Retailers still missing the key issues

Christmas is ruined because of the Reserve Bank. Or something.

It wasn’t a big surprise to see the Australian Retailers’ Association promote this line yesterday after the RBA decided to keep rates on hold at 3.25%. Executive director Russell Zimmerman wrote that retailers can expect to have a softer performance as a result.

And today, state premiers have backed a call for the Government to slug online purchases with GST. They rightly point out it could add over $600 million in revenue a year.

Excuse me for saying so, but these statements are missing the key issues.

These announcements comes just a few days after retailers welcomed reports the Federal Government’s review into GST would suggest hitting online sales with a tax. The industry has been gunning for this for a long time, and they may just get it.

The only problem with complaints about the Reserve Bank and GST? They highlight the industry’s major problem.

Many retailers are simply not focusing on the right problems. And they’re the same problems they’ve been facing for a few years now.

There’s no doubt that retailers are facing some tough times. Rents are higher than ever, and when sales are low, having to pay huge wage bills is a struggle. No one denies that.

But what some retailers don’t understand is that issues like GST and rents aren’t going to affect whether people walk into your store or not. In a world where someone can come into your store and then shop for competitors on a smartphone at the same time, an issue like that isn’t going to make a difference.

What you need is value. A lot of retailers don’t have it.

David Jones understands this. Criticise it for being slow, and it has been, but it’s spending millions in making sure its online presence is rich and valuable. Myer is doing the same.

Spending a huge amount of money on high quality photography is all about adding value and a reason to trust. The fact David Jones has now promised free shipping until December 14 is just an incentive – the well-designed site is the reason you’ll keep going back.

There’s a mentality among some retailers that what we’re going through is just a few tough years, and then everything will get better. Not so. Transforming your business into a digital-savvy entity is something that is required separate of issues like the GST or interest rate cuts.

David Jones understands this. What your business needs is a transformation, not a belief that things will improve “sometime in the future”. Smart retailers are future-proofing their businesses and doing it now.

You can follow Patrick Stafford on Twitter @pdstafford.


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