Wesfarmers' Amazon Gorilla beats Harvey's latest outburst

Summary:In one week, we've seen the figures behind two successful Australian businesses choose to rise up to the challenge of tough retail conditions, or whinge that the government is making it all too hard.

The man who wants Customs to inspect every incoming package to Australia to put GST on it complains that the government is hindering business in Australia, while another relishes in the challenge that global competitors like Amazon will provide his business with. The stark contrast is of two executives heading up some of the biggest retailers in Australia, which are now forced to compete in a global market thanks to e-commerce.

Earlier this week, professional old man yelling at cloud retail billionaire and Harvey Norman founder Gerry Harvey complained that there is too much government red tape preventing him from doing business, and that it is impacting on retail sales.

"It's too hard, the lawyers had to do things, accountants had to do things to get over that barrier and the next barrier and the next barrier — I just said 'too hard, I'm not going to do it'," Harvey told Fairfax as his company reported its third consecutive quarter of growth.

Harvey didn't name any so-called "nanny state" laws or rules that are preventing him from doing business, but he was still going to complain about it.

After the boom in online retail, the complaints from the billionaire businessman seemed to become more frequent. Although he advocates the government "doing as little as possible and people power doing the rest", Harvey is not so much a fan of Australians shopping overseas, where retailers charge significantly less for electrical goods than what you can buy in your average Harvey Norman retail outlet. For years, he has complained about online retailers, and called for government intervention to help out by charging GST on goods under AU$1,000 purchased overseas .

The Productivity Commission worked out that with around 58 million parcels entering Australia under the low-value import threshold, the cost of processing all those parcels would outweigh the money brought in through GST revenues. The former government said it would hold off on a decision until more data is available, and this week, new Treasurer Joe Hockey again delayed making a decision on lowering the threshold.

While this will no doubt infuriate Harvey further, some retailers see the global online market glass as being half full.

Richard Goyder, the managing director of Wesfarmers, which owns supermarket giant Coles, as well as department store Kmart, office supplies store Officeworks, and home improvement store Bunnings, does see online retail as being a major threat. In a speech to shareholders yesterday, he labelled US online retail giant Amazon as the "Amazon Gorilla". The retailer already offers all of the products of Kmart and Target, as well as most of the products of Bunnings and Officeworks, and a good portion of Coles'.

"They even sell coal!" he said.

But the managing director did not complain about the government impeding competition in Australia, instead saying that Wesfarmers welcomes the competitive challenge.

"All Wesfarmers retail businesses like Coles have to be entrepreneurial, fast moving, long term in outlook, innovative, and fit to take on not just Woolworths, Aldi, IGA, and Costco — who are aggressive competitors, not just on price but also in terms of store network growth — but new entrants such as Amazon, which operates in a borderless world," he said.

"As management of your company, we look forward to taking on these new competitive challenges, and hopefully within a framework that encourages competition to build real and sustainable shareholder (and stakeholder) value over time."

There's no doubt that Goyder is lobbying the government behind closed doors to make it easier for the company to do business in Australia, but the attitude difference between Goyder's vision of online retail as an entrepreneurial challenge, versus Harvey's impotent and misdirected rage at the government for not helping more to prop up his outdated business model as more customers flock online, speaks volumes.

Topics: E-Commerce, Australia

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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