Independent warns peers of turbulent times in retail

A part-owner of supermarket Fresh Provisions has warned WA’s independent retailers are in for one of the toughest periods in more than a decade.

Director Shawn Offer said the challenging conditions were due to a perfect storm of extended trading hours for bigger competitors, exorbitant rents, high electricity prices and penalty rates and the entry of new retailers such as Spudshed and Aldi.

Mr Offer said independent retailers had not found it this difficult to make ends meet since consumer confidence was undermined by the GST in 2000 and by high interest rates in the decade before that.

He said the challenges would be exacerbated by the falling Australian dollar, which would drive up the cost of imports.

“There is definitely some rough weather ahead but it’s a cyclical business and this is our third run at a particularly tough economic environment, ” he said.

Mr Offer said some independent retailers might not survive.

“Consolidation will come, and the unfortunate part of that consolidation is that it will not come from people buying them out, ” he said.

“It’s going to be the old-fashioned way where shops will close because they are not able to survive.”

Mr Offer said the two Fresh Provisions stores were still running strong, with a cult following offsetting a small loss of customers to the supermarket giants. Loyal customers were spending more during each visit.

However, the stores were struggling with high operating costs, particularly as suppliers cut back on specials because they too were being squeezed by major players.

He backed recent calls by Small Business Minister Joe Francis, who said it was time to level the playing field between small and big business, with the latter enjoying smaller weekend and public holiday penalty rates.

Analysis of several agreements by WestBusiness show staff at big companies are paid 50 per cent more on Sunday and 150 per cent to 250 per cent more on public holidays.

Those working for smaller businesses in the State system usually get double time or double time-and-a-half on Sundays and public holidays. But big business workers get slightly higher hourly weekday rates.

Mr Offer said he supported all independents for their attempts to break the supermarket duopoly but warned they could end up chasing the customers unless they ensured they operated in different areas. He said the proliferation of farmers’ markets on weekends were chasing the same customers as Fresh Provisions.

He had competitive concerns about Aldi, amid rumours of an Inglewood store close to his Mt Lawley branch, but he fully supported Spudshed, which operates in different catchment areas.

Echoing a strong sentiment across the small retail sector, he praised Spudshed owner Tony Galati.

“Every dollar he makes is a dollar Coles and Woolies aren’t making, ” Mr Offer said.

“We’d rather see Spudshed get the money than see it head over east where it will just help the bigger guys get bigger.

“I think the Australian public will rue the day when they allow Coles and Woolies to get as big as they are going to get.”

Mr Offer said it was important for the Federal Government not to put a GST on fresh food despite the calculations it would raise $6 billion a year.

He said GST was a “pseudo-tax” on junk food, effectively promoting fresh food.

Mr Offer’s own love affair with Fresh Provisions started with his first job at age 11. He collected trolleys and emptied bins at the inaugural Claremont store.

His mother was a manager at the time and he ended up buying into the business when he was 20 years old.

In keeping with family tradition, his 15 year old daughter has recently started her first job at one of the stores.