Looking into it?

It is time to replace looking-glass reactivity with new windows of opportunity to avoid the mirror/mirror mentality that sees everything in terms of costs not customers.

The members of the ARA (Australian Retailers Association) who are smart companies in the sporting goods, books and toy distribution business rightly believe that the Government needs to act sooner rather than later to create a more level playing field.

The PC (Productivity Commission) response is to admit that Australian retailers are at a disadvantage, given the low-value goods purchased from overseas do not incur the 10% GST and applicable customs duties and further concedes that this disadvantage will persist for some time.

It recommends the establishment of an independent (??) government taskforce to investigate a new approach, reporting just before the next federal election. The Productivity Commission has already undertaken a review and, not surprisingly, has found that price, choice and convenience were more important drivers than the GST exemption for online retail purchases.

This follows from their earlier stunning finding that wiping out smaller business through the development of larger stores, like the soon to be developed big-box Master stores of Woolies and Coles new huge liquor barns, means that they are more efficient, employ more people and have lower prices.

The offer from Minister Bill Shorten to convene an inquiry into streamlining Australia Post and Customs if the Productivity Commission calls for it appears to extend the mirror/mirror principle to a new standard of deferred unresponsiveness.

At the same time, Shorten is encouraging state governments to make it easier for the bigger stores to eradicate the advantage of smaller operators through changes to hours and zoning laws.

A greater sense of urgency might take into account a collapse in both business and consumer confidence in a two-speed patchwork economy, declining rates of employment generation, small business credit crises, rising foreclosures and equity crashes.

Gary Morgan reports that in terms of personal finances, only 31% (down 2%) of Australians expect their family to be “better off” financially this time next year – the highest this indicator has been since October 25/26, 2008 in the middle of the GFC.

Yesterday’s Roy Morgan employment estimates for July show a large drop-off in the number of employed in Australians in July – down 418,000 to 10,802,000 – virtually the same as March this year (10,800,000). While month-to-month figures can “jump around” a bit this was still the largest one-month fall in employment ever recorded by the Roy Morgan employment estimate and clearly shows the fragility of the Australian economy.

The idea that another inquiry would address issues of tax neutrality appears to be an extension of the “we’ll look into it, but don’t expect us to do it” version of the mirror/mirror principle of feckless government.

Under these conditions, smart companies will be better placed to heed the other proposal from the PC – to improve their own unit productivity to make them more competitive with online competitors. This requires small business owners to get both staff and family members to accept a number of key productivity improvements including:

• Greater personal accountability for creating and retaining customers
• Active follow-up of orders to attract repeat business.
• Encouraging innovation, creativity and entrepreneurship.
• Developing cost-effective terms of trade with suppliers and downstream distributors.
• Rewarding and encouraging initiative and effective cost reduction strategies with non-pecuniary encouragement and recognition of the effort that is being made for the growth of the business.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.