The Viewpoint - No Harvey, No Harvey Norman!
Friday 7 January 2011
by Mat Churchill
There has been a lot of noise in the media of late about shoppers jumping online to get a better deal, consequently having negative impacts on traditional retail stores.
Some of Australia's biggest retail heads are up in arms about the trend to jump on the laptop to shop overseas rather than jump in the car and head to your nearest shopping centre.
These heads include Myer's main man Bernie Brookes, and two of Australia's richest people, retailing magnate Solomon Lew and Gerry Harvey of annoying ads giant Harvey Norman.
Check out the Taiwanese take on the issue (top left)
To be fair, these guys aren't against online shopping as such, just the fact that if we make a purchase from an overseas business we don't pay GST on goods worth less than $1,000.
They've become so passionate about the issue that they've formed a coalition and will buy two full-page advertisements in major newspapers, and may even buy airtime on radio and TV.
Apparently they want a "level playing field" so they can compete with overseas competitors. ''You've got a retail store offshore that doesn't pay duty or GST competing with an Australian store that does,'' Mr Harvey was quoted as saying.
But as consumers why shouldn't we be lured to finding the same product at a cheaper price? Surely this is competition at its purest.
Australia's dollar can now buy so much more than what it could 12 months ago…but not in Australia it seems.
And the same applies to retailers who import their stock from overseas. They are getting better value for money, so why should we continue to pay the same amount for our purchases?
The buzz word to come out of 2010 in economic circles was 'parity'. Now we've surpassed parity with the US dollar does that mean we pay less than Americans for our goods? I know I'm simplifying things too much by saying that, but something tells me that we're paying more than 10% above our US allies for our brand new three metre plasma TV.
An article in The Age quoted George Svinos, of KPMG's retail group, who says retailers need to get a better deal with their suppliers. ''The costs are higher per head in Australia than anywhere else in the developed world. You might ask some questions about why a Panasonic 40-inch flat screen is less than $400 in the US and is $1,000 in Australia.
''But the GST component of the Australian TV is $100, so the consumer is not going to be swayed by saving the GST on purchases. At the end of the day the internet gives us competition for pricing in Australia.''
I couldn't have said it better myself George.
I'm not sure where the traditional retail sector is heading into the future. Heading to the shops can be a social affair for many and if I demand instant gratification I won't have to wait for 14-28 business days to get it (just the next pay day). So as far as I can see there will always be a place for the retail strip.
I'm not going to scour the internet for hours looking to save $5 on a t-shirt or CD when it's right in front of me at a local shop, but why wouldn't I want to save hundreds of dollars when it comes to a major purchase such as electrical items or a holiday?
Everything changes over time and the way we shop is no different. Will the trend to make our dollar go further by jumping online force the larger retailers to trim what I imagine would be their fairly healthy margins?
Fingers crossed all of this results in deep cuts to Harvey Norman's advertising budget.
Let me know your thoughts (left hand side of page).