According to retail mogul Solomon Lew the retail industry is facing its toughest period of the last 50 years. In order to cater for the impact of the falling dollar, which would normally push prices up for anything that is imported, retailers are working with thinner and thinner margins. In the space of just five years the margins on white goods and furniture have fallen from record highs to historic lows. This means retailers need to move more units in order to sustain working profits.
The Australian dollar has fallen by about 30 percent over the last five years, mostly in the last 18 months. This means retailers are now paying about 30 percent more for imported goods—which is just about everything. But consumers would have noticed that prices for white goods, TVs, and other technology have generally not gone up (with some exceptions). They haven’t gone up because JBHiFi, Harvey Norman, et al, have played with margins to keep prices attractive in order to keep people buying.
Retailers are begging for Government assistance to help them survive the bad times. Mainly they want weekend penalty rates scrapped, the GST exemption for online purchases up to $1,000 scrapped, and company tax rates lowered to about 25 percent.
It is highly likely that the Government will scrap the GST exemption for online purchases up to $1,000 but one wonders how they will then ensure that this GST is collected and paid by overseas online shops.