Small WA retailers 'swept away'

Small WA retailers 'swept away'

07-Aug-2014
Independent grocers have described a report calling for deregulation of retail trading hours as a “catastrophe-in-the-making” for Western Australia’s small retailers.

WA independent retailers say deregulation of hours will ‘sweep away’ small players


WA Independent Grocers Association President, John Cummings, said a report from the Economic Regulation Authority (ERA), which recommended that retail trading hours be deregulated in Western Australia, “fails to consider the real world implications” of its recommendations on the whole retailing sector.


Australian Food News notes Western Australia has been an exception to the domination of the supermarket scene by Woolworths and Coles. Unlike the Eastern states, there are many family-owned or independent retailers who continue to play a large role in the retail landscape of Western Australia.


Weeknight and Sunday trading “harmful” for small retail businesses


The WA Independent Grocers Association has recently released its own independent study on the “harmful effects” of existing weeknight and Sunday trading on small retail business. It said the ERA’s recommendation would see big national retail chains “sweep away small retailers” in metropolitan and regional Western Australia.


Mr Cummings said that the ERA had mistakenly treated all retail marketplaces and consumers in WA as if they were identical, regardless of whether they were in the city, the suburbs or country towns.


“It’s a one-size-fits all approach based very much on arguments supplied by the major national retail chains, the Shopping Centre Council of Australia and the Chamber of Commerce and Industry,” Mr Cummings said. “Where is the ERA’s own detailed analysis of the WA market and the economic impact on small retailers?” he said.


“For example, the report highlights data supplied by Coles and Woolworths that the companies have a combined market share of between 55 and 60 per cent,” Mr Cummings said. “In fact, the ACCC has stated that it is 80 percent, while Roy Morgan Research reports that it is 72.5 per cent,” he said.


Mr Cummings said the ERA’s report also compared data provided by Coles on supermarket trading hours in different states and locations, but that it “fails to state that the trading hours relate to stores in different demographic locations; in one case a supermarket in outer suburban Victoria and a supermarket in inner city Perth”.


“In another Coles graph the ERA argues for deregulation on the basis of customer transaction numbers, but fails to consider the dollar value per transaction,” Mr Cumming said. “The dollar value figure is imperative in terms of the hours that a shop is open, staff rostering and business profitability,” he said.


Regional retailers will be “hardest hit”


Mr Cummings said regional retailers would be hardest hit by the ‘one-size-fits-all’ deregulation approach because they had vastly fewer resources available to compete against major chains.


“Independent research into the effects of existing trading hours clearly proves that current weeknight and Sunday trading was harming small retailers,” Mr Cummings said.


The study, conducted for IGA grocers in July this year, showed that the majority of small retailers suffered reduced profits and sales since the introduction of weeknight and Sunday trading in 2010 and 2012, while the overwhelming majority of retailers reported less than a quarter of stores in their centres were opening on Sundays. The survey conducted for the study included metropolitan and regional retailers, but excluded independent grocery stores.


The WA Independent Grocers Association said the survey revealed that almost 60 per cent of small retailers suffered falls in profits, while almost one third report that things have remained the same. Nearly half reported a decrease in sales while almost 40 per cent said that sales had stagnated.


“Regardless of what the ERA believes, it is clear from these real-world experiences that weeknight and Sunday trading has resulted in no additional business for 90 per cent of retailers,” Mr Cummings said.


“The major retail chains and the big shopping centres absolutely support deregulation and the reason for this is that they are the ones who are soaking up sales and profits at the expense of their smaller competitors,” Mr Cummings said. “Jobs have been axed and stores closed, and from the evidence supplied to the current Productivity Commission inquiry by Woolworths, it appears that no extra jobs have been created as a consequence,” he said.


‘One in five’ small retailers would leave if trading hours changed


Mr Cummings said it was “disturbing” that the survey found nearly one in five small retailers said that they would leave the industry if small changes to trading hours were introduced by the State Government.


If translated throughout the retail sector, the WA Independent Grocers Association said consumers in the southern half of the state would have around 2000 fewer stores competing for their business, added to which would be the loss of several thousand jobs.


“We call on the Premier to maintain the Government’s policy not to change the current trading hours system in both Perth and regional WA,” Mr Cummings said.


For the original article from Australian Food News click here.