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Federal Budget gives retailers nothing new

fb_thmThe ARA have blasted yesterday’s Federal Budget. They have gone as far to say that retailers have every right to feel “ripped off” after mostly ‘recycled’ initiatives disguised as new small business investment incentives were announced in 2011 Federal Budget.

ARA Executive Director Russell Zimmerman said there was no real relief to retailer business costs or red tape and no new incentives for business investment. “The reduction in the company tax rate to 29 per cent for incorporated small businesses as well as the tax write-offs for assets under $5,000 were announced firstly as part of the Henry Tax Review and then again in last year’s budget announcement.

“These small business incentives have now been recycled twice over – there’s not much that is new for retail in the 2011 Federal Budget announcement.

“As the changing market place is demanding Australian retailers deliver online shopping facilities, there is nothing in this budget that gives incentive for retailers to invest in the training or the infrastructure they need to provide best practice online service to Australian customers.”

Zimmerman goes on to mention the drop in retail sales in March identified by the Australian Bureau of Statistics (ABS). Those statistics reveal that retail sales overall were down 0.5%, department stores sales were down 3%, whilst online shopping had increased by 12% in the first quarter of 2011.

However, closer investigation of the ABS figures indicates that clothing and footwear retailers bucked the overall trend and in fact grew by 0.1% in March. There is the possibility that clothing and footwear retailers could continue to buck the trend. After all isn’t clothes and shoe shopping the epitome of retail therapy? Isn’t there something in the phrase “if the shoe fits”? After all retail stores have the overriding benefit of allowing consumers to try the goods on. Purchasing such personal items onine isn’t the same as buying books, games or electronics. If it does not fit properly there is the issue of returning the product and all the hassle associated with registered post and refunds.

Online retailers, whether in Australia or overseas (who are also benefitting from a strong Aussie dollar which is currently able to buy more in the UK and the States) are changing the competitive landscape for Australian clothing and footwear retailers and for continued survival the government is going to have to recognise the problem and do act accordingly.

But retailers should not just look to the government for support or a survival plan. Wholesalers and suppliers whose business would not exist without the retail trade should be providing assistance. Not just financial in the form of discounted wholesale prices, but extra marketing, more point of sale material, more support generally.

Not every wholesaler is interested in establishing a website through which to sell their labels or brands direct to the public. They established their business to sell multiple quantities of the same line and possibly to avoid the high street.

The ability of a retailer to continue to attract customers to their bricks and mortar shop, whether using online techniques, social marketing platforms or old fashioned service leading to word of mouth recommendations, is what will determine the continuing survival of some more innovative retailers over others.

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