By Aimee Chanthadavong
With belief that the Productivity Commission’s inquiry into the future of Australian retail will do little for the industry, a group of Australian retailers have decided to take matters into their own hands.
Myer, David Jones, Harvey Norman, Borders and Target are among those forming a coalition and declaring war against international online retailers.
From Tuesday, the group will be launching full-page advertisements in some of the country’s major newspapers calling on the government to create a “level playing field”, by either exempting all GST and duty charges or have everyone pay GST and duty for products under $1000.
Speaking to Retailbiz, Helen Karlis, David Jones general manager corporate affairs, said the current GST and tariff system is flawed and does not provide a level playing field for all retailers and Australian consumers.
“The government announced its Productivity Commission Review without consulting any retailers. The review will take nine months, which is an additional nine months we have to wait for findings over and above the nine months in 2010 that we have tried to engage with the Government about this issue. That’s in total an 18 month wait before anything is done,” she said.
“In addition, the framework of the Productivity Commission Review is inadequate; it looks only at suppliers rorting the existing system by making multiple purchases under $1000 to benefit from the GST and tariff exemptions and then on-selling. It does not in any way look at the disparity of charging GST and tariffs if Australian consumers buy from Australian retailers and then not charging it for those buying from offshore.”
The combination of mobile internet technology, the strong Australian dollar and greater product offerring overseas have seen a growing number of local consumers buy from international online stores. This has forced the Australian retail market to turn to heavy discounting to draw customers into their stores.
In spite of this, the Australian Bureau of Statistics reported a 1.1 per cent drop in retail sales in October.
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In the advertisement, the retailers, which together employ more than 76,000 Australians across 2,211 stores, have warned that failing to act “will see a reduction in hours and shifts for casual and part-time workers, and ultimately cost Australian jobs in retail, manufacturing, logistics and related services”.
The advertisement also says that while the local retailers recognise that online retailing is here to stay, they want “to be able to offer them the same Australian tax exemptions that offshore retailers enjoy”.
But consumer watchdog group Choice said the advertising campaign is an “alarmist red herring”, which is driven by self interest.
“The big chains should recognise that it's their high prices, limited range and poor customer service that increasingly encourages people to use the internet,” Christopher Zinn, Choice spokesperson, said in a statement.
Similarly, Australian Retailers Association executive director Russell Zimmerman told Retailbiz that the demand for a quick change will only lead to greater consumer backlash.
“[The government and retailers] are both trying to achieve the same outcome – a level playing field – but what we’ve also got to think about is the Productivity Inquiry, which will be looking at a wide range of issues, which is far broader than just GST but also the exchange range, employment costs and property rental,” he said.
“I would call upon the Coalition to work with the government rather than against it.”