Advocating Change

National Retail Association

A change would do us all good, according to Gary Black, executive director of the National Retail Association. He is in no doubt that the current government is no friend of the shopkeeper and that its removal would be a good thing.

Despite retailing’s position as the largest private-sector employer and its situation of major transformation, “there is no indication that government is in any sense aware or is dedicating any resources to support the sector or develop a more competitive retailing sector,” says Gary. “A change of government would help because then we would have personnel who are much closer to business, in particular small business, and have much greater empathy for the predicament of the retail sector. At the moment there is a minority government under great pressure from the trade unions and their agenda, so if a hundred jobs are lost in manufacturing there is a huge outcry. However, retailing has lost twenty or thirty thousand jobs in the last couple of years – employment is back to 2004 levels – but there is no policy initiative and no engagement from government. It’s a major issue.”

The National Retail Association represents thousands of Australian retail, fast food and service businesses of all sizes, with more than a thousand members representing more than 10,000 retail outlets nationally. These figures have been increasing steadily. The association says it offers a “lifeline for employers who need access to high quality and industry specific legal advice.” The core service offered by the association is the employment law service which is delivered by a team of in-house lawyers. “The majority of Australia’s national retail chains rely on NRA for advice around anti discrimination and unfair dismissal claims and in the event of disagreements with the regulator (Fair Work Ombudsman) about award breaches or arrears of wages claims. Members primarily join NRA to access practical advice and solutions for employment law.”

In terms of comparison with other groups promoting or representing the retailing sector, says Gary, more care could be taken in ascertaining which group offers the most. “No one seems particularly enthusiastic about lifting the bonnet and having a look” at what each offers, he says. One ‘rival’ now operates from rented offices and with mainly external – outsourced – staff and facilities including the legal resources, and Gary is not confident that model can be as effective as retaining in-house experts. “We are a more robust and diverse organisation, and much larger in terms of employees.” NRA runs a series of committees which examine issues and provide a base for submissions to government over issues such as loss prevention (read ‘theft’ or ‘shoplifting’).

NRA works actively with governments and departmental officers to ensure that the interests and needs of the retail and services sectors are protected and promoted. As an industry association, it “takes seriously its obligation to influence government policy and keep public debate focused on key business issues. NRA’s member engagement programs help to identify issues of concern for business and industry and help direct NRA’s policy and lobbying strategies on behalf of members.”

It’s no secret that the retail sector is undergoing a major transformation, and Gary acknowledges there “will be quite extensive casualties,” possibly taking the form of a national chain closing or the loss of marginal or non-performing stores, business failures occasioned by the stress being felt in almost every high street across the country.

Gary says there is no arguing with the facts: discretionary spending in the form of shopping is down, in absolute terms for many people but, significantly, as a proportion of overall household budgets, while other sectors such as education and health provision now account for a rising proportion of total income. He also says the high Australian dollar takes its toll on shopping: the negative ‘balance of trade’ in terms of people going abroad rather than spending vacations domestically has a perhaps surprisingly large effect. “The explosion in short-term outbound tourism is significantly weakening the Australian retail sector,” explains Gary. “When people travel overseas they spend money in bricks and mortar stores overseas and all the research shows us that shopping ranks very high – probably their number one or two leisure activity.”

While many observers say the economy is bottoming out of its recent trough, “we may have hit the bottom, but coming off the bottom will be very painful as growth will be marginal, so there will be a very challenging set of circumstances going forward.”

Would changing policies help? “In the battle with online, until the government reforms the tax and customs regime it will be very hard,” says Gary. Retailers are working hard to develop price harmony – reducing the difference between the price of a product in Australia and its tag in other countries, defended by many manufacturers and distributors on grounds of the lack of economies of scale here. Late 2010 the government announced an inquiry into the future of Australian retail by the Productivity Commission. The Commission recommended late last year that, in principle, the low value threshold exemption for GST and duty on imported goods should be lowered to promote tax neutrality with domestic sales but reckoned the government should not proceed to lower the threshold until ‘it is cost effective to do so.’

Gary points out the far lower threshold in Europe (and elsewhere – typically below $40) and suggests that until this is changed at home, retailers will continue to have a mountain to climb to compete with parcels arriving from the outside world. Global shopping “impacts very significantly” on the high street, but even as retailers move toward an online shopping model, “we will never be able to compete on a level playing field with a tax and customs regime that favours the foreign competitor.” It makes it prohibitively expensive for retailers here to develop the necessary infrastructure for selling online.

Gary is less forceful about the ‘independents versus conglomerates’ issue. For a start, the well-known ongoing battle between the likes of Coles and Woolworths against small outlets is “predominantly a grocery issue. If you look at the national chains which are mainly non-grocery, the greater concern is the level of concentration in shopping centres, especially at the high end,” such as Westfield. Upward pressure on rents and the ability for the major shopping centre owners to take advantage of their dominant presence in cities is a real concern for NRA and its members. “The challenge then is that there are no other really suitable retail formats.”

The multi-goods model is attractive but frequently hampered by planning regulations. NRA has been active across all jurisdictions in pressing for the reform of retail shop leasing laws to allow retailers to more effectively negotiate with landlords over occupancy costs and to try to achieve more equitable rental outcomes for retail tenants.

NRA has long advocated the need for a uniform workplace health and safety regime and supports current measures directed at harmonising state and territory health and safety laws. NRA information programs are helping retailers become conversant with the emerging national model for the regulation of workplace health and safety. The association also continues to give advice and direction about in-house policies and procedures that will need to be changed to ensure compliance with harmonisation outcomes.

The Carbon Tax has made more news as a political football than a genuine controversy since its implementation in July. The impact of the tax on retailers “is mixed and not uniform at this stage,” explains Gary. Operators are facing changes in power bills “which will not become evident quickly.” The main observation is the “sleight of hand – the sliding scale or staggered introduction” of extra aspects. “For example, fuel is exempted until July 1, 2014. That’s when retailing will see a greater impact.”

NRA says it will continue to “present the facts to governments on the impacts of legislation and decisions on the retail sector. Members’ views and concerns of the retail and service sector are continually monitored to ensure they are communicated to governments, the media and the wider community. It is through these processes that NRA does collectively for business and industry what individual businesses struggle to achieve alone.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

November 21, 2018, 3:47 AM AEDT