Our study independent national Consumer Sentiments Study before Christmas showed that 69% of Australians did not feel that a GST on goods and services under $1,000 was warranted.

After the full page newspaper campaign, the Herald Sun and other major newspapers gave results of around the high 80% mark for consumers not wanting to have a GST on goods and services under $1,000.

In recent days, Bunnings via their owners Wesfarmers, have also joined major retailers in asking for the GST to be applied on all online sales of goods and services.

Are they right, and are the majority of consumers wrong in their attitude?

Well, it really doesn’t matter because consumers are king, and they have the buying dollars.  If they don’t want it, then it must be right because if government and large retailing groups force the issue, then they will drive them to further online sales and build consumer resentment.  You can’t win from this situation.

Perhaps what is more important is the fact that by taking on this campaign, retailers have “shot themselves in the foot” in a number of ways.

Firstly, they have told everyone in Australia that their online shops are not doing the job that other global organisations can do in terms of product, service, speed of delivery, and even quality.  Myer has announced that they will go online as a result of the GST.  Didn’t they have an online shop that failed?

Secondly, retailers have run a very successful campaign informing and converting those consumers who did not shop online to online shopping advantages, while having to “cop” the criticism of poor in-store service, attitude and even selection and quality of product compared to online offers.  In the price area, they are non-competitive.  The result will be increasing online shopping by future Australian consumers.  Perhaps they would have been better donating the lost GST revenue to Australia to the Queensland flood relief.  It would have given them credibility, leadership on the issue, driven home the benefit to ordinary Australians, and beaten “whinging” hands down.

Thirdly, many of these retailers are super chains that use their bargaining position to control markets, and in that role as channel leaders, to squeeze wholesalers and others in the distribution chain that supply them.  If suppliers complain about them, it will lead to further lost orders and lost business.  You have to suffer it because there is no other place to go to gain distribution outlets to consumers.  They are hardly an example of “level playing fields”, and giving ordinary Australians a fair go.

On the other hand, these retailers are large importers who have helped diminish Australian manufacturers and their role in this country.  They have always put price before customer, employment, quality and warranty.  Try complaining about a faulty product to any of these stores, and you will wait weeks and still not necessarily be satisfied according to Australian national customer complaint statistics.

These retailers led the import revolution under the global banner, without placing ads in the newspapers, but now wish to control global markets when overseas competition they and the Internet impact on them and their business.

Fourthly, the loss of jobs promised from the GST backlash may already be happening because they have practised suicidal markdowns and back-to-back sales programs that have delivered reduced retail margins and profits over the last few years.

Their sales record is not really about the GST.  In reality, it’s more about the style of management that has focused on strategies for extended credit free terms, casual employment which translates to customer self-service in the store, misusing price as the basis for continuous promotions, and sacrificing product selection and quality, the store environment, customer relationships, trust and loyalty.

How come that the “stretched” Australian consumers have the funds to buy online anyway?

Altogether, I think the program will fizzle unless the Gillard government wants to fall on yet another ugly knife, which is very miniscule compared to the large policy swords it is currently evading.

The retailers will be reminded that nothing happens without a sale backed by money, and consumers are now taking back the market place and their sovereign right to shop where they want, with whom they want, how they want, when they want, and for what they want.

By:                  David Higginbottom

Competitive Edge

Date:              January 6, 2011

Reference:    www.consumersentiments.com.au