Rudd can do more to control grocery prices: ARA

Posted by Daniel Palmer on 30th May 2008

Peak retail body, the Australian Retailers Association (ARA), has urged the Rudd Government not to ‘wash their hands’ of the issue of grocery prices and look at other avenues to reduce costs for retailers – in particular – occupancy costs.

ARA’s Executive Director, Richard Evans, said while petrol prices are obviously having an effect on the cost of goods going to market, the Rudd Government has been slow to release the Productivity Commission’s report on retail leasing and look at steps to help contain spiraling occupancy costs for retailers. “The ACCC’s inquiry into grocery prices is ongoing with the results due to be handed down at the end of July, but we urge the Rudd Government not to give up on Australian families and seriously review the situation of occupancy costs,” Mr Evans said. “The cost of occupancy is currently well above what the retail sector should be paying as a percentage of direct costs to bring goods to market while maintaining a good profit margin.”

Mr Evans believes complicated regulation is causing unnecessary worries for retailers. “We need to start finding solutions for this over-complex and over-regulated part of the retail sector on a coordinated national front,” he stated. “In this time of downturn in consumer spending and confidence we should be looking very hard at improving the situation for retailers – including making the issue of tenancy less problematic and limiting the number of disputes that arise.”

With the Productivity Commission’s report now not due for release until August, the ARA have called for a stop to the “blame game” and provided four potential solutions to the issue:

“- Bring fair negotiating into retail leasing;
– Bring in a Code of Conduct for leasing negotiations and the application of the law;
– Standardise retail leasing laws Australia-wide; and
– Cease disclosure of turnover figures to landlords.”

“Over the years, no consensus was reached on certain issues due to the landlords being unwilling to concede any ground. These include end of lease issues, management fees, the introduction of competition changing the tenant mix, the inability of the small retailer to run a case against the might of the landlord and remedies relating to non-disclosure. This has to change and this is something very tangible the Rudd Government can do to ease the cost of business for retailers and therefore impact prices,” Mr Evans claimed.