Wesfarmers CEO Richard Goyder has called for reduced taxes and 24-hour trading to combat international competition from Amazon. Photo: Christopher Pearce
There are many things that I do not understand - for example, why do digital cameras in movies have motor drives to wind on the non-existent films?
Or why is the most suitable house for the Australian climate, the Queenslander not built anymore?
Or why does business always think that laws and taxes should change to better suit them?
The self-interest shoe is on the other foot and international competition is hurting Big Retail, they want the tax laws to change. Photo: Paul Sakuma
There are answers for the first two, but for those of us who believe in private enterprise, the third remains a puzzlement.
In his recent address to the National Press Club, Richard Goyder, the CEO of Wesfarmers (aka Coles), has called for reduced taxes and 24-hour trading to combat the competition from internet retailers, particularly Amazon.
What is it with Australian businesses that they cannot understand that they are in business? It is not as if they don’t pay executives enough. So why is it that when they hit a difficult time they want either protection or corporate welfare?
What retailers are confronted with in Amazon is just plain old-fashioned competition on the very unlevel playing field of business.
As one of the first internet retailers, Amazon took major risks many years ago and they have suffered ups and downs and have nearly collapsed a number of times.
They have persevered and are now successful.
Unlike Amazon, supermarkets in this country have operated in a safe corporate duopoly, and consequently they dominate Australian markets.
I suspect that the major retail chains considered that fronting the fierce forces of genuine international competition was considered far too risky for them and they figured that there was a bigger short-term profit in not doing it.
Having chosen that path and been well rewarded for it, surely it is not the government’s job to now come in and protect them?
Surely it is the companies’ job to reorganize themselves or face losing business?
Let us not forget that these are the very retailers that have been lecturing government on market forces for some time - and they have been very successful at it.
Because of corporate pressure, governments took no action when supermarket owners took control of fuel retailing. Successive governments said it was just market forces at work.
Those market forces caused many family-owned and independent petrol stations to go out of business to be replaced by corporately-owned fuel outlets offering dodgy and illusory discounts.
Curiously, the big two retailers newly-found desire for a level playing field did not make them give speeches calling for tax cuts for those who were being put out of business at that time.
But now that the self-interest shoe is on the other foot and international competition is hurting big retail, they want the tax laws to change.
If only they would learn it, there is a big lesson in this for retailers: Market forces can make business profits go in both directions, up and down.
They do not need protection from the Internet business any more than electrical retailers do. No company has a right to expect ever-increasing profits unless they adapt their business model to cater for change.
The retailing business has changed and Internet shopping offers customers the ability to buy the products that they want from whoever they want to deal with.
No longer are customers’ choices restricted by what is on a retailer’s shelf, there is a world market operating and Australian retailers need to get on board or they will have to get out.
Being able to purchase the exact product that one wants without leaving home and then having it delivered to the door is a fantastic service that many are prepared to pay for.
In what is even worse news for retailers, for many people price is not the determining feature. This is a market that is driven by personal choice.
Of course if the government weakens and provides the tax reduction that big retail is seeking, the revenue shortfall has to come from somewhere.
That shortfall can only be funded from two sources. These are either an extremely unlikely reduction in government spending or, the most obvious, a tax shift onto normal everyday taxpayers.
These taxpayers are also the very consumers who are already having their purchasing choices restricted by big retail.
Which begs the question of why those consumer’s taxes should be increased to advantage or protect the very businesses that cannot or will not provide them with the choices that they want?
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