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Link to 2013 NRF presentations
12-09-2011 - >>
Productivity Commission report links - Here are the links to the source materials - makes for interesting reading.
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Submit On: 12-09-2011

The Productivity Commission Report into the retail industry was released today. Here is Julian's quick summary, and the links to the documents.

Final report key points

·         Across 140,000 retailers in Australia, retail spending share to total consumer spending has fallen from 35% in 1980’s to 30% in 2011 

  •  Services have increased
  •  Goods are cheaper
  •  $A appreciation
  •  Consumers are saving more of their income

·         The rate of entry of new retailers (13.4%) and exiting rate (15.8%) is in line with other Australian industries

·         Impact of online is dependent on the sector

o   Highest impacts are: Books, CDs/DVDs, apparel, bike parts, cameras and accessories

·         Australia’s largest retailers enjoy higher relative profitability compared to the largest firms within other Australian industries

JJ says this is an indicator that the larger retailers are making good, productive use of technology 

·         Labour growth in retail has been similar to that within other Australian industries, but Australian productivity within retail is lower than most comparable OECD countries

o   Labour productivity in this Productivity Commission (PC) statistic is measured by output per hours worked and Australia's productivity is lower than most OECD countries

o   Multi-factorial productivity growth is declining – takes into account capital spending

(JJ thinks this is the most serious take-away from a business operations perspective.  A key contributor is the difficulty for Australian retailers to productively adopt technology.  This is most prevalent in the small and medium sized retailer sectors.)

·         The PC estimates overall domestic online retail spend is 4% of total retail spend, and a further 2% goes overseas – ($12.6bn on online trade)

o   Government response is that the ABS will continue to develop its capabilities to measure online trade

·         PC says that surveyed consumers say price, range, and convenience are the reasons for shopping online

o   (JJ:  Theory of distribution through retail channels says consumers will weigh up the following six services and deterimine what they are willing to pay for: Information provision, Customer Service, Waiting time, Spatial convenience, Bulk break, Product variations)

·         PC says restrictive zoning results in making Bricks & Mortar retailing more expensive, which when costed into products, makes online retailing more attractive

o  PC recommends removal of business viability as grounds for objection

o   Government establishes the Retail Council to recommend more on this

·         Distribution contracts for the Australian region are a problem where brand owners are giving rise to parallel importing

o   PC recommends government be vigilant against improper practices by international brand owners

·         Adversarial landlord-tenant relationships work to prop up tenancy costs

o   PC recommends voluntary landlord code of conduct to be negotiated with retailers

o   Government has established Retail Council to advise on this, but recognises state governments are mainly responsible

·         Similarly, restrictive trading hours serve to make online retail more attractive to consumers

o   PC doesn’t agree with the adverse social implications of relaxing labour hours, and proposes that fully unrestricted trading times be permitted in all states

·         PC recommends establishment of a task force of experts to design new parcel handling

o   Government has agreed and established this to report by July 2012

·         PC does not agree that the current $1,000 low value threshold for GST is a major problem to retailers, and also highlights that lowering the threshold today would cost the government more than it would gain but agrees in principle that it should be lowered

o   Government has initiated a Retail Council to advise Government on issues of concern to the industry

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