Preparation for the future

The Australian retail landscape has become increasingly more competitive in the past decade, none more so than the supermarket sector.

As the independent banners vie for their piece of the pie against Woolworths, Coles, and ALDI, there’s been no shortage of innovation, from price points to marketing and logistics. The Australian Bureau of Statistics Retail Trade figures for May 2015 are a good indication of how this competition is benefiting retail in general. Year on year, retail spending in Australia grew by 4.6 per cent in May. The category of food retailing has kept pace with total growth, showing an increase on May 2014 of four per cent. While it’s not the six per cent many in the industry may be wishing for, it is certainly an improvement on the bleaker growth witnessed in December 2014 and January 2015 of around two per cent.

Of course, competition isn’t the only thing driving these rises. Other factors playing into this include the Abbott Government’s more palatable federal budget, which took its toll on the previous May’s, as well as early cooler weather. Supermarket and food businesses will be witnessing the flow-on effects of the winter chill, with heartier hot meals on shopping lists and perhaps DVD and magazine sales picking up slightly as consumers opt for indoor activities.

While department store chains and electronics retailers see spikes in sales driven by heaters and fashion, many supermarkets are also cashing in on this with seasonal products and ranging. Despite the growth, lower consumer confidence figures have been clocked by several researchers in the past month and, while confidence is not always the best indicator of sales traction, it cannot be discounted. You could say the ARA is also doing its best to plan for the future viability of the retail industry. The ARA is currently engaged in a review of the Fair Work Act, with the view to reducing the costs for retailers that trade on Sundays. This significant issue is a strain on Australian retailers across the board, with the number of hours employed in the retail industry having fallen in the past eight years at the same time as we’ve seen increases in the last five years in Sunday penalty rates, public holidays, and lack of flexibility in employing part-time employees.

Under the current modern award, owners of retail businesses are required to pay staff working on Sundays at a rate of double time – a 100 per cent penalty rate. The ARA would like to see this reduced. The ARA proposes a reduction in the modern award on Sundays to timeand- a-half. Contrary to reducing the earning capacity of Sunday workers, we believe a reduction in the Sunday penalty rate to 150 per cent would allow retail employers to be able to provide more labour hours than they can presently afford. Given the fact the community has indicated through its behaviour and lifestyles that access to retail on Sundays is important, and independent research that shows retail employees are prepared to work on Sundays for a lower penalty rate, we believe this compromise provides an even balance of the needs of both staff and businesses. The ARA is working with  group of retailers in an effort to have the modern award amended under the Fair Work Act. In the coming months, we expect to have our case argued in the courts and look forward to being able to bring some positive news to retailers. Should the ARA be successful in the ‘Modern Award Review’ case, retailers will receive a much-needed reprieve from one of their biggest operational costs.

Russell Zimmerman
Executive Director

Mr Zimmerman became a councillor of the ARA, NSW Division, in 1995, and held the position of president of the NSW State Division from 2001 to 2003. From 1997 he held the position of state delegate to the ARA National Council and served as its president from 2003 to 2004. As National President of the Australian Retailers Association he represented Australian retail at the Federation of Asian Retailers Association in New Zealand, Beijing and Australia.

About ARA

For more than 100 years, the ARA has been the peak industry body in Australia’s $240 billion retail sector, which employs more than 1.2 million people. As an incorporated employer body under the Fair Work (Registered Organisations) Act 2009, and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects more than 5,000 independent and national retailers throughout Australia. Visit www. retail.org.au or call 1300 368 041.