The costs of doing business in the retail sector are inflated by unnecessary regulations, argues this report.
The retail industry provides a key intermediary service between producers and consumers of final goods. The sector contributes almost 5 per cent to GDP and over 10 per cent to employment.
Whether based in Australia or elsewhere, retailing is going through a major structural evolution. Various social, economic and demographic factors are affecting what consumers buy, where they buy and how much they are willing to pay. Further, the uptake of e - commerce is providing consumers with the option to search for, compare and purchase goods from around the world at their convenience. Australia is also seeing the increased entry of international retailers in the domestic bricks and mortar space. This changing playin g field is intensifying competitive pressure on many retailers and compelling them to reconsider how they do business. At the same time, it is putting a stronger focus on their costs of doing business.
What the Commission has been asked to do
The Australian Government has asked the Productivity Commission to undertake a study into the cost structures of the dairy product manufacturing industry and the retail trade industry respectively as part of its broader interest in relative cost structures.
In doing so, the Commission is required to:
- undertake a case study of costs (such as those relating to capital, labour, intermediate inputs and regulatory compliance) facing the respective sectors
- where relevant, identify areas of cost advantage and disadvantage Australian businesses face relative to international competitors.
This interim report is focused exclusively on the costs of retail businesses. The cost structure of the dairy product manufacturing industry is addressed in a separate report.
The Commission is seeking written feedback on the interim reports by 11 July. Final reports will be provided to the Australian Government in early October 2014. Find out more about making a submission here.