ACCC needs to wear realities of fashion's changing look

With fashion goods in retailing, the internet has introduced new and unpredictable marketing dilemmas.

It has changed the way almost all of us go about shopping.

It has vastly complicated firms' approaches to the traditional trade-offs between what they charge for their products, the distribution and in-store promotion costs they incur.  And it is changing the nature of our high streets and shopping centres.

The volume of online sales is doubling every four years in spite of a stagnant overall retail market.

And the internet's role continues to evolve with new developments that include using Australia Post's ''click and collect'' post-boxes to supplement home delivery.

Six months ago, a Productivity Commission report noted that online imports of goods costing less than $1000 benefited from not attracting GST.

This enhanced the competitiveness of online sales, although the Commission argued other regulatory imposts were more important factors.

Chief among these were labour inflexibilities, causing Australian shop workers to be only 60 per cent as productive as their US counterparts, and excessive rents caused by our retail zoning laws.

The estimated cost of bringing all internet sales within the GST net is $2 billion.  This would collect only $600 million in revenue, hence the Government has established an inquiry to find a lower-cost solution.

Headed by Labor Party adviser Bruce Cohen, it also includes former Australia Post executive Jim Marshall, a director of several online businesses.

Lower prices from internet availability have their cost.

Where internet supply reduces demand for goods from conventional shops, one outcome is fewer such outlets and a diminished consumer's ability to examine a product and physically compare it with alternatives.

This new marketing context forces producers to review whether to spend money on sales promotion and distribution, or economise on such costs to enable lower prices.  They are experimenting with novel approaches.

Some firms may go totally online.  Others may have stockless outlets.  Some will continue to focus on more costly conventional retail outlets.

Of course, this is easier if the bricks-and-mortar shopping costs are not loaded with unnecessary regulatory imposts.

Some clothing firms have apparently struck agreements with bricks-and-mortar retailers in Australia not to supply goods online at prices that undercut those in the shops.

In response to complaints, Rod Sims, the chairman of the Australian Competition and Consumer Commission, has reportedly said he will crack down against clothing-importing companies who strike such agreements with online suppliers.

It is hard to see the reason for such action.  Prices are best set by supply and demand.

In the absence of monopoly, the ACCC cannot and should not force firms to supply at lower prices.  And while every fashion goods seller has some form of monopoly over its product, none has a monopoly over its market.

The last thing that is needed in the marketing maelstrom touched off by internet sales is interference from a competition regulator aimed at forbidding business approaches that it considers might raise costs.

Retailing is highly rivalrous.  Technology changes and consumers' responses present challenges to suppliers and retail intermediaries.

Regulatory interference can only bring further, unnecessary complications.

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