We’re tired of feeling ripped off

Beverley O’Connor
Herald Sun
March 28, 2012

THE idea of Melbourne’s city centre without the venerable old ladies, Myer and David Jones, seems inconceivable to me.
Sadly, it’s looking more and more like a reality.

Let’s not be under any illusion that online shopping is anything other than a revolution, one that will change retailing in a way mobile phones changed how we communicate. And it’s one that has happened very quickly

A few short years ago David Jones was riding high – now the 174-year-old department store retailer expects profits for this financial year to plunge by up to 40 per cent.

The solution, to open more small stores and expand its online retailing operations, acknowledged the retail giant completely missed the boat. And Myer is no different.

How could they have got it so wrong? Here’s something else I don’t think DJs and many other retailers have understood.

The other day the beautician at my favourite salon asked me whether I had all the products I needed. I felt awful.

Why? Because I had long since stopped buying the products I needed from the salon because I’d found what I needed online for half the price.

But she knew that already.

“Hold off,” she said to me.

Her supplier had decided to cut the wholesale price she had been buying them for by 50 per cent, because they could no longer stop the bleeding of their sales to online.

Fifty per cent! It gives you an idea of just how much they were creaming off the top in the first place.

And that’s why so many of us don’t have any qualms about shopping online. We’re tired of feeling ripped off.

Yes, that famous service may have won us over in the past – but more and more the bottom line has become about the bottom line.

The latest research into the Australian retail sector reveals that 118,000 jobs will be lost over the next three years, many because of increasing online activity.

And here’s the rub. I get that we have to be concerned about jobs and be prepared to pay for service, but for far too long we’ve been getting none of the latter, which is making us care less and less about the former.

Inside Retailing editor Carla Bridge says David Jones is about a year or two behind its competitors in the online space.
She also says the company has lost some of the in-store customer service reputation it was famous for.

Well, it could all be too late. Yes, that famous service may have won us over in the past – but more and more the bottom line has become about the bottom line.

Sally Scott, a retail specialist with law firm Hall & Wilcox, says while the retail sector has survived recessions, restructuring and downturns, it will not survive this trend without much deeper fundamental change.

She says the whole supply chain has to be examined, but two key areas killing retail are rents and wages.

Now wages is a hard one to tackle; we pride ourselves here on providing a decent wage to workers.

One solution is to look at the models used by banks in staffing an online presence off-shore to keep labour costs down. Of course, the banks didn’t win any friends that way.

Smart retailers also have to look at the overseas retail and online models that are driven by price, discounting and loyalty.

Critically, the big retail centres such as Chadstone, Southland and Northland had also better wake up to the crippling rents they charge, if they are not to deliver the final fatal blow.

Yes, the high dollar is unhelpful and there’s the GST argument put up by retailers like Gerry Harvey.

Well, a 10 per cent GST is not going to scare anyone off internet shopping when we’re getting goods up to 70 per cent cheaper online.

We finally feel we have real choice and bargaining power, and we won’t be giving it up easily.