More to retail decline than bag ban, NRA says
Heads of Australian retail associations have dismissed reports that the ban on single use plastic bags has weakened the economy.
The Australian reported findings this week from the Treasury’s Business Liaison Program, in which businesses claimed the bag ban has led shoppers to reduce grocery consumption to an amount they can easily carry.
But chief executive of the National Retail Association, Dominique Lamb, said that this claim differs from what the association is hearing on the ground.
“We have run significant engagement campaigns in Queensland, Western Australia and now Victoria. We’ve probably gone to over 480 shopping centres across the country, and we have not had this feedback,” Lamb told Inside FMCG.
The association reported an “overwhelmingly positive response” to banning plastics and this move “resonates with consumers”.
“I think it’s very difficult to pin the current retail [decline] on plastic bags, especially if you look at retail figures over a number of years.”
Lamb said there are various economic factors at play, including changing shopping habits.
“Retailers are perhaps reporting having smaller basket sizes, but customers are shopping more frequently, or differently.”
This change in consumer shopping behaviour was echoed by Jos de Bruin, CEO Master Grocers Australia, who said that calling out the bag ban “is a bit much”.
“There are so many variables that affect sales in retail,” de Bruin told Inside FMCG. “Consumers are shopping regularly; if they haven’t got their bag, they’ll come back tomorrow for the rest of the items.”
“People are shopping three or four times a week minimum; they’re shopping for tonight’s meal this afternoon. Gone are the days of families doing the weekly shop and carrying 25 bags back to the car.”
He said that like with any new process there can be a “few teething problems” as consumers adjust, but if it costs retailers in one sale it will be recouped on the next.
“We’re going through a bit of a transition; high cost of living, [consumers are dealing with] high fuel costs, gas, bills… all these variables affect the ability for consumers to spend.”
Other factors at play
The Treasury’s Business Liaison Program, which is used to develop a deeper understanding of economic conditions by listening to businesses on the ground, uncovered a number of other factors contributing to a fall in consumer sentiment, including subdued income growth, high levels of debt and credit tightening.
Some businesses even reported reducing expansion plans as a result of continued weakness in consumption.
Businesses told the Treasury that increased automation including dark warehouses staffed only by machines is leading them to cut jobs. In many cases these businesses were instead adding technical jobs with higher salaries to manage these technologies.
The transition towards a more online consumer was also highlighted with some retailers reporting that consumers still wish to come into the store to experience products in person but will often then choose to buy the product online.
The impact of the drought also played a part in price pressures, with higher prices for products such as lamb causing consumers to switch to cheaper alternatives.