COMMENT: What Now For Retailers After Labor Humiliation?
Retailers and suppliers are today breathing a sigh of relief after Labor failed dismally to deliver their policies that could have wreaked havoc on the retail industry.
Scott Morrison’s shock election victory came after Bill Shorten went out of his way to attack what he called ‘‘the big end of town’’. The key theme that’s come out of the weekend election was stability with consumers voting to keep the status quo.
It is also clear that Shorten policies failed to resonate with the electorate for the simple reason that Labor and in particular Shorten was not trusted. He could not bring the people with him, because of his lack of personal appeal glib comments and a lack of sincerity that came through with Scott Morrison (ScoMo).
What retailers are now facing is an uplift in business after several weeks of deflated sales with some suppliers telling ChannelNews that sales for appliances and consumer electronics were “terrible” during the election campaign.
Retailers are counting on a rebound in spending from the Morrison government’s tax cuts which some analysts claim it will pump $8 billion into retail spending.
Almost 5 million Australians earning between $48,000 and $90,000 will qualify for the full cut of $1080 with some of this set to hit the economy in the second half.
Shortens strategy of targeting business not only failed miserably his backroom goons who are now vying to lead the Labor party had failed to work out that most Australians are “happy” in their jobs with research showing that most staff satisfaction surveys come in at around 80 to 85 per cent positive.
11 million of the 13 million Australians have jobs which under Shorten would have been threatened as business was in no position to pass on the big wage hikes that Shorten, and the Labor party were promising.
Shadow treasurer Chris Bowen also made the mistake of loading up the tax policy agenda with too many items and too much unexplained spending which consumers saw was an utter mess and not ‘believable’.
Despite this the socialist media including Fairfax and the ABC backed Shorten, now organisations such as the ABC who several Coalition refused to give interviews to are facing the real threat of further budget cuts with the return of a Coalition Government.
For retailers there is some real positives on the re-election of the Coalition.
First home buyer incentives could see a flow on effect with consumers also buying new appliances.
At the same time the housing market could get a boost from the unexpected Coalition victory.
With housing investment no longer facing the threat of higher tax rates, the new Coalition government could well change tax policy to boost housing stock and allow institutional investment in build-to-rent properties at the same 15 per cent withholding tax rate applied to affordable housing and student accommodation.
This could be a major boost for the likes of Harvey Norman and The Good Guys as new homes are built.
Allowing the franking credit concession should lift consumption by retirees aged over 60 who receive cash payments from Treasury in settlement for excess franking credits.
Another consequence of the franking credits concession being maintained is trustees of self-managed super funds will no longer have an incentive to switch into industry super fund and will go back to spending with retailers.
It is clear by the humiliating drubbing that Labor got in Queensland that traditional Labor voters were worried about jobs and family issues more than the climate change impacts of the Adani coal mine.
Meanwhile, in Tasmania Labor voters were just scared of change whatever form it takes said Fairfax media.
Morrison’s re-election follows the re-election of NSW Liberal Premier Gladys Berejiklian and the re-election of Victorian Labor Premier Daniel Andrews which delivers stability and confidence with consumers who are tipped to return to spending with retailers knowing that there are no uncertainties.
Morrison needs a clear majority and if he gets it, he can deliver clear policies that build wealth.
From wealth comes profits and from profits come taxes that are needed to build out infrastructure for Australia. This in itself generates jobs and cashflow for retailers.
Several leading business figures recently told the Financial Review that Australia lacked a long-term vision to diversify the country’s economy and lessen the reliance on resources exports to China. Also, they don’t see it coming from Morrison.
One chairman said: ‘‘We’ve been drifting for a decade. It started with the failure of Kevin Rudd’s big set of ideas and went nowhere under Abbott and Turnbull. We can’t afford another five years of drifting.’’
Another business leader highlighted the lack of any forward thinking on innovation policy. Start-ups and entrepreneurs are doing well but without a coherent, overarching government vision it is almost certain the progress will be piecemeal.
Retailers exposed to the housing sector posted the biggest gains in early trade, with Harvey Norman shares up 2.3 per cent to $3.92, JB Hi-Fi, which owns appliances chain The Good Guys, up 2.6 per cent to $26.24, lighting retailer Beacon adding 3.3 per cent to $1.08 and bedding retailer Adairs up 6.6 per cent to $1.76.
For CE and appliance retailers the future looks a lot brighter that it did last week with several new products set to drive sales, one big factor is the need for retailers to motivate consumers to upgrade their old gear with new, a new HD TV for 4K, a new sound system with voice activation, a new router with MIMO technology. It is all there for the taking.