As we enter a new fiscal year, we find ourselves in an ever-shifting landscape, facing a host of changes, challenges and opportunities; some unique, some historic.
Whether we’re talking about artificial intelligence, data centres, energy transition, trade wars, prices or cyber crime – the theme of trust is at the core of our conversation.
It’s hard to think of anything in the past few months, maybe many years, that has debased trust in trade more than the US tariff war. While the immediate, even mid-term impact, on your business may be muted, perhaps for a few even positive in the near term, the fact is that the US administration has torn up an 80-year-old rule book on global trade. And it’s led to massive volatility which, on balance, puts upward pressure on prices, undermines business and consumer confidence and jeopardises some major global economies, not least a swathe of Australian trading partners.
Yes, they’ve stepped some of it back for the time being, and Australia is buffered from the most extreme elements, but the US playbook remains incoherent and Australia, as a significant and willing participant in globalisation, is being impacted.
This is not just a supply chain problem, it’s a geopolitical problem. And at home, it’s a trust and a cost problem. Know that we are doing what we can to ensure retailers don’t wear the consumer backlash from this modern US experiment in mercantilism.
Consider this: SEC Newgate’s Mood of the Nation report records that Australians are currently more likely to hold a negative view of our relationship with the USA (26%) than with China (20%), with only Russia rating worse (49%). Our strongest relationships are seen as being with New Zealand, the United Kingdom, Canada and Japan.
Supply chain disruption is, of course, becoming standard fare. From global tensions and weather events to industrial strikes, cyber strikes to Avian flu – our supply chains have seen it all.
And Australian retailers have largely navigated all of it with incredible skill and resilience. We need to do more in bringing that to the Australian public’s attention. Often, we don’t just serve a customer, we serve a community. That’s happening in the mid-north coast of New South Wales right now.
We also need to do more in working with governments to improve supply chain resilience, whether that’s inefficient ports, scarcity of industrial land, or inefficiencies in our transport & logistics network.
Productivity
Of course, the tariff war underlines the importance of a more robust economic reform agenda in the second term of the Federal Government. Efforts to lift productivity need to be redoubled.
The economist, Paul Krugman, once commented: “Productivity isn’t everything but over time, it’s almost everything:”
We’ve had a wasted decade, We can’t afford a second one. Productivity growth is intrinsically linked to higher living standards. They haven’t risen above where they were in 2014.
To quote another economist closer to home, Chris Richardson: “Red-tape is smothering productivity and if you smother productivity you smother prosperity.”
Expect us to not only take forward your concerns on areas like tax, industrial relations and broader regulatory reform, but also in areas such as R&D, competition, digital and AI. The fact is that the global retail sector is at the forefront of innovation, a fact that gets a bit overlooked here.
And expect us to be front and centre, in coalition with other peak business groups and like-minded community groups, to prosecute this agenda.
Global competition
Part of this work needs to point out that the Australian retail sector doesn’t operate in isolation from the rest of the world. If we want to create local jobs, we need greater reflection from our governments on the nature of global competition and the speed with which it is restructuring retail in Australia. When governments do things like restrict trading hours and increase compliance, they’re simply exposing local businesses to a competition that operates on a wafer-thin rulebook beyond our borders.
Disruptive, ultra-low cost operators, such as Temu and Shein, are growing at pace in this market. They’re taking a greater share of wallet, but adhere to different governance principles and contribute little in the way of employment or taxes. Commitments to safety and sustainability don’t stack up to Australian requirements.
We need to call time on the instinct to add ever more regulation. While some in Federal Parliament are fixed on price-gouging, for which the ACCC has found no evidence, we’d contend that the bigger issue is the regulatory gouging that Australian businesses of all sectors, not just retailers, face in ever more lethal form.
Surely we’ve now reached the precipice that is ‘peak’ regulation. It’s not a summit we should be proud to plant the Australian flag on.
Before we consider any further regulation, we need to first review what we can repeal so that we can empower our Australian, home-grown retail businesses to compete. Governments across the nation need to retreat. In doing so you unlock private sector investment and drive economic growth. If that isn’t argument enough, then there’s the bonus that the Federal Government has a $900 million fund to incentivise some action.
It’s not just businesses that win here. Resisting the urge for ever more regulation will also help put downward pressure on one thing that is sacred to every Australian: the price at the check-out.
And let’s never forget, you’ll be hard pressed to find a single retailer in this country that wants their customer to pay more at the checkout.
Retail crime
Talking of the check out, let’s tackle another key issue that is central to trust – retail crime. In-store and online – the intensity and brutality of the retail crime wave is very distressing.
It’s costing the industry $9 billion by conservative estimate. That’s some cost of doing business. 2.3% of merchandise simply disappears off the shelf without a transaction.
More than that, there’s around 800,000 incidents in a given year. Around half involved an assault or a weapon. In the very worst cases, it’s about loss of life. That’s just unacceptable.
While it’s an area where we’ve made some significant progress, more is required. The ARA and our retail community are working in partnerships with their own teams, with police, with state and territory governments. We are working on a unity ticket with unions as well as with technology players like crime reporting platform Auror.
Solving this challenge is also leading us to explore new terrain when it comes to trust, for example in introducing technology solutions like body worn cameras, or the application of facial recognition technology.
Artificial Intelligence
There’s much more I could cover today but given the time I’ll give some more abridged comments on other areas of focus when it comes to strengthening trust in Australia’s retail community.
We will need to reconcile the juggernaut that is AI, divining where the value-add opportunities are and how jobs may morph over the coming decade or more.
On a similar level, the energy transition and sustainability will continue to loom large, especially given the challenges the world is facing in managing that elusive trilemma of lowering energy costs, reducing emissions and ensuring available, dispatchable energy.
While the US and some other countries are devouring civic society with some pretty unedifying culture wars, in Australia, I think we’re mostly moving the right direction. The vast majority of Australians accept and aspire to what diversity & inclusion is at its core: to respect other people, to see them for who they are.
On this, it’s clear there’s still a way to go in achieving greater equity and respect in the workplace, whether that’s in terms of gender pay gaps, respect at work, or employment outcomes for disadvantaged and people with disability.
Retailers are committed to leading that change, and given our workforce demographics, really have an oversized contribution to make in shifting attitudes and behaviours.
And on our workforce, it’s important we reflect that career opportunities in retail go way beyond your first job. The sector plays a fundamental role in skilling up generation after generation for broader participation in the Australian workforce. It can also give flight to huge careers, whether that’s in a start-up or scale-up environment or working for some of the nation’s most iconic brands.
Beyond these issues, there’s many other areas for us to contend with such as payments and cash in transit. There’s also a much more contested industrial relations environment, where we’re contending with parts of the union movement that simply dismiss the huge structural shifts in international competition occurring in retail. All of these challenges contribute to, and potentially debase, the levels of trust that exist within our sector and society more generally.
As I close I’ll leave you with this: We’ve got a job to do. Together.
Retail is $430 billion and counting in terms of contribution to this nation’s economy. We’re a 1.4 million person workforce. That’s the entire population of Adelaide.
We’re more than the retailers who constitute our membership. We’re every community, every shopper, every worker. Our brands are some of the most revered. It’s our job, together, to bring that to the fore.
Please know I’m here, always, to talk to you about how we do that. We want your passion, we want your ideas. The ARA, soon to be ARC, is your organisation. You sustain it.
ENDS
