The 24th of June, 7pm, Current Affair, Channel Nine: “The Shopping Revolution Heading Down Under”.
I am not a Current Affair viewer, but what the heck? The title intrigued me, since I am also waiting for the shopping revolution in Australia.
The anchor announced, that Sephora was coming to Australia and their prices were going to match US prices. Then two commentators from the “Choice” and “Shop Till You Drop” magazines, informed us of how excited they were that Sephora was coming to Australia with the US prices. They also told us that Australian consumers were paying “Australia Tax” as a definition for inflated Australian prices for imported goods. At that moment I did realise once and forever why I was not an avid viewer of “Current Affair”. The program is mostly one-sided. In this case, in particular, not one retailer was given a voice to explain what is really happening with Australian prices.
“Australia Tax” in reality is 10% transportation cost + 30% taxes and duties at the time the goods are cleared from the customs. On the top of this come the wages, including the penalty rates, when a sales assistant is paid 50$ per hour on a public holiday. On the top of this top, comes the rent, where Sydney is only behind the 5th Avenue to foot the bill.
At the time our shop was closing in the most expensive rental enclave of Westfield Sydney, we had a customer, who was at the same time, also closing her unique bookshop. She said a catchy phrase that our fellow Australians would not be happy until the last Australian owned shop is closed. Of course it was an exaggeration, but at the time, we were closing. Lisa Ho, Kirilly Johnston, Bettina Liano, Colette Dinnigan, Ksubi, you name it were shutting their businesses down…Quintessential Australian retailers and designers employing hundreds and thousands of people…
Why are US prices so cheap? US prices are cheaper even than European prices for European goods, because of the sheer volume of the goods purchased and imported into the country. US import taxes are significantly lower.
In US they don’t pay GST at the border. US prices are also cheaper, because they don’t pay penalty rates to their stuff and apart from NY, their rents are much cheaper too. It costs much more to operate a business in Australia that in US. The economy of the bigger scale -300 million in USA versus 22 million in Australia is proven to carry cheaper costs. In general, Australian prices for clothes and cosmetics are 60% higher than US prices for the same goods.
How can Sephora in Australia match US prices? With 1400 shops on the planet, with LVMH, the owner of the company, I can only guess, it can afford to subsidise its first seasons in Australia. But it is nothing to do with “Australia Tax”. It will only make competition with my beloved Mecca unfair and unjust.
At the same time I am happy for Australian consumers. Most probably I will shop at Sephora with gusto and delight.
I cannot, however, help, but notice the changing shopping landscape of Australia. It is becoming a land of numerous Zara(s), TopShop(s), mass luxury brands you can find anywhere in the world. Add Sephora(s) and H&M to the mix – we could as well be in anonymous country in anonymous city inside anonymous shopping centre. Soon, our consumers wont have a choice, but to shop online to feel unique, or to pay for another “Australia Tax “– the ticket to fly to USA and Europe to do the shopping. I only pray for Mecca and many other unique Australian shops to stay and be alive for its fresh and beautiful choices. I also pray for the Government of Australia to make smart decisions for retail sector, as this industry is drowning into obscurity with the speed of light…
As for the Current Affair, I have to take a break from watching it for a little while…