I was indecisive on blogging this particular article because it is controversial. It involves a sector that MSP are passionate about; retail. But after reading a billionaires’ complaint this morning in the national newspaper, on the wave of his public disapproval for consumers to get a better deal, AND used the C word with a journalist (who thank God paraphrased) – I thought again.
As we reflect on the lessons of 2010, to make sure we look into 2011 with the true knowledge of what to avoid, the local weekend business paper comments on the 2010 winners…and the losers; one of which is retail.
Is it any wonder why retailers in Australia have failed to encourage consumers to open their wallets this Christmas? With the boost from Kevin Rudd’s economic stimulus package now long faded, something happened that the MSP crew saw emerging 2 years + ago. The rise of the savvy consumer who is fed up of being ripped off. This is globalization at its peak peeps!
Retailers fail to see that in the homes of families across the land, there is an urgency to re-budget the household spreadsheet to avoid financial greed of businesses that are monopolizing the market.
Families, executive couples and single working class people are suffering from the sudden rise of gas, electricity, water, interest rates, the big four banks (see below) the price of food, the lack of quality in fruit and veg, rising costs of child care, the double crossing on the solar power plan and are scuffling to make sure they can survive and not get penalized by banks lending them precious dollars to live. All the while, they are marketed to by advertising companies, who are paid big bucks to shove inspirational images in their faces while they drive to work, walk the metro streets during their lunch break and on the way home received another set of advertisements telling them what to eat, how to eat it, what to wear, why to wear it and how their house needs to look to prove they are succeeding in life.
The big four banks leave me perplexed. Here they are headlining profits of over $21 Billion dollars (yes that’s billion, not million) and protecting this outrageous profit by saying, ‘yes, that amount looks large because they are very large Australian businesses’. We have a good banking system in Australia, yes we do, but does that give them the right to charge over and above what is fair and reasonable (like the $2 fee if you withdraw money out of a competitors ATM). Consumers are mad.
Back to retail; I am very pleased to see that this is one of the top stories. Retailers have been commenting, “The drop in customer traffic and general customer spending since the interest rate rise was completely unexpected (like…derrr) however, it is our understanding that overall customer traffic and spending is down across the retail sector”.
Down? Damn right it’s down. With the world wide web now open for trade and the people of each city realizing how ripped off they are when it comes to the basic necessities of life, it’s no wonder peeps, why families are opting to buy bulk, not boutique and buy overseas where there is no tax, there’s a better delivery system in place (sorry Auspost, you have failed me too many times).
We’re now hearing in the press that the leaders of these big retail businesses are scratching their encrusted scalps stressing out? Well, I say, feel the stress because it’s clear that you’re just focusing on the spreadsheet and not the painful relationship discussions in the lounge rooms of families stretching the bank accounts to the point of snapping just to survive.
We all know when the going gets tough, the retail middle market drops and we see the consumer move towards either value retailing or luxury brands to uphold quality and status. Right now, the value retailers are smiling all the way to the bank, but watch them closely. They will start to put their prices up as they see an influx in profit and think they can pinch a little more.
The guts of the situation is online, No GST is charged on goods bought from international websites for less than $1000. Massive businesses are screaming in the wings stating that this is going to cause them to cut jobs and hurt financially. But shoppers should not be penalised for the failure of big business to adapt to their changing needs, says the consumer watchdog, Choice, in response to powerful lobbying from major retailers to tax goods bought online.
The Choice campaign director, Christopher Zinn, said retailers losing sales to the internet should focus on improving their services instead of crying poor. (Damn right!) “The big chains should recognise that it’s their high prices, limited range and poor customer service that increasingly encourage people to use the internet,” Mr Zinn said. ‘Consumers are simply chasing the best deal and the best service and often these days that is found online.”
And in response to that? What are the big businesses doing? Spending $200,000 on an advertising blitz that warns of job cuts should the government fail to act.
Many big Aussie retail businesses are complaining that overseas businesses are getting free kick. But many independent senators are stating that for many years big businesses have been taking advantage of the power imbalance and monopolising the market. When they (big retailers) state that this tax exemption for overseas players will hurt small businesses it makes me laugh. The truth in fact is that they have been hurting the smaller player for along time now, by out-pricing them so that the little fellow has had to shut down. MSP has seen many times a great innovative product from a smaller business launch and the larger players with bigger wallets copy that item and bring it to market at a much cheaper price point and a faster speed.
The Australian Retailers Association executive director, Russell Zimmerman, said many large companies had been slow to embrace the internet. By contrast, small retailers were using social networking sites such as Facebook and Twitter to promote their wares. ”Small retailers are getting very savvy,” he said. ”Retailers are going to need to look at various forms of retailing to engage with their customers.” The fight online was just one factor afflicting the Australian retailing sector, he said, and high labour costs and soaring rents also needed review. The assistant treasurer, Bill Shorten, said big businesses had exaggerated the impact of the GST exemption.
In summary – For years these major businesses have worked to gain control of the marketplace. Their actions have forced smaller retailers out of business. Now that they have control, they can do what they like. Consumers have an alternative and it seems that these major retailers are now trying to control the consumers. This isn’t about keeping jobs here. If they were so concerned, the CEOs would act to reduce their costs, perhaps even give up their bonuses to ensure their workforce keeps their jobs. I don’t see that happening. This is purely about protecting their market share and putting shareholders first.