GERRY Harvey knows a thing or two about business.
And like all successful entrepreneurs, the boss of the giant retail chain Harvey Norman also understands that if you don’t adapt, you die.
A year or so ago, Mr Harvey was under attack for daring to suggest that the GST be applied to purchases made online from overseas.
Having the temerity to advocate for a level playing field saw Mr Harvey howled down in a consumer-driven hate campaign that labelled him rich, greedy and out-of-touch.
A few months later, he launched his own online retail store and expanded his inventory to suit online shopping.
Last month, Mr Harvey estimated that in its first year the new online business would bring in “millions’’.
Mr Harvey believes Australia’s retailers have waited too long to act, hoping that the online shopping trend would go away.
The reality for many retailers is that it will be their businesses that disappear, not the tendency for consumers to seek out a bargain.
Recent findings by the Productivity Commission didn’t make pleasant reading for the $200 billion a year retail sector either.
Too often, our goods are much dearer than overseas, according to the commission, and unsurprisingly we have been slow to adapt to the digital age.
The commission’s decision to stop short of recommending the Harvey doctrine — dropping the $1000 GST-free threshold on goods bought on overseas websites was a further blow.
Retailers have been lobbying hard for this change, arguing that Australia has one of the highest customs rates in the world and the $1000 GST-free threshold is too high.
Reducing the threshold to $20 would raise in excess of $550 million in tax revenue, but that the cost of processing the change would escalate to more than $2 billion.
Put simply, the government would lose more than it would make off the deal with the cost of checking the 50 million purchases that arrive each year far outweighing the revenue collected.
Furious, the National Retailers Association, which had been lobbying madly for reform, now estimates that as online shopping escalates 50,000 jobs could be lost through company collapse and business consolidation.
The industry is a huge employer so the government can’t be seen to be fiddling while Rome burns.
But why impose the GST and lose money? Why anger voters by making them pay more for their online shopping?
Enter the newly-created Retail Council of Australia, a body made up of industry and consumer groups tasked with advising the government on survival strategies.
Retailers might be forgiven for thinking it sounds like just another committee. It is, but at least it is something. Perhaps they could start by asking why a $15 million budget allocation to educate smaller, retail businesses about how to capitalise through the internet was axed by the government earlier this year?
Although retail should feel entitled to some help, it never pays to sit idly by and wait for it to arrive, especially when the pace of change is so rapid.
Some businesses may not be suited to online, for others there is an opportunity going begging.
Either way, most would benefit by swapping complacency for technology investment, better merchandising, product review, better service and cost control.
Service is an obvious area where shops cannot only improve, but compete with the faceless online world.
The sector has plenty of fight left in it and demand for ‘‘retail therapy’’ will never simply vanish.
Online retailing represents just six per cent of total Australian retail sales — 4 per cent domestic online ($8.4 billion) and 2 per cent from overseas ($4.2 billion).
But it is anyone’s guess what that six per cent figure will be in two to three years’ time. There is a bandwagon out there. Get smart and get on.
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