At a recent conference, representatives of the National Retailers Association blamed legislation for being outdated, making trading conditions too harsh for them to ‘compete’ with online. The question has to be asked, “Why compete?”
If you heard the words ‘archaic’ and ‘analogue world’ being used with reckless abandon at an Australian National Retailers Association Conference in Canberra, you would be forgiven for thinking that those retailers were referring to their own businesses in reference to their online engagement, right?
At the recent NRA conference in Canberra, retailers were referring to the laws that they have to abide by and that their online counterparts do not.
Katie Paige, Managing Director of Harvey Norman stated, “When you talk about the GST and $1,000 – when that came in in 2000, we were in an analogue world.”
Managing Director of Coles, Ian McLeod, also noted that trading laws are “simply archaic.”
It seems to me that this sentiment represents a very weak argument, which, for the consumer, ends up sounding like sheer whining. Rather than complain about the laws that online retail is able to avoid, and thereby profit from, why don’t these retailers try harder to embrace the online community?
Below are the four main areas that the involved retailers believe require legislative changes in order to help them out. All of these areas are said to create an ‘uneven’ playing field for bricks-and-mortar retailers trying to ‘compete’ with online retail.
- GST – “That old chestnut!” I hear you all groan. Yes, goods bought overseas for less than $1000 are not subjected to a GST. The Productivity Commission found that trying to enforce and collect this would cost Australia more than it would collect. Beyond that, even if the GST was enforced, the overseas goods would still be cheaper in general, it would only slightly narrow the yawning disparity. So how would a retailer use this online to their advantage? It is widely understood that it’s cheaper to sell things online; retailers can lower the prices of some items online compared to in-store, and many do this now to great effect.
- Retail zoning – There are many areas of land whereby retailers can not develop because they aren’t ‘zoned’ for them to use. Obviously, no such zoning issues affect an online business. Reports from the recent conference state that this is a huge problem. So why not go online then, given zoning isn’t an issue there? A retailer can still sell to those inside the zoned area that they can’t build in, and they can do it in a more cost-effective manner, too.
- Wages – Retailers have been arguing for years that the penalty rates are too high, and this makes it impossible to justify having more staff on weekends when sales aren’t as high as the business would like. Obviously online traders aren’t limited by the same laws and tend to operate with minimal or no staff over the weekend, despite receiving numerous sales. But again: any retailer can offer their product online, increase weekend sales and have them shipped on Monday – ultimately improving revenue without growing wages.
- Opening hours – Bricks-and-mortar retailers are limited to trade in the hours set out by the law – obviously online stores are not: its 24/7 for us. Again, by having a fully functioning website for your bricks-and-mortar shop allows your business to also be trading 24/7 and not limited by trading hour laws. To drive traffic to your online store costs a fraction of what it costs bricks-and-mortar stores, and the revenue for an online sale can actually be higher.
The perception from the buyer’s point-of-view is that items are cheaper online, and as an online seller, it is typically the case that there is less cost involved with selling online compared to selling the same item from a traditional storefront. If I were a retailer in Australia with multiple physical locations and an online presence, I would absolutely look at selling the same item online slightly cheaper than in-store (with the ability price match in store). This makes it more appealing to those researching multiple sites online, narrowing the gap between overseas sellers, but also offering the same high-quality, local customer service. One must be careful not to lower prices too much, as this can be detrimental to brand value in the long term, as well as harming business perception and the ability to reinvest money in new products.
By having an online store that I am happily marketing and driving traffic to, I could help to circumvent any negative impacts on the business from opening hours, wages and zoning legislation.
The word retail has evolved with the consumers and the technology they have on-hand. It is time for those who own and run the stores to do so as well.
Forty years ago, retail meant an outing with Mum into town on the tram to visit David Jones or Myer in order to buy an outfit(s) for the coming winter. Twenty years ago it would have been a trip with Mum and/or Dad to ‘Chaddy’ (Chadstone shopping centre, for the benefit of those outside Melbourne) to walk through hundreds of metres of stores. Today, retail is a combination of window shopping, online browsing, bouncing around on Facebook, subconsciously seeing the styles and trends of friends, reading emails on a mobile device from that favourite retailer, and only after all of that do we then make the decision to purchase that which suits us – the consumer (you know, those people that are the reason that retail exists in the first place).