Not only are Australian retailers already paying higher labour and rent costs than overseas peers, they are also paying a high price for stock as they continue to fight the against its online competitors.
As a result, Myer and David Jones have threated to find new sources for stock or to remove products from shelves uncles global suppliers reduce their prices.
The department store chains have demanded price reductions of 10 to 40 per cent on cosmetics, apparel, accessories and consumer electronics in order to reduce the price difference that online pure-play retailers and overseas department stores offer.
“Suppliers have differential pricing so it’s up to them to come to the party,” Bernie Brookes, Myer chief executive, told The Australian Financial Review.
“We have over 30 buyers and each of those buyers within their own categories are almost daily talking to suppliers about the fact that their prices relative to online don’t match and they’re selling product online either through agents or through their own websites at cheaper prices, in some cases, prices that are close to our buying price.”
In this latest fight, it has resulted in some retailers, including JB Hi-Fi and Harvey Norman, offering products direct from manufacturers. And Brookes has told the AFR that Myer was looking to do the same through sourcing products from its Hong Kong and Shanghai office if it unable to buy locally at competitive prices.
Similarly, David Jones chief executive Paul Zahra said consumers are no longer to prepared to pay a premium for international brands when it could be bought cheaper online.