Productivity Commission paper highlights retailers’ woes

Retail groups have welcomed the release of a Productivity Commission paper on the performance of the industry, saying that it highlights the pressures on Australian retailers.

The paper is intended to assist retailers in preparing a submission to the Commission as part of a larger inquiry.

Late last year, the Federal Government announced the Commission would undertake an inquiry into the state of the retail industry.

The Commission has been asked to report on a number of topics including the current structure and performance of the sector, drivers of structural change, issues contributing to the increase in online shopping, and current tax arrangements.

Russell Zimmerman, executive director of the Australian Retailers Association, says the paper identifies the pressures on retailers including price deflation, cautious consumer behaviour and the impact of offshore online retailers.

Russell says the inquiry is the first serious look at the state of Australia’s retail sector, and the ARA is embracing the opportunity for retailers to be heard.

“With the recent news of Colorado Group and Perfume Empire going into administration – adding weight to the February REDgroup and Ed Hardy collapse – retailers are facing the perfect storm and certainly warrant this attention from government,” Zimmerman says.

The Imports Alliance has also welcomed the release of the paper, with spokesperson Brad Kitschke saying the issue of the GST threshold is being examined for the first time.

“We are looking forward to an evidence-based examination of the threshold… Government [currently] can’t tell us the number or value of packages imported under the GST threshold,” Kitschke says.

“Nor can it tell us the cost of enforcing a lower threshold, even though it says a lower threshold is administratively unfeasible and not economically viable to enforce.”

“If this review is to provide an honest appraisal of the situation, government bureaucracy needs to be honest about the data and not rely on assumption and conjecture to reinforce the status quo.”

Kitschke says while offshore online retail isn’t the enemy, it has an unfair advantage over local online retailers.

“If you compared a Hong Kong-based online retailer of clothing to an Australian online retailer of clothing, the Hong Kong business has a 20% advantage because of the threshold,” he says.

“How can an Australian e-tailer compete when overseas counterparts have this kind of head start due to a form of reverse protectionism that punishes Australian businesses operating in a global market?”

The comments come in light of new findings by the Australian Centre for Retail Studies, which reveals 43% of local online sales go offshore, with experts predicting the figure to increase.