Consumers pay a very high price for the concentration of retailing in Australia in the hands of a very small number of companies. Whether it be Woolworths and Coles in food and liquor or Woolies, Coles, JB and Harvey Norman in electrical goods or Myer and David Jones in department stores, the power is in the hands of the major retailers. The specialist retailers in almost every field are at an extreme disadvantage because of the trading terms that these big companies demand from their suppliers.
To get their goods stocked in the big stores, suppliers must have trading terms that discriminate against small competitors. The major extortors insist on an amazing array of exclusive arrangements that are not offered to your neighbourhood retailer: an extra couple of percent to stock a product nationally, a few more percent as a promotional allowance and then an exorbitant discount for quantity purchases that have absolutely nothing to do with the actual cost of distribution. Wholesale distributors can either cop the terms or not get stocked and given the market share of the handful of maj0rs it is no wonder that they agree to the terms that keep independents uncompetitive and retail prices high.
In other countries where there is not such a concentration of retail power as in Australia, distributors have quite different trading terms. They offer goods to retailers based on their own costs and the profit margin they need without having to pay the bribes demanded by the majors here. Invariably, across a wide range of products, retailers in other countries buy much cheaper and can therefore offer goods to Australian internet purchasers much cheaper.
This is the arithmetic at the nub of the efforts by Australian retailers to have the federal government introduce a system whereby GST is levied at the 10% rate on purchases from overseas. They want what they call a level playing field. At the moment the GST is only levied on purchases valued above $1000.
How sensible it is that so far the Government is refusing to be stampeded into any change. The first thing it needs to do is work out how to stop the uncompetitive nature of retail trading terms.