The Government Should Invest in Retail’s Future

Last week, Ford Australia announced it would sadly have to slash jobs at its manufacturing plants. This was, of course, a kick in the guts for the economy, the Gillard Government who had given a $1 billion grant to Ford earlier this year and especially those employees who are now out of work.

The retail industry is currently going through some very tough times of its own; numerous stories of businesses closing doors and laying off staff are sadly appearing in media outlets all over the country. Estimates of the losses to the retail industry by the National Retail Association are about 650 store closures and nearly 2,000 job losses in the past 6 months, with everyone from Myer, Dick Smith, WOW, Fletcher Jones and even chocolatier Darrell Lea announcing the depressing news from the front line.

The Issues

Retailers have constantly asked for changes to laws and regulations that they see as holding them back against the tide of growth from online retail; these arguments we have heard before regarding the GST, penalty rates, zoning laws. I have always taken the stance that those retailers not online should embrace it. Slowly we are starting to see that happen more and more. So perhaps it is time that retailers asked for government grants to assist their move online, rather than asking for legislative changes and complaining about the ‘enemy’ of online retail.

The Government spent $1 billion on Ford; is that money really well spent? Retail as an industry employs over 1.2 million people and it is long term and viable – unlike manufacturing cars, which, lets face it, has been propped up for years with tariffs, taxes and government grants and employs only 1 million people. Retail is a better bet; it’s an evolving business – so perhaps some help is needed to assist with the evolution.

The Proposal

I propose a government grant for retail with the proviso that the funds be spent on moving a retail business into the future and engaging with the online audience. The money may be used by retailers for some of the following examples;

  • Those retailers that don’t have a website
  • To get consulting from experienced personnel to assist their online strategy
  • Retain staff to new areas of growth within the business (retail doesn’t need to lose staff to stay profitable if it goes online)
  • Invest in in-store infrastructure to support in-store online purchases. This would include devices such as iPads and wireless hubs locked on to the store site
  • The money could go to improving websites to try and replicate the in-store purchase experience

The Benefits

Retail includes online, so why don’t we try a different tact: embrace it and rather than ask governments to change legislation, ask instead for e-commerce grants to promote the retail sector. These kinds of grants would help to evolve local retail, keep jobs here in our local industry and provide better local options to keep shopping here, rather than buying from overseas sites.

The retail sector has often had traditionalists slinging mud and accusations at the online world, and while I don’t agree with many of their previous arguments or requests from the government, seeing $1 billion spent on another industry to keep jobs safe has made me think that surely retailers can spend that government money better!

Keeping people employed and rewarded with income, they can reinvest into the economy into what is the cornerstone of a strong economy. I believe a retail grant for e-commerce would help achieve this through growing the industry positively. Retail is no longer just a store in the suburbs – so lets deal with it.

What is your stance on Government grants for retailers? Do small businesses that are struggling to get online deserve a handout? Is there already funding available for them to do so? Have your say.

3 thoughts on “The Government Should Invest in Retail’s Future

  1. Chris
    I share your frustration with the wasteful grants.
    However I do not believe it is the role of Government to rescue ANY ailing industry. Best to leave those things to market forces.

  2. Hi Dennis
    I understand your point re government intervention, and I usually go with Friedman style economic principles. That said governments the world over will protect their own, and currently with overseas business ahead of us in a retail sense – some incentives and assistance to develop the industry will help protect Australian jobs. The market forces are currently taking money offshore and out of our economy, this is something that is the nations best interests to help with; and with other nations protecting their own economies, we need to keep government intervention in industry.

  3. There are actually already numerous grants and tax incentives that are available to assist businesses to innovate and improve. Where a business chooses to invest it’s capex funds becomes part of a strategic plan. In the case of retail (specially large retail) you will find that there is capital for expenditure. So it all comes back to the strategic plan and importantly shareholder expectation and value.

    Will the retail industry ever leave Australia, unlikely in fact practically impossible. Should it innovate and improve? Every business should if they want to stay competitive and there in lies the problem.

    Will the automotive industry leave Australia? A definite possibility. After it is gone then we will all be saying why don’t we have a local automotive industry. I do not think a government should rescue an industry sector but I do believe that they should support it if it is an economic imperative. We have seen it in the past with banking and primary production.

    That, in the past, has also come at a price both to the industry and community. Hopefully the beneficiaries of the government support for the auto industry will make some significant changes and move towards a sustainable future.

    Also remember that 30%+ of household and business spend ends up back at the retailer. So a significant proportion of the funds to support jobs in the auto industry will end up in retail cash registers or hopefully online store checkout.

    If you want to push a barrow that might carry weight then lets push for a safer online environment, where the government can help. Lets push for cheaper online merchant fees, where the government can help, Lets push for better, cheaper and more consistent Australia wide shipping, where the government can help. Lets push for more readily available and cheaper wholesale data rates and hosting costs to bring down core innovation costs, where the government can help.



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