Small retailers should do more to compete with overseas online retailers rather than support a major campaign to remove the tax-free threshold, according to government and industry representatives.
A group of 21 large retailers, including Myer, David Jones and Harvey Norman, launched the $200,000 campaign earlier today, with full-page advertisements placed in major Australian newspapers.
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There is currently no GST imposed on goods purchased from international websites for less than $1,000. This has provoked the ire of large retailers that are increasingly competing against international websites for consumer dollars.
Retail heavyweights including Harvey Norman boss Gerry Harvey and Myer chief Bernie Brookes have criticised the Federal Government for failing to remove the tax-free threshold, which they claim is threatening traditional retailers.
The newspaper advertisements state that the government’s inaction “will see a reduction in hours and shifts for casual and part-time workers, and ultimately cost Australians jobs in retail, manufacturing, logistics and related services”.
However, Peter Strong, executive director of the Council of Small Business of Australia, says smaller retailers should not support the campaign as larger retailers already pose a threat to their business.
“This [campaign] is laughable given that these large retailers have helped push many small retailers out of business,” Strong says.
“The smaller retailers have been aware of this GST issue for many years and have expressed concern to various governments but they have been ignored.”
According to Assistant Treasurer Bill Shorten, online retail sales account for about 3% of all retail sales in Australia, and between 20% and 50% of these sales relate to overseas purchases.
Shorten says there will be no policy change with regard to the tax-free threshold, and local retailers can do more to compete.
“Consumers enjoy shopping online because it offers them choice, convenience and, often, discounts far beyond 10%,” Shorten said in a statement.
“International retailers have embraced the digital economy and developed sophisticated and consumer-friendly business models.”
National Retailers Association spokesperson Michael Lonie says smaller retailers should focus on traditional selling methods rather than attempt to imitate online retailers.
“It goes back to quality, customer service, and looking after your existing clientele. Smaller retailers in particular should have an understanding of their existing client base and work with that client base,” Lonie says.
Brian Walker, managing director of retail consulting company The Retail Doctor, says smaller retailers have an advantage over other retailers in this regard.
“Building relationships with customers is more important than ever before, particularly as it’s something [other] retailers can’t emulate,” he says.
“Highly individualised, personalised service and value-adding will resonate with customers… Also, build up the retail experience with effective displays [and] attractive shop fronts.”