Category Archives: Retail

Big retail continue the whinge

The National Retail Association (aka the union for profit hungry big retail) is carping on again with their demand for the Australian government to impose a 10%  tax on online goods purchases. A report todays says:  “Australia stands to lose 88,000 retail jobs over the next five years if the government does not begin levying tax on imported items bought online and worth less than $1000” says the National Retail Association. The big retailers are just sooooo concerned about their staff and the potential for staff to lose their jobs. Isn’t that jolly good of them!

In reality of course, big retail is only concerned about themselves and their hungry profits. Having ripped off Australian consumers for years with over-inflated prices, baulked at providing real customer service, and completely failed to see the coming of the 21st century, the big retailers now want to keep heaping additional costs directly on the consumer.  Moreover, the high Australian dollar makes buying from overseas for BOTH the retailer and the consumer that much more inexpensive. Retail cannot face up to the fact that we live in a global village with access to a vast range of goods at various prices from around the globe.

One of the great ironies is that these same retailers are happy to source product from overseas at reduced costs. They obviously aren’t concerned about the Australian jobs lost through their offshore purchasing. Indeed, a bevy of big retailing bosses weren’t too unhappy when their businesses boomed at the expense of smaller local competition.

Like most big businesses, they don’t want the competition.  It’s easier without it.

The other self-serving irony is that it won’t be big retail paying the cost of collecting any new tax on online purchases. No, it will be us consumers again through our taxes. The government will have to pay for the cost of assessing and collecting this tax – on goods below $1000. I bet you the cost of administering the tax on my $35 book from Amazon won’t be efficient. And there’s still no guarantee I won’t continue buying from Amazon (or wherever) to get the goods I want, when I want it, and at a price I want to pay.

Changing business conditions have always occurred. The farriers and wheelwrights went out of business when the car replaced the horse and cart. Farm labour got the bullet when farm mechanisation was possible. Service station attendants got the chop when self-serve petrol pumps came into vogue. And big, fat department stores will face the wall from more competitive providers of goods who can serve customers more effectively and deliver faster.

Offsetting these job losses in industries facing rapid change have been new jobs. There aren’t too many unemployed wheelwrights and farriers any more as there won’t be too many bored shop assistants in the future. And courier companies will be looking to soak up new staff to move all these goods around. One wonders why the National Retail Association hasn’t been pushing for a carbon tax – now, that would be real progress!

Instead of blowing additional hot air, the National Retail Association would be better served by having its financial supporters actually provide proper training to staff. They could actually provide excellent customer service. They could  try new ways of  creating relationships with customers instead of treating customers like commodities. They could stop ripping off Australian consumers with ridiculous prices. But most of all, they could wake up to the 21st century and respond (which is different to react) to the new environment with a change to the way THEY operate.

Go, National Retail, Go!

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Online retailing doesn’t always deliver

Hey, Gerry Harvey and the crew of the whingeing Australian retail coalition – online retailing doesn’t always deliver!

If you’ve been following the brouhaha here in Australia over online retail then you would know that some of Australia’s biggest retail behemoths have been whingeing boldly and loudly about the non-application of GST (10%) to overseas online retail below $1000 in value.

If you believed these retail dinosaurs, you’d think that online retail was a great evil attacking the very fabric of fair-faced capitalism! Nothing could be further from the truth.

As this latest article identifies, online retail has some problems that should be familiar to anyone who has spent a little bit of time understanding the phenomenon. Problems facing consumers shopping online include:

  • non-delivery
  • item was not what was claimed online
  • privacy and security issues with internet transactions
  • confusion over application of domestic consumer law to overseas purchases

One of the reasons consumers shop online is because “bricks-and-mortar” retail has let them down.  Big retail in Australia generally has poor customer service and the range of products on sale is far fewer than what is available online over the internet. The first problem is something big retail could fix but it would cost them extra money in recruitment and training, something they all want to avoid. The second problem is unavoidable due to globalisation and communications – something that has been obvious over the past 20+ years.

Rather than spend the millions of dollars on a public relations campaign whingeing about a paltry tax payment, big Australian retail could actually improve performance through good ol’ fashioned competition. They could provide better service. They could offer a wider array of products. They could lower some of their prices to be more competitive with online (still higher, but not the umpteen hundreds of per cent differences we often see now). This comes at a cost to the retail monoliths and this is the real reason why they fly the online tax propaganda.

Retail stores in Australia have a huge advantage over online:

  • products are visible and tangible
  • products can be bought on the spot
  • there is no postage charges and overseas currency banking fees to pay
  • good customer service builds consumer trust and improves word-of-mouth marketing
  • Australian retail can use their own online stores to supplement their retail stores, thereby being both supportive of the business and enhancing the brand (but only if the online store actually meets consumer needs)

The trouble is, big Australian retail needs to put in some effort to compete. That’s why the CEO and Board of Directors get paid the big bucks – to work hard on strategy and operational performance. Quite frankly, I don’t see much evidence that they are willing to work hard beyond the easy fix of spending their company’s money on simplistic advertising drivel.

Online selling is here to stay

No doubt you have heard the mad ravings of big store retailers like Harvey Norman, Myers, and Borders complaining about unfair competition from online retailers.

Please note that much of their ranting fails to distinguish between online sellers in Australia and overseas, although the propaganda campaign really targets non-GST payments of overseas retailers. Mind you, Gerry Harvey has had a long-time spat with Australian online retailer Ruslan Kogan who sells televisions in direct competition to Harvey Norman. Perhaps Gerry Harvey has had it so good for so long he has forgotten what competition is all about.

The GST exemption is for goods under A$1000 in value purchased by Australian consumers overseas. At 10%, the maximum tax that could be applied is a pretty paltry A$100.

But of course most people who buy from online retail (about 2% of all retail sales)  don’t do it for tax reasons and don’t necessarily spend big. For example, I buy the odd book or CD from overseas when I cannot source the items in Australia. If  my purchases come to A$60, then the GST exemption saves A$6. I bet it would cost more than A$6 to manage the application of GST to such small individual purchases. But then, the big Australian retailers don’t have to fork out for the costs of administering the tax – the Australian taxpayer does.

The PR campaign from big Australian retail is a whinge that reflects more their lack of adaptability in the market than enything else. Business journalist Michael Pascoe sums it up here and Michael Fox here.

More fundamental to the attack by dinosaur retail in Australia on new methods of consumer shopping is the fact that consumers have far greater visibility on choice of product and price. Whereas before, Australian consumers pretty much had to take what retail offered in their stores. Nowadays Australian consumers can buy what they want and when they want from anywhere. Moreover, Australian consumers can see the different prices for the same goods from many, many different retail suppliers.

Along the same lines, but at least a dinosaur moving into the 21st century, is newspaper mogul Rupert Murdoch with his proposed Ipad newspaper. The digital newspaper will be called the “The Daily”, but the launch has been delayed slightly. Murdoch has in the past vociferously complained about news media’s failure to generate income from news on the internet. This new venture is obviously something Murdoch is pinning his hopes on for the future.

The content will be important if it is to generate big sales.  Murdoch’s News Corporation has often been criticised for right-wing bias (Fox News in the US is a classic example). It will be interesting to read the tone of the content on the digital newspaper and what that means for online sales.  If Murdoch gets his content and pricing structure right, then this will be a huge success.

One of the myths about online is the belief that people want everything for free. The massive increase in online shopping over the past five years belies this myth. The fact is that people will pay for a service or a good online (like anywhere else) when they see it delivers what they want at a price they find acceptable.

It will be interesting to watch the digital newspaper take-off in the same way it will be interesting to watch loud-mouth big Australian retail adjust to the new shopping realities brought about through online shopping. (It seems that the Australian big retail bully boys will persist with their campaign – read here. A more sensible response can be found here).

All of this will have a huge impact on online marketing and communications; a trajectory that continues to advance online media over the traditional forms of media communication.