to fend for itself without the support of the retail giant Wesfarmers. /react-text

react-text: 15723 That’s the view of Bank of America Merrill Lynch’s veteran retail analyst, David Errington, who argues the demerger will benefit Wesfarmers more than Coles.

Wesfarmers shocked the market with its announcement on Friday that it intended to cut Coles loose, with the $18 billion supermarket to become as new top-30 ASX listed company.


2. Why Toys R Us went bust

Toys R Us is Toys R Bust. The company has entered Chapter 11 bankruptcy and has begun closing more than 1000 stores in the US and UK.

The company’s Australian arm insists it is business as usual but, when a retailer fails, all the talk is about the effect of Amazon and weakening consumer confidence.

But there was another reason why the 70-year-old Toys R Us found itself plummeting over the retail precipice: private equity.

Toys R Us was owned by private equity (PE) investors and they often have a singular and laser-sharp focus — to make money, and make it fast.

In retail, that strategy has seen many casualties.


3. Aussie loyalty startup looks global 

Australian customer loyalty start-up PokitPal has scored a major deal with payments giant Mastercard, which it said would catapult the business internationally and help it grow its Australian user base more than 200 per cent this year.

PokitPal started out as a paper-based booklet of deals for university students, but three years ago it developed a mobile app and 18 months ago took the step to integrate payments technology to allow it to link directly to customers’ bank cards.

The deal with Mastercard, which took 16 months for the start-up to get across the line, will immediately let Mastercard’s 10 million Australian users access PokitPal’s range of customer loyalty deals at 4500 restaurants, shops and venues across the country while using their card.

The partnership is initially open to Australian users only, but the three-year deal is a global one and in 2019 PokitPal will begin expanding offshore, most likely targeting Britain as its first international market.


4) Man makes $2m by getting fired 

When Calvin Leung was fired from his steady job, it ended his successful IT career — but he couldn’t be happier.

The self-described “computer nerd” had worked in Canberra for five years when he had a run-in with a member of staff over what he described as a “simple admin mistake” in 2008.

The incident escalated quickly, and Mr Leung’s contract was cancelled the next day.

Despite having witnesses who were prepared to stand up for him, and colleagues who resigned in solidarity with him, the decision was final.

But Mr Leung, 36, said while he had initially been disappointed by the incident, he quickly realised it was a blessing in disguise.


5. How the Beach People fight rip offs

Emma Henderson and Victoria Beattie have built an international business on the back of a distinctive beach towel.

However, the runaway success of the Beach People’s round beach towels has led to a flood of imitators, with similar-looking round towels now sold around Australia.

Henderson says the Beach People was the first to market after she came up with the idea for a round beach towel while on maternity leave and enlisted her sister as her business partner.

“We had to find a manufacturer because it was a product that was completely new to market so we were reinventing the textile industry globally which we didn’t realise we were doing at the time,” Henderson says. “It took a long time because nobody had the machinery to make it. It was a pioneering venture.”