Penalty Rates And Retail’s Rush To The Bottom

by MR Magazine Staff

A financial planning lecturer once explained to his students why he believed wealthy people are so obsessed with tax. “The thing is,” he said, “when you are earning $1 million a year it actually doesn’t go that far!” “When you have the big house in the flashy suburb, the holiday house on the coast, the two or three European cars in the garage, the kids in top private schools, the annual overseas skiing trip, meals in posh restaurants, the wife’s regular visits to the top fashion houses … it can be a struggle to make ends meet. “The only variable it seems in a world full of big fixed costs is tax; and so wealthy people lobby the government furiously, and employ creative tax accountants, to try to get their tax bill down,” he added. Why is this relevant to retail? Because when you look at the retail scene you can see a similar scenario. A world full of fixed costs and declining revenue and a desperate search for a circuit breaker to try to firstly make a profit and then grow it. That circuit breaker it seems is the wages of those at the bottom of the pile. In the retail world, rents are fixed, supplier costs are pretty much fixed, or rising, and on the other side, the only sales strategy it seems at the moment is to be seen as the cheapest. Read more at ABC News.