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January 10, 2011
I've been watching the big retailers (Myer, David Jones, Harvey Norman and Borders) publicity campaign against those of us who shop online overseas instead of buying from the local retailer. Their campaign---its all about the jobs being lost--- suggests that the difference is the lack of GST on overseas goods under $1000. They are pressuring the Gillard Government to axe the GST-free threshold on imports under $1000.
Yet this only affects about 3 per cent of retail spending. The real issue is poor service, lack of choice and double the prices, if not more, on imported goods. It is cheaper to buy Japanese camera gear or film online from the US than either online or in-store in Australia:
Digital capitalism is going to effect the retail industry in the same way that it has the music industry, Hollywood, and the newspaper industry--a major transformation. That means they can no longer get away with double the price when the Australian and American dollar are at parity. Why should we pay double the price?
The global economy is here to stay and it will grow. That means the retailers profit margins are going to be reduced and they need to offer an online store if they want to grow their business. Australian consumers have wised up to the price gouging that has gone on for decades--they have become informed. It is the retailers who are living in a time warp.
Update
Joseph Schumpeter coined the phrase "creative destruction" to describe the process of churn whereby old companies, technologies, and industries die, to be replaced by new ones. Border's for instance, is an American firm that has never really successfully transitioned to digital, leaving it with a lot of physical inventory and real estate assets in the US that are rapidly becoming albatrosses with declining sales.
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it is high profit margins and inefficiency not the GST that causes the electronic flight of consumers overseas. Consumers argue that while retail giants are calling for more taxes to "level the playing field", they are appear to be very slow to lower their prices when the Australian dollar rises -- boosting their profit margins.