The billionaires’ distraction tactics

Let’s get this straight. About a year ago retail billionaire Gerry Harvey told SmartCompany that online retail sales were a dead end, prompting a huge number of our readers to write in telling Gerry that his website was so bad, they purchase their electronic equipment elsewhere.

Now Harvey and fellow retail billionaire Solly Lew are up in arms demanding the government do something about online retailing which they claim is creating an unlevel playing field and sucking away their livelihood, Australian jobs and the Australian way of life.

The government has already tried to shut them up by ordering a productivity commission to conduct an inquiry into the impact of globalisation onto the retail sector and whether sales tax and customs duty concessions on imports are being exploited. Under existing tax arrangements, overseas retailers are able to offer purchases under $1,000 online without attracting GST.

The inquiry will drag on well into next year before concluding that nothing can be done, which is what the billionaires suspect.

So over the weekend they ramped the protests up a notch, threatening to mount a campaign against the government over the uneven playing field.

So why the change of heart? Has luddite Harvey suddenly ‘got ‘ the internet? Has Harvey suddenly understood that the unthinkable has happened and people are actually quite happy buying a couch online? (I did a few weeks ago.)

Well, no. Quite frankly the sceptic in me thinks this could well be a giant distraction tactic by our savvy billionaires.

Here is why. I was having lunch with the head of a major retail chain yesterday who was waiting to receive crucial pre-Christmas sales figures. When they came through, the news was disappointing but not unexpected. While customer numbers are up, sales figures are down, despite the lure of huge discounts.

It is a story I have been hearing since the start of a very wet December. And it is not just consumers that appear reluctant to spend in our stores. B2B also seems sluggish. While there are reports out this morning that maybe things appear a little brighter on the retail front, my feeling is that this quarter’s retail figures are going to be surprisingly poor.

There is no one reason why this has happened. We know from past history that the end of a severe crisis like the GFC always has a sting in the tail for small business, retailers and consumers who usually spend the first year of a crisis accusing the media of beating the whole thing up (yes you did!) and then retreating into a shell to lick their wounds while everything bumps along the bottom.

Of course rising interest rates, a rising Aussie dollar and the end of the stimulus package has not helped. And who felt like going Christmas shopping yesterday in the pouring rain and buying shorts and bathers?

Add to that the newly acquired spendthrift habits of Australians who now get more excited at the growing money in their savings accounts than a Boxing Day sale and we are heading into a new year with a fair bit of uncertainty.

Harvey and Lew know this. They also know that every second person they meet has spent years now shopping in Hong Kong, getting their shirts made in the UK and buying their Nikes from the US. I mean, exactly how long has Amazon been around? They also know that the amount being spent on online sites is minimal as a percentage of the overall spend, which is one of the reasons Gerry has never bothered to pay more than lip service to his website.

But what they also know is they are about to get a walloping from shareholders when their quarterly figures are released. Shareholders should want to know what the plans and strategies are to combat the new approach to saving. What are their online plans? How are they going to reverse the poor sales? And why should their executives get big bonuses for poor performance?

So why not throw a giant grenade into the mix to distract everyone from the truth which is that our giant retailers have missed the signs, fallen behind and don’t have a plan. That’s what I reckon this is all about. And if they hurt a few of their overseas competitors in the process, all the better.