Learn from history. What real changes have taken place in 2013? Robert Gottliebsen, an associate editor for The Business Spectator provided some observations in the middle of 2013 after reading a survey by Boston Consulting on consumer sentiment. The thrust of his article was that Australian consumers were on strike, saving more and spending less, and using internet purchasing more than any other developed country. The reason he put forward as to why Australians are purchasing so much onl
ine was interesting. He reckons that it is not based only on price, but more on the variety available online.
If Gottliebsen is correct, what does this mean for 2014?
The LVT is again in the spotlight with demands varying from ‘leave it alone’ to ‘charge GST on all online purchases’. If the LVT is changed (and I believe it will change in order to satisfy the lobby that mistakenly believe it will help them improve their turnover) it will probably change by around 50 per cent. If Gottliebsen is wrong and price is more of a factor than he thinks, what affect will this have on retail sales in Australia?
I contend virtually none.
I have long held the belief that prices online are invariably so much lower than they are locally, that the GST becomes marginally relevant to a purchase decision. Furthermore, scams and rorts will proliferate and GST collection will be compromised and be costly.
So my prediction is that the LVT will reduce and the impact will be negligible.
The second point Gottliebsen makes is more interesting. A small population such as ours cannot justify the width of range that is available elsewhere in the world.
Price apart, this is a major driver for consumers to pursue buying off shore.
It is therefore inevitable that online sales will increase in 2014 and in my view, quite substantially.
The million dollar question is ‘when will internet sales’ level out?
The answer must surely be ‘when the drivers are no longer significant’. Which means that price is not materially different and variety is comparable.
Neither of these drivers are likely to change much in the foreseeable future, so Australian retailers had better get used to it and explore other ways of increasing their revenues. I suggest that the fixation that has developed regarding internet sales should be cast aside and the focus should be on what Australian retailers can do to improve their sales and profitability. And there is lots that can be done.
Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702
