Harvey Norman’s executive chair, Gerry Harvey, has called for a government inquiry into ultra-cheap retailers Shein and Temu which are rapidly capturing market share among budget shoppers in Australia.
Asked whether he believed online marketplaces like Amazon and Temu were killing off local business, he said “yes, yes, and yes”.
“(Shein and Temu) are a … pariah, it’s a very difficult situation for Australian retailers to combat,” he told The West Australian paper.
“They never pay any tax here, they don’t employ anyone.
“There should be a government inquiry into it as to what ramifications are there and whether they should or shouldn’t do something about it.
“It’s a real worry, do you let it just go or not, I think it’s worth an investigation.”
Shein and Temu first entered the Australian market in 2022 and 2023 respectively and have seen rapid success since then. Data from Roy Morgan in August last year indicated that 3.8 million Australians aged 14+ bought at least once from Temu over 12 months, while 2 million bought at least once from Shein.
It estimated that Temu and Shein together had close to $3 billion in annual sales in the 12 months to June 2024, which includes $1.7 billion for Temu and $1.1 billion for Shein.
As ChannelNews has previously reported, Temu believes that they can take on Australian retailers especially the likes of Bunnings, Big W, Kmart and Target in the value market despite questions being raised about the products the company is shipping into Australia.
Temu is moving to ramp up its roster of locally-based suppliers in an effort to shorten delivery times, as it increases pressure on retail competitors.
They are reportedly already talking to local suppliers to move to same day delivery, and are “happy” to offer “significantly better margins” than what high street retailers are demanding.
While its ultra-cheap goods are a major draw for many customers, there are concerns over the safety of some of its products.
Following an incident where an 8-year-old Queensland girl was burned after wearing a jumper sold by Temu that had no fire safety warning, Temu is now believed to be working with the Australian consumer watchdog, the Australian Competition and Consumer Commission (ACCC), to sign a voluntary product safety pledge.
Harvey said, “…there’s a lot of online retailers selling some of the stuff we sell but it’s unbranded, you don’t know which factory it’s made in.
“Price (is the drawcard). Mind you, the picture (online) looks good, whether the picture is as good as the product might be another thing.”
He added that consumers could have “a lot more comfort” buying from trusted brands even of it was more expensive.
While Temu and Shein are adding more customers, it is yet to grow its brand trust among Australians.
Roy Morgan noted that in the 12 months to September, Temu climbed from the tenth most distrusted brand to the eighth position.
Even the upcoming mega Myer-Premier deal is being positioned as one that will counter the likes of Temu and Shein. “In the 10 years since the David Jones transaction, the outlook for department stores has deteriorated further, with the entrance of Chinese ultra-cheap fast fashion retailer Shein and online marketplace Temu, with the two companies gaining market share due to heavy discounting and aggressive social media marketing spend,” said independent expert Kroll in its assessment of the upcoming deal which would see the combination of Premier Investment’s Apparel Brands with Myer. “Retailers operating at larger scales are often better positioned to leverage their size to more efficiently run the company.”