The bizarre retail debate

One of my favourite journalists, Adele Ferguson of The Age, today calls for a retail bailout:

Other figures show that online spending is going gangbusters. There is an estimated $12 billion a year spent in online retail, but it could be much higher than this.

Domestic online sales have been growing at 5 per cent to 10 per cent a year while overseas online sales have been growing at 20 per cent to 25 per cent a year. For Australian retailers, the presence and power of internet shopping is hard to underplay.

The structural shift has been accelerated by the strong dollar, which is making overseas retail offerings vastly cheaper than those sold in Australia.

Traditional retailers need to get their act together and focus on merchandising, cost controls and margin expansion. They need to clean out their inventories rather than bringing in cheap rubbish during sales and putting out sales stickers. Shoppers have wised up.

It is no longer just about creating efficiencies, it is also about product range, product quality and a lack of magic in much of Australia’s retail.

…Whatever the case, there is a structural shift in consumer behaviour between online retail and bricks and mortar. The new boss of Premier, Mark McInnes, the former head of DJs, understands the shift and has announced a six-point plan to revamp the company.

It is all about making it efficient, leveraging off the brands and dipping deeper into the online world, which includes using social networking.

This strategy will become a blueprint for other retailers which have been struggling to grapple with the structural shift. It has happened in the media and book industries, and it is now gathering momentum in retail.

But it involves pain. The knock-on effect of weak retail sales is profound across the supply chain. It can lead to a build-up of inventory, a profit killer for retailers, and results in tighter margins and potential redundancies.

The government needs to think about some of the Productivity Commission’s recommendations and see if it is worth introducing a tax on online imports to save some jobs.

A couple of points. First, Adele gives us a terrific assessment of how competition is suddenly alive and well in Australian retail.

Yet, again, as with yesterday’s efforts by Alan Kohler, the issue is being framed entirely within the Dutch disease narrative. There is no mention of the much larger forces at work on retail, like the structural shift away from debt and sluggish asset prices. Nor its position within the larger Australian economy.

Happily, the SMH also provides a second story puts more figures on foreign online purchases:

Consumers are set to boost their spending at foreign online stores by $1.2 billion to $6 billion this year, a new report that underlines the rapid changes affecting retailers has said.

The report from PricewaterhouseCoopers, published yesterday, predicted online spending would grow at least twice as quickly as the total retail market over the next four years. While so-called ”bricks and mortar” stores are in the doldrums, PwC forecast total online spending by Australians would grow by 12.6 per cent a year between now and 2015, jumping from $13.6 billion to $21.7 billion.

Doing a few quick calculations, that $1.2 billion in sales growth equates to .48% of the sector growth for next year (if it sustains the same growth level as the last year, 2.7%).

That compares with 7% sector growth in 06/07, 07/08, 4.4% in 08/09 and 4.2% in 09/10. So you tell me, is this ‘crisis’ really emanating from online purchases?

This debate is shaping up as an analog to the carbon debate, and the RSPT debate before it. It’s being distorted completely by how a single sector can be saved money and specific jobs protected, rather than what is in the collective interest, which may well bring greater benefits to a much larger number of people.

For instance, a few questions we might ask include:

  • how does protecting retail fit with an RBA agenda to free resources for the adjustment to a larger mining sector?
  • how will protecting retail affect other sectors, such as manufacturing, which will have to wear more of the cost of that adjustment if retail is protected
  • is that a trade we want to make?
  • does Australia have a large enough retail sector already, having enjoyed a debt-juiced run for twenty years?
  • And, do the benefits of increasing competition in the retail sector – greater efficiency, productivity, service and range – outweigh the costs of some offshore competition?

Comments

    • A free market would include a free labour market and this would allow retailers to shed wages and be more competitive.

      It is indeed regulation that is the issue here…along with disleveraging of course

      • I don’t think we’ll go back to WorkChoices any time soon. I guess retailers can up sticks and bugger off to Somalia – they have a very free labour market over there.

      • A “free labour market” would allow many employers, not just retail, to shed wages in a race-to-the-bottom attempt to become more competitive. Widespread downward pressure on incomes isn’t quite the thing to to bolster demand for most goods and services which business requires to be profitable and to create more employment. To say nothing of the rising poverty and inequality that would be created.

        I often find myself agreeing with things you say Stavros – so it’s too bad that you have such a distorted social outlook.

      • The purchasing power lost by minimum wage earners doesn’t evaporate into thin air; it is transferred to someone else. Demand would remain the same, employment would likely increase as it becomes cheaper to employ people.

        Minimum wage laws do nothing to help the economy. They help those with a job earning minimum wage, which is good, but it is at the expense of others, especially those without a job.

      • Timbo +100

        People who think they are compassionate arguing for a minimum wage better understand that this policy will force hundreds of thousands to lose their job over the next few years in Australia.

        My point was that the arguments you two always make against a ‘free market’ are rubbish as we are not anywhere near a free market is Australia…its one of the most regualted markets in the world and it will be a cause of our downfall as the credit collapse continues and we realise we have an unproductive workforce that is paid way more than they should be.

        I mean seriously, some retail staff are not worth $8 an hour…they spend their time on their iPhone, danding around to music turned up too loud and do little to help customers…why should they be guaranteed a wage. Make em work for it…I was paid $4.30/hour to clean fat out of drains at Maccas when I was 15…geting paid peanuts is what you do when you are climbing the ladder of opportunity…

        This idea of not having to work harder and harder is a the biggest threat facing our nation. ITs another symptom of the bubble…why work hard when you can borrow, buy and sell.

      • Guys, I suggest you try out your free market exercise in some other country. I don’t think Aussie voters will oblige you any time soon.
        .
        I was just pointing out the irony in those screaming the loudest against government regulations are also the ones who squeal for government bailouts.

      • I mostly agree, but my view is that minimum wage laws are the result of the welfare system. If minimum wage laws don’t keep pace with changes to welfare payment thresholds you get the bizarre situation where someone working on mimum wage suddenly becomes better off not working.

        Clearly, this is to be avoided.

        Economists generally like to look at the law in isolation when in fact it is part of a broader welfare system.

        Also, there are flow on effect to minimum wage laws. For example, a new business might consider that employing 3 people on minimum wage is equivalent to employing 1 person and some automated equipment. The minimum wage law means that the optimal choice becoms the automated equipment.

        The optimal choice for the two people now on welfare might be to study or improve their skills because low wage jobs are being replaced with automated equipment (governments also sponsor quite a bit of training and education).

        My point is that there is much more to the law, and out choice as a society is not minimum wage v no minimum wage, but the degree of social support in the form of welfare payments.

      • “The purchasing power lost by minimum wage earners doesn’t evaporate into thin air; it is transferred to someone else”

        Agree with that bit. Disagree with the rest.

        Perhaps I misinterpreted what I have read but I was under the impression that a not-insignificant number of the early capitalists believed that if wealth was not spread, all wealth was likely to become endangered sooner or later.

        If I had a hundred employees of whom I reduced the purchasing power, would I buy a house with a hundred lounge rooms, buy a hundred flat screen tv’s, one for each room, buy a hundred Holden utes, a hundred pc’s – you get the picture. No matter how much money you have, you’ve still only got one d**k and one stomach Timbo, and there’s only so much you can do for them. Could the concentration of wealth into the hands of the few really replace the current broad consumption of the many?

        The broad consumption that gives so many busines enterprises a reason to exist?

        How does ensuring that a significant number of people at the bottom have a minimum amount of power to purchase goods and services – which requires the creation of jobs – steal jobs from others?

      • Lefty, for an intelligent bloke, you seem to have a very distorted unhealthy view of employers 🙂 …maybe you got it from all those anti-employer anti work choices ads

      • Hi Flawse! Long time no blog.

        Sorry, I don’t mean to give that impression. I have worked for numerous small business owners and they were all very good and decent people. Most of the supervisors in larger organisations I have worked for were likewise. That said, I wouldn’t like to work for Timbo and definately not for Stavros.

        Seriously though, I did see firsthand, workchoices being used to sack the entire staff of my local 24 hour service station when they refused to sign a pay-cutting AWA and replace them with non-union labour on workplace agreements. Minimum wages and conditions are vital for those in the lower part of the labour market. Those upmarket or in areas where their particular skills are in short supply will tend to do well regardless. Millions of people downmarket have no economic certainty in a laissez-faire environment – that’s not a social situation I think a civillized nation should aspire to.

        Workchoices MK1 (the scenario under which the staff I referred to were terminated) was swiftly repealed after 12 months when it was revealed that large numbers of people had been shafted to one extent or another, and some sembalence of a no-disadvantage test was re-installed. Had workchoices – especially the first working version – not been removed, I feel we would now have a significant-sized pool of permanent poverty and disadvantage at the bottom, as employers who “did the right thing” would be forced to try and compete with those who exploited the laws to the full extent, gaining a competitive jump over those who did not.

        Certainly not the sort of country I’d want to live in.

      • Lefty i couldn’t see any way to reply to you so I’ve replied to myself. I wouldn’t argue with your experiences. I didn’t see any such abuses but i will say that when my sons were working graveyard shifts in Servos for $6.00 per hour they got shafted every which way. There are other issues involved but this reasoned place is not a place to air them.
        For mine, good staff were so hard to get that all I could do was try to hang on to them with both hands. One problem I really had, seriously, was trying to get rid of people who were not pulling their weight and all the rest of the staff wanted to be rid of them. Unfortunately that is not one of the allowed reasons for getting rid of someone from a small business.
        Anyway, we should have these discussions over a wine one day. I always find your take on things interesting.

      • “Anyway, we should have these discussions over a wine one day. I always find your take on things interesting.”

        We should definately do it Flawse – you’re on the sunny coast aren’t you? Not so far away from me and I usually pass through your way three or four times a year. I’ll let you know the next time I’m going through.

        cheers.

  1. Crocodile Chuck

    ‘Bullseye’!

    Good framing of the problem, and good questions to boot.

    Once again, Macrobusiness nails the issues!

    • The real reason why retail in this country is failing is that’s it’s paying too much rent for overinflated properties and too much for warehousing.

      That’s the real reason why things are 1/3rd the price online.

  2. Being involved with the retail industry for almost 20 years – it’s my view that this country is ‘over retailed’.

    Brick and mortar outlets offer a good social aspect to shopping, but price in the end is generally the clincher. There’s no doubt a retail shakeup/shakedown will occur, and I believe needs to occur, and will regrettably result in a rise in unemployment. To bailout this sector is to kick the can down the road.

    The online sector has become the game changer – in particular in the past twelve months. Major local retailers are now forced to focus more in this area.

    For the moment overseas sales are significant due to the higher aussie $, but even if and when the aussie $ deflates, the practice of purchasing online will not disappear. The online focus will just become more localised.

    • As a very recent migrant from the UK to these shores (Melbourne), the one thing that amazes me driving around is the plethora of cookie cutter shopping centres every couple of miles (sorry kilometres LOL)

      Having spent the past 20 odd years in the SE of the UK (with much higher population densities) one just does not see an equivalent over there.

      Greg

      • I remember reading an article a few years ago that SC operators such as Westfield were charging our local retailers much higher rents than their overseas tenants. This was done to subsidize their overseas expansion.

      • Yes, they are crippling the retailers.

        The retailers feel the squeeze on their low volume/profit sales, and then a squeeze from high lease rates.

        Who’d want to own a retail business in those conditions?

    • I have felt it was the ‘begining of the end’ when you started to see two of the same chain store outlet in the single shopping centre. Sportsgirl west wing and Sportsgirl east wing – that sort of thing. Seriously, what is that about??

      Given I had hardly a shopper at all, I might not be best to comment, but it seems like those shopping centres are just acre upon acre of the same chain stores – and not that far apart either.

      Is there really that much demand out there for that amount of blandness?

  3. ‘does Australia have a large enough retail sector already, having enjoyed a debt-juiced run for twenty years?’

    I think that is the absolute key comment. We have had an over-bloated retail sector since almost forever as signified by continuous CAD’s for 50 years (bar 1971)

    There is one heck of a Real estate problem tucked into the side of this. We have palatial over-capitalised shopping centres with 15 acre car parks covering much of the good land across Australia. The resulting rents are unsustainable.
    We could add to GDP by creating a Government supervised (employing lots of Public Servants)demolition teams (more workplace Health and Safety) to go around the country demolishing major shopping centres.

    • My understanding is that Australia has much less retail floor space than the US and the gap is widening due to nimbies and spoiling action by existing retail landlords on rezonings.

      Rather than one enormous centre in a locality we should be encouraging several smaller centres surrounded by strip shops.

      The range of landlord options combined with an expansion in lettable area will produce lower rents.

      Westfields will not lower rents when store keepers have no choice.

      Those empty low rent store fronts are the types of places where youngsters can test out business ideas without a kings ransom.

      Dont get sucked in by vested interests bleating about excess supply – they just dont like competition.

    • Spot on with the real estate problem. Not only with the over capitalised shopping centres but also the small strip shops. These have also been part of the RE bubble and the small investor owners ask some outrageous rents. In my area (inner west Sydney) there is a constant turnover of tennants in the local shops because many are unable to afford the high fixed cost of rent except for in the peak Christmas period.
      The competition from online has got to drive these rents down and prick the bubble, else there will be many empty shopping strips in coming years.

  4. Sandgroper Sceptic

    Westfield and other mall operators have to be aware of the growing tremors beneath their feet. Their landscape of charging ever higher rents and squeezing the small retailers is over.

    Note: Owns zero shopping malls/retail stocks.

      • I think Westfield has been taking a % of profits from stores…but recently as the sales have slumped, they have changed their structures and upped their rents to cover themselves….so they get paid either way!!

        A mate of mine who runs a Flight Centre franchise was forced out of a Westfield and into a smaller suburban centre in order to keep his business alive…and is now doing OK as the rent is reasonable.

        I wonder how many retailers can sustain the high levels of rent in the Westfields and how many will just close up and not be replaced…that would then have some big impacts for the Westfields of this world….

  5. The retailers in Australia have been ripping people off for years, massively overcharging for products that have been more than half to a third of the price overseas. The inherent greed is now catching up with them, and might I add the landlords that charge the ridiculous rents. (With more than a third of Hastings street is closed, due to highest rent per square meter in the world) Shopping on a world scale was due to happen eventually with the advent of the internet. People are now more connected to the prices paid oversea in the UK and the States. Even with exchange rates and delivery charges it is still a cheaper option. Now hopefully they will wake up to the fact that we are also paying excessively high fuel, food and energy costs as well….But thats more a case of competition……

  6. On-line selling is as legitimate a business as any other retailer and can’t be stopped.
    Change hurts and Westfield is getting it in the neck already.
    Being unemployed at 55 isn’t much fun either and I don’t get any bailouts.

  7. Online retail in Australia has one of the lowest penetration rates (if not THE lowest) of all OECD countries last i read about this issue.

    The MSM, as per usual are lazy and stupid.

    • “Online retail in Australia has one of the lowest penetration rates (if not THE lowest) of all OECD countries last i read about this issue.”

      And it’s the worst quality. Having just returned to Oz after a long stint overseas, I’m gobsmacked at the lack of an online Australian market. Just as well it’s easy to buy from US/UK vendors.

      • Yes! it is just plain awful. Many retail online offerings from Aussie stores are either

        1: an online catalouge and not much else

        2: a limited range of weird ‘stuff’ that is not available instore

        3: overpriced – especially on delivery. I can get stuff sent from the UK or the US faster and *cheaper* than I can get it posted locally by a retailer.

        There are a few good local options, but on the whole it is a shabby and woeful display of apathy.

  8. “…. a tax on online imports …..”

    Barking economic illiteracy, let’s make producer interests such as Messrs Harvey, Smith and Co even wealthier…

  9. Tax on online purchases. That’s right, let’s destroy the Australian consumer’s right to a competitive market. Just like banking.

    The southern suburbs of Perth are full of retail parks, clearly put up to serve the explosion of property down the Kwinana Freeway and parallel inland corridor. One not far from us is like a ghost town on a Thursday night / Saturday.

  10. And, in any case, how do you “protect” retailing?

    Consumer expectations and behaviour are changing. Merchants who can see how and why change is taking place and figure out how to respond will still make a living.

  11. Agree with what is said here…

    The retail downturn is also impacted by Australia’s overblown property market.

    A major hit to the bottom line of small business is the inflated price of commercial property leading to owners having to pay high interest charges on commercial mortgages or renters paying excessive rents.

    This will be reflected in high prices

    • High property prices are squeezing their customers discretionary spending as well, so it hurts them from both sides.

      Agree with Pfh007, high rents stifle risk taking and creativity.

      Anyway, it’s quite clear reading this article and many comments, that there are multiple factors that have led to our high retail prices, many of which have been the case for years, it’s just the internet and more OS travel is exposing us to the rip offs.

  12. “Doing a few quick calculations, that $1.2 billion in sales growth equates to .48% of the sector growth for next year (if it sustains the same growth level as the last year, 2.7%).

    That compares with 7% sector growth in 06/07, 07/08, 4.4% in 08/09 and 4.2% in 09/10. So you tell me, is this ‘crisis’ really emanating from online purchases?”

    It is nice to have some perspective here backed up by quantified estimates. Nice work H&H.

    Also, only some retail sectors translate well to INTERNATIONAL online shopping (formal domestic online retail is included in the ABS figures). Eg, cafe, restaurant, food, liquor, furniture and floor coverings.

    So while overall the impact is minor, it is likely to be concentrated in a few retail markets where local options are limited and prices are far higher than aborad – books, electrical, electronics, games etc.

  13. I think Westfield revealed their hand when they sold half of their portfolio to investors last year (I think)…

    And I love that chestnut about the high Aussie dollar making it hard for Aussie retailers….how does this work when most goods retailers import their products?? Ie: their goods cost of sales (for imports) is going down, boosting profit margins?

  14. > And, in any case, how do you “protect” retailing?

    It’s very simple. You just use Internet filters (heavily promoted by Labor) for blocking overseas e-tailers. You will not only protect local retail jobs and heavy investment in the shopping centre infrastructure but will also create a lot of new jobs in the retail censorship department 🙂

    • Better still, your search engine rankings can depend on the size of your political contribution. 😉

  15. Anyone who is interested in this debate should read what Jeff Kennett wrote in the Herald Sun recently about this -(23/6/11). To summise, he’s concerned about the mum & dad retailers as well as the superannuation funds that we all own shopping centres through.

    Correct me if I’m wrong but this was the same Jeff that closed lots of things down in the 1990’s (such as train services, schools and hospitals) because ‘that’s progress’ basically… so why doesn’t the same thing apply here? Isn’t it just the new paradigm that we’ll all just have to get used to, including retailers, shopping centre property trusts, etc?

    If Westfield can’t find tenants at their shopping centres they might have to (shock horror) cut rents and become more competitive. Just like how every other commercial entity operates. Now its true that this could affect their overall plans to conquer the world and put a Westfield on every corner but that shouldn’t worry anyone but them and their shareholders.

  16. Is anyone aware of studies that compare the reduction of shop sales staff versus the increase in delivery/warehouse staff, in relation to the growth in online shopping? Surely the reduction in one would lead to an increase in the other.

  17. I certainly agree that deleveraging is a major factor, but to me it looks like the retail overheads here are the reason for the online splurge.

    Between high rents and exceptionally high -by international standards- cost of labour, especially casual labour, retailers have little room to maneuvre. The strong dollar impact has mostly been offset by wage and funding cost increases.

    It’s great while you or your family benefit from it, but after living here for two years I still cannot get over the fact that my 15-year old daughter gets paid $80 for a Sunday morning shift at the local bakery.

    How many croissants and loaves of bread do you need to sell to cover just her pay alone? Ditto for most other retailers.

    Which brings me back to deleveraging.

    While money was flowing freely through the economy and money supply was increasing these costs were comfortably abosrbed by all but the weakest retailers.

    The strength of a service dependant economy becomes its weakness when the velocity of money slows.

    Mining has provided the fuel to keep the economic engine ticking over, but high interst rates mean it is running really lean!

  18. I feel we have too many shops. just look at the number of similar type shops in shopping centres.

    that together with people cutting back on spending (to save or just a sociatal change in not having to buy ‘things’) means income for shops is thin.

    this is a supply thing…too many shops. things will get better as many shops close down.

  19. The fact is, the Government should never look to help a sector of the economy…because it comes at the cost to another sector.

    So the RE industry should never have got the FHG boost. The retailers should never have got the Ruddflation. The green energy industry should never get their billions.

    All of these ventures are political bribery. They are aimed at appeasing the vocal minority.

    What the Government needs to do is make sure we have good infrastructure, good schools and hospitals and little red-tape for businesses to deal with.

    Watch our economy thrive if only the political numbskulls stayed out of the day-to-day economy.

    The retail stimulus chant is just the worst example of rent-seeking, there are plenty other industries out there propped up by Government at the expence of the rest of us.

    Time to end all stimulus/bail outs, across all industries!

    Let the chips fall where they may

  20. Mark McInnes has obviously hired some pretty good PR people.
    How revolutionary is “dipping deeper into the online world” for retailers? This might have been news in 1995.

  21. I am probably the only person in Australia (outside of retailers) who thinks overseas online merchants should collect GST.

    Why should Australian retailers — both bricks & mortar and online — have to give 10% to the government, but not overseas retailers? Its like a reverse tariff!

    A Kohler pointed out yesterday, retail employs 1.3M. Its one of the biggest, if not the biggest, employers in the country.

    I mean, we don’t make anything that’s sold in the shops, and now it seems we can’t even sell things. What exactly are the 95% of Australians who aren’t employed digging holes going to do with themselves?

    • Mate, I buy heaps of stuff online, and I for one, couldn’t care less if GST was levied. The reason I shop from overseas has less to do with price and more to do with choice. Most of the stuff I buy simply cannot be purchased here at all. And I think that has more to do with anything than price.

      • Not the only one. I think GST should also be levied on overseas online purchases and that’s where most of my non discretionary purchases come from so it would certainly affect me.

        I’ve even got an idea about how it could be done relatively simply.

        As Delraiser says, I don’t shop online to only save 10%. It’s mostly about choice, service, range AND the 50%+ savings.

      • Let me join the “Me too!” crowd when it comes to being OK with paying GST on overseas purchases. The selfish part of me is happy to skip the tax but the sensible part of me realises that it’s unust.

        Having said that, it wouldn’t in any way reduce the amount that I buy from the US and UK.

      • +1

        I’ve said many times before, I’d like to see GST doubled to 20% on ALL goods and ALL services, but with a commensurate axing of any tax on savings (in bank accounts, bonds or fixed interest).

        You want productivity reform without having to compromise with the unions (i.e you’ll never see wages go down) and business – reform the tax system to encourage savings and investment.

        And spend some decent money on infrastructure instead of on submarines, fighters and other wasteful projects.

      • The tax difference between savings/fixed interest and capital gains held for over 12 months is an absolute disgrace and a huge risk to our financial system.

    • Presumably the overseas online merchants should also collect UK VAT (17.5%), Canadian PST & GST (15%/13.925%/13%/12%/10%/5% depending on province), European sales taxes (20%/12%/10%/21%/12%/6%/20%/7%….that’s alphabetically as far as Bulgaria). Obviously they’re going to have to remit these taxes to the relevant bureacracy in the state, province or country the buyer lives in. Seriously, have you thought this through?

      • I live in Tokyo and when I guy items from overseas online, sometimes a Japanese tax will apply. I’m not sure of the criteria for application of the tax, but for example if you bought a computer from over seas, then a tax may be applied. The tax can be paid upon delivery at your door, or at the post office when you get the package.

        It works based on the description of package ie gift = no tax I guess, computer worth $1000, tax applied.

        Also, I understand that some US couriers actually charge the tax as part of the courier fee so there is no tax due on delivery.

        It seems to work quite simply.

  22. I agree AB that’s why I just can’t bring myself to vote, Labour, Liberal or Green. The market should only have simply easy to understand guidelines that prevent harm (physical and financial) yo the general population and environment but let things fail if all goes pear shape.

  23. Alex Heyworth

    At the risk of annoying those who have already read my comment on the Glenn Stevens speech thread, one issue that appears to have escaped commenters’ attention is that the high $A enables consumers to spend less and still get more stuff. Given that most of our consumer goods come from overseas, it is not surprising that retail spending has taken a hit.

  24. “People who think they are compassionate arguing for a minimum wage better understand that this policy will force hundreds of thousands to lose their job over the next few years in Australia.”

    You’re saying that minimum wages and working conditions can’t exist alongside low unemployment then Stav?

    • No – I am saying that if a business only has $1000 to pay two employees, and the min wage is raised to $550…this will cause unemployment.

      I think all contracts should be determined by the parties to the contract.

      No one has the right to impose their will on others and this includes labour contracts

  25. Don't Prop Up the Ponzi

    In recent years property prices have grown way over where they should be thanks to the government-sponsored housing bubble, and homeowners have been conditioned to think it is normal to take on astronomical mortgages. With rising costs of everything else, it’s hardly surprising that retail is suffering. The carbon tax is striking fear into the minds of many Australians because most of us know we will be affected in probably all our costs of living, but we don’t yet know how much. There couldn’t be a worse time to introduce it, but the Gillard govt obviously has to try and get back some of the billions they’ve wasted on everything they have tried and bungled. I don’t know how so many of the shops at the shopping centres can afford to stay open. Of course the presence of internet shopping is also having an effect, but the overall percentage of online shopping is still only about 5% (correct me if I’m wrong). If the government really wanted to help they should take notice of the elephant in the room – housing affordability. If negative gearing was scrapped, for example, this would have prices plummeting as investors rush for the exits – not a popular measure for baby boomer investors, of course, but more affordable housing would mean there’s money left over to spend and keep the economy going. An economy built on a housing bubble is unsustainable as we are seeing now. It is starting to unravel, but will take a while to see the full effects.

  26. the best thing that could happen is a collapse depression style, not this managed torture spreading misery to the savers and proactive to bailout failures.
    This socialism shit will destroy the west and australia.
    My grandparents came here many years ago, plenty of jobs, not much government interference and “regulating”. You could start a business etc etc. Big Gov and their mates Big bizz who they help by forcing people to prop them up thru compulsory super and ever increasing taxes and welfare has got us here over many years. We have been played for a fool.
    Sravros is correct, minimum wage causes unemployment, the gov caused the house bubble over the years, uses diversity to get people employed even though others are better qualified, lets face it we are commies/socialist watever yu wanna call it/ Burn motha f–r burn, good riddence.
    Abbolish income taxes and property taxes, have a 10% gst and thats it. to fund the essentials. 90% of the public service could go overnight, included the punlic schools. The problem is not going away, whatever “they” do.

  27. stav means the FREE market would sort out prices and wages, along with house prices and everything else. A seller and buyer agree when they interact, they dont need help and handouts.
    enjoy your socialism, god bless you.

    • Cheers – Agree 100% – why do people think that two adults cant make a contract without 240,000 Australian Public Servants having their ‘input’ on what they think is fair?

      Who bestowed these faceless people with such foresight and intuiton?

      How many times does the Government need to stuff things up before people realise that they are the problem

      How long till people take the time to read Hayek’s “The Road to Serfdom…”

      Before reading that I was a ‘Lefty’…reading Hayek was the best thing to happen for me…my eyes are wide open now!

      • Stavros you seem like a pretty smart guy and I sometimes agree with some of your comments, but to suggest that you have subverted (and there is no better word for it) your ideological position on market dynamics on the basis of Hayek’s work is a little scary! This book was written in a tumultuous socio-political environment and it infuses economic theory with political ideology. He admitted many years later that it cost him his economic reputation at that time and was considered to be nothing more than an exercise in political science.

        Regardless however, it doesn’t matter if you’re talking about Austrian School or Chicago School, Hayek, Friedman, or any of a litany of others, the challenge is that none of these individuals has lived long enough, and perhaps we won’t either, to see the final result at the other end of the so-called “free market” reign. Their works typically describe but a brief moment in time and do not contemplate that they were actually referring to an iteration of an economic and political evolutionary cycle.

        If you were to read some more history (the fall of the Roman Empire is interesting to examine self-defeating behaviours and systemic challenges that are increasingly present in most modern democratic systems) and some philosophy to take those hard edges off some of your black and white positions on the social responsibilities of a cohesive society, and you’ll see that it’s not such an easy argument to make.

    • Ha Ha – that is pretty standard procedure. The other one is to use their ‘anchor’ tenant status to block competitors moving into the same shopping centre.

      The majors do the same in liquor retailing. Do whatever they can to prevent new outlets.

      Whenever a major commercial interest is spending big bucks funding planning legal eagles and claiming to defend community amenity you can be sure they are really trying to limit competition.

      Some planning laws are essential but the more red tape, regulations and ‘approvals’ there are the greater the risk that the supply of commercial and residential floor space will either be insufficient for demand or delivered with such lags that it produces booms and busts.

      • Another examples of how big business can benefit from big Government…they go hand in hand.

        Imagine a free market where stores like Aldi, Cost Co etc… opened up where people wanted them to without the 1000 different kinds of ‘approvals’ being declined due to the lobbying powers of big business!

        Without the Government interfering, the big business spend their time competing for our patronage…rather than lobbying for favours and protection

  28. A bit late with a comment, but how much of a role does the lack of parallel importing have to play in the prices we pay for stuff in Australia?

    Even when the dollar is strong, I would assume the retailers are stuck with whatever the distributer feels like charging.