Welcome to the global pillage

With the Aussie dollar on the rise and more customers finding the benefits of buying online overseas, the tax summit at the end of the year will need to give serious attention to the plight of domestic retailers. Sol Lew’s Premier Investments has just announced the closure of 50 of its Portmans, Just Jeans, Jay Jays, Peter Alexander and Dotti Stores.

Bernie Brookes asserts that up to 30,000 jobs could be cut from the Australian retail sector unless GST and import duty exemptions are removed from online purchases of less than $1,000 made via foreign websites. Joe de Bruyn, Shop Distributive and Allied Employees Association national secretary says the campaign by retailers including Myer, David Jones, Harvey Norman and Just Jeans is overplaying the threat that online shopping posed to their businesses.

More than 10 billion dollars of sales will be done through online retailing this year, and those under 21 already will spend more than $5 billion via off-shore credit card purchases. We can therefore expect the issue raised by Gerry Harvey (Harvey Norman) and Bernie Brookes (Myer) concerning GST exemptions that were scorned by Bill Shorten will undoubtedly get another airing.

Shorten admits that Australian retailers are doing it tough in recent times as a consequence of the surging dollar, consumer confidence collapse since the GFC and the threat of rising interest rates, but pleads that it might cost the Government money to level the playing field for domestic manufacturers and retailers.

Independent senator Nick Xenophon says the campaign doesn’t acknowledge that small businesses are those most hurt by internet shopping. “It’s extraordinary to hear Myer, David Jones, Harvey Norman and Target all claiming they want a level playing field when the extraordinary market power of these very businesses has put enormous pressure on the small business sector,” he said in a statement.

The recently released Commonwealth Bank study of the online shopping habits of its card holders shows that sites offering buying deals and fashion sites had the most aggressive growth, especially with the heavy internet using under 30s as the major beneficiaries of cheaper imports and poor customer service.

As half of the online purchasing (around $5 billion a year) is with domestic online sales, this raises the issues raised by Christine Wakefield, Amex Australia World Service Vice-President, who points out that “some businesses see service as an investment because service can be equally important as the product they are selling. Other businesses just see service as something you can put on the chopping block and cut out when times are tough.”

Bernie Brookes could well benefit from a discussion with both Christine and the CBA to see that spending lots on the Myers storefront is no substitute for a savvy approach to online retailing. Take for example his current competition that demands customers front up for the fares to Sydney to compete for some store clothes when customers are encouraged to “find summer at myer.com.au”.

Bernie’s mystyle catalogue full of fresh looks and exciting new designers’ on sale next week cannot be found as online purchases on the site according to some very frustrated store visitors who compare the online site very unfavourably with that of Emme at www.mysize.com.au.

Ken Goldstein, Conference Board economist sums it up saying, “Trying to lay the blame somewhere else is classic retailing strategy. The smart stores aren’t laying the blame but have both bricks and mortar and internet options. Australia is very late to this game.”

Not surprisingly this is the direction that is now being taken by the former head of David Jones as Premier Investments shifts its focus to its online store with a sophisticated effort to speak to different consumer segments in their own language and their own preferred information search processes.

Smart companies will see the online market and the shift from print catalogues to online media as the chance to create new forms of customer loyalty and adopt the interactive and direct communications profile that builds both their brand and their business in this emerging post-McLuhan global electronic pillage.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.