Where do we go from here -The future of retailing in Australia
At present the Australian dollar is at parity with the US dollar and as such, the incentive to buy locally has all but diminished for many purchases of camera equipment in this country. A friend of mine asked me how much he could obtain a Nikon flash for here, and then went and purchased two of the same flash from B&H in New York city and had them delivered here to Sydney within three days for $200 more than it would cost for 1 of them here were he to have bought it that way here.
Whilst I am a definite advocate for buying cheaply, I have begun to think and more importantly see, how that is starting to bite in this countries retail market.
One retail chain of six stores has chosen to close their doors, as they believe the future of retailing here is going to continue to become difficult, and I cannot tell you how many times in the last few weeks that I have been in or around retail stores when customers walk in and ask whether stores can match a price on the internet they have seen, to which Australian retailers are simply saying "NO!". They cannot afford to survive making in some cases a dollar on cost, or in other cases losing money to make a sale.
The customer walks out thinking that retailers are ripping him / her off and is chuffed that they can buy it on line for a fraction of the cost, and often without a single thought or care that their decision may have in time cost them the choice they currently enjoy, and also have changed the face of retailing in this country altogether.
Current affairs programs are almost encouraging people to drive a bargain and schooling consumers on how to "beat" the system and drive prices down, They are also encouraging people to buy on ebay, and sharing the tips and hints on how to navigate the process successfully and whilst i believe they are ratings winners I have begun to see where the future of this, should it continue for long, actually end up.
Gerry Harvey CEO of Harvey Norman, one of Australia's largest retailers came out two days ago declaring that he wished the government would place a high tax on goods coming into the country ( I am paraphrasing here) citing that all goods imported into Australia under $1,000 do not attract a GST component. Yet as a retailer, he pays GST legitimately on every purchase he makes, and so by allowing goods into the country under a $1000 without GST, retailers are in fact paying too high a price, especially when customers can in fact become low level importers without paying the same or any taxes for that matter.
it quite frankly is a very legitimate concern.
I believe that should this personal importing increase, which Australia Post has indicated last week to have already increased some 50% on last years mail intake, the future of retail and retailers in this country is bleak.
Retailers and general small business owners account for almost 70% of people employed overall (stats taken from a radio commentator last week) so, if retailers margins are not simply being eroded, but literally snatched away, they will not be able to employ people, leading to lost jobs for many and less retail shopfronts for choice.
If the government is not careful, all of the increase in personal orders and importing will actually decrease revenue, and what suffers will eventually be those extra hospital beds we were needing and expecting as a progressive community and country.
What about the roads? which in Sydney are already in a state of severe stress, where does the money come from to improve them?
What about essential services? What about the increased load on the welfare system of the country, on medicare and the list quite honestly could continue.
Now, I do not place all of the responsibility of the situation on general consumers who want a bargain, I am saying that in order for this to improve, we as a country need to get smarter. Retailers have been riding a small to medium gravy train for quite some time with higher than normal profits, giving rise to some newer retailers who are coming in and selling the same goods at or near cost price in this country, and living off supplier based subsidies.
For those who are not aware, many retailers in this country attract a subsidy from suppliers as a cost of doing business in this country. The US and other countries are nowhere near as high as it is in this country. However, as I stated earlier, buying overseas is not the golden goose that everyone expects. We will feel we have saved right now, but make no mistake, we will ALL pay in other ways in the near future.
A friend told me last night that he just bought 4 wheels and 4 tyres from the US of A and had them couriered to Australia for a cost of $520 and they arrived at his front door here for less than half of what it cost to buy them here!
Make no mistake I applaud a cheap purchase and that is a massive saving, but we need to be careful. Our combined individual purchases we only see in isolation, but the ripples of those choices are still circling on and on and on and are indeed being felt throughout the entire retailing market nationally.
We may be lulled into thinking we are the only ones who matter in our purchases, but there is a higher cost and a day soon to come when our combined purchasing choices may in fact have killed off the independents and small business owners leaving the entire retail market to the big boys who may then be able to charge whatever they like because of reduced or no competition, and with an increased unemployment the strain on the public purse will be onerous.
In closing, let me suggest that I am not a prophet of doom and gloom, I wanted to give my readers who may have been interested to read this, an insiders view on what is happening here at present and the details of what could be the result, and let you know, that I am actually very energised and excited by where the market can go from here.
I believe we stand a pivotal crossroads and the root determining factor of where we go as a society comes down to some rudimentary basics like selfishness.
What is our responsibility for Investment in the future? What investment if any should we make in an industry? Can we imagine life as we know it without certain industries?
I think the whole way we have done business previously, the whole face of what people are wanting in or from a retail store are changing, and the challenge remains for all the players in the industry now to choose their own destiny to shine or their demise and failure.
It is very exciting and I watch the future of retailing almost breathless with anticipation.
Whilst I am a definite advocate for buying cheaply, I have begun to think and more importantly see, how that is starting to bite in this countries retail market.
One retail chain of six stores has chosen to close their doors, as they believe the future of retailing here is going to continue to become difficult, and I cannot tell you how many times in the last few weeks that I have been in or around retail stores when customers walk in and ask whether stores can match a price on the internet they have seen, to which Australian retailers are simply saying "NO!". They cannot afford to survive making in some cases a dollar on cost, or in other cases losing money to make a sale.
The customer walks out thinking that retailers are ripping him / her off and is chuffed that they can buy it on line for a fraction of the cost, and often without a single thought or care that their decision may have in time cost them the choice they currently enjoy, and also have changed the face of retailing in this country altogether.
Current affairs programs are almost encouraging people to drive a bargain and schooling consumers on how to "beat" the system and drive prices down, They are also encouraging people to buy on ebay, and sharing the tips and hints on how to navigate the process successfully and whilst i believe they are ratings winners I have begun to see where the future of this, should it continue for long, actually end up.
Gerry Harvey CEO of Harvey Norman, one of Australia's largest retailers came out two days ago declaring that he wished the government would place a high tax on goods coming into the country ( I am paraphrasing here) citing that all goods imported into Australia under $1,000 do not attract a GST component. Yet as a retailer, he pays GST legitimately on every purchase he makes, and so by allowing goods into the country under a $1000 without GST, retailers are in fact paying too high a price, especially when customers can in fact become low level importers without paying the same or any taxes for that matter.
it quite frankly is a very legitimate concern.
I believe that should this personal importing increase, which Australia Post has indicated last week to have already increased some 50% on last years mail intake, the future of retail and retailers in this country is bleak.
Retailers and general small business owners account for almost 70% of people employed overall (stats taken from a radio commentator last week) so, if retailers margins are not simply being eroded, but literally snatched away, they will not be able to employ people, leading to lost jobs for many and less retail shopfronts for choice.
If the government is not careful, all of the increase in personal orders and importing will actually decrease revenue, and what suffers will eventually be those extra hospital beds we were needing and expecting as a progressive community and country.
What about the roads? which in Sydney are already in a state of severe stress, where does the money come from to improve them?
What about essential services? What about the increased load on the welfare system of the country, on medicare and the list quite honestly could continue.
Now, I do not place all of the responsibility of the situation on general consumers who want a bargain, I am saying that in order for this to improve, we as a country need to get smarter. Retailers have been riding a small to medium gravy train for quite some time with higher than normal profits, giving rise to some newer retailers who are coming in and selling the same goods at or near cost price in this country, and living off supplier based subsidies.
For those who are not aware, many retailers in this country attract a subsidy from suppliers as a cost of doing business in this country. The US and other countries are nowhere near as high as it is in this country. However, as I stated earlier, buying overseas is not the golden goose that everyone expects. We will feel we have saved right now, but make no mistake, we will ALL pay in other ways in the near future.
A friend told me last night that he just bought 4 wheels and 4 tyres from the US of A and had them couriered to Australia for a cost of $520 and they arrived at his front door here for less than half of what it cost to buy them here!
Make no mistake I applaud a cheap purchase and that is a massive saving, but we need to be careful. Our combined individual purchases we only see in isolation, but the ripples of those choices are still circling on and on and on and are indeed being felt throughout the entire retailing market nationally.
We may be lulled into thinking we are the only ones who matter in our purchases, but there is a higher cost and a day soon to come when our combined purchasing choices may in fact have killed off the independents and small business owners leaving the entire retail market to the big boys who may then be able to charge whatever they like because of reduced or no competition, and with an increased unemployment the strain on the public purse will be onerous.
In closing, let me suggest that I am not a prophet of doom and gloom, I wanted to give my readers who may have been interested to read this, an insiders view on what is happening here at present and the details of what could be the result, and let you know, that I am actually very energised and excited by where the market can go from here.
I believe we stand a pivotal crossroads and the root determining factor of where we go as a society comes down to some rudimentary basics like selfishness.
What is our responsibility for Investment in the future? What investment if any should we make in an industry? Can we imagine life as we know it without certain industries?
I think the whole way we have done business previously, the whole face of what people are wanting in or from a retail store are changing, and the challenge remains for all the players in the industry now to choose their own destiny to shine or their demise and failure.
It is very exciting and I watch the future of retailing almost breathless with anticipation.
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