Canberra cannot save you: Why retailers need to see beyond lowering the GST threshold

The campaign to lower the GST threshold was a mistake, says Ian Moir, the chairman of department store chain David Jones. “It set Australian retailers back because they spent more time trying to persuade governments to do this than they did thinking about what the long-term future for the business is.”

Moir was speaking yesterday in Sydney at an Australian Israel Chamber of Commerce lunch panel titled ‘Reframing retail for the digital age: The importance of an integrated approach’. Joining the DJs executive on the board were Craig Dower, the CEO of Salmat and David Mustow, head of retail and consumer at Macquarie Bank.

The message from the lunch was clear – technology-savvy customers were demanding more from retailers now smartphones are driving purchase decisions. “Everyone talks about big data and how you use it as an organisation,” observed Scottish born Moir. “Not enough people talk about the big data the customer has on their mobile phones.”

Moir’s view on mobile was endorsed by Macquarie’s Mustow who stated “if you’re investing in this space, it’s mobile first.” Salmat’s Downer added to this with Salmat’s research that found 55% of online retail sales are coming through mobile devices.

That Australian consumers have one the world’s highest smartphone penetration rates and are also among the planet’s most avid web users only shows how poorly local retailers have responded to the web and mobile devices over the past two decades.

When Moir took the reins at David Jones last August after Woolworths South Africa – unrelated to the local supermarket giant – the company was making a piddling 1% of its sales online. The new management has grown this threefold but it’s still trivial compared to Australians’ appetite for online shopping.

The appetite of overseas online sales will dampen should the proposed GST changes reducing the taxable threshold on imports to $20 be introduced, as consumers deal with the bureaucracy, delays and costs of Australia’s dysfunctional customs system. However, Moir warns this will only be a temporary respite, “these changes only affect you in the short term, it tends to sort itself out over time.”

Indeed for retailers, the GST changes will probably only benefit customs agents and bloated ticket clippers like Australia Post, along with introducing a whole range of unexpected consequences, as foreign retailers and local entrepreneurs find opportunities in the new tax regime.

While the champagne may taste sweet for Australia’s retail lobbyists as they celebrate their likely win over brunch at the Balmoral Beach Club this Sunday, their employers are going to find that swaying the politicians is the easy part – it’s ultimately the market that guarantees your success.

Paul Wallbank is the publisher of Networked Globe, his personal blog Decoding The New Economy charts how our society is changing in the connected century.