Local retailers suffer - Small shops right to call for fair play

THE recession is likely to hit a wide range of jobs, not just in the construction sector but throughout the economy.

The retail sector is already seriously hit by a variety of factors — lower consumer confidence, harder economic times, rising costs, tougher credit terms from banks, higher VAT and commercial rates.

RGDATA, which represents the country’s 4,000 independent retailers, contends that local retailers are facing unfair competition from the larger multiples. Independent retailers still command 40% of the retail trade, but they are being squeezed by competition from the larger supermarkets. These are competing with one another by offering a high level of discounts that are approaching price-war proportions.

Independent retailers are not really in a position to compete with the supermarkets, which purchase such volumes that they are able to sell at a lower price. But smaller retailers are competitive when it comes to convenience. They are closer to their customers, and the extra price for just a few items may be more than offset by the convenience of not having to drive or find parking at a supermarket. Moreover, family-owned shops have shown a capacity to innovate and adapt more readily to change, through their capacity for hard work.

There have been charges the supermarkets have been engaging in “irresponsible” discounting of alcohol. In some instances, publicans are actually purchasing stock from large supermarkets which are selling those items cheaper than the publicans can buy it wholesale from their regular distributors.

Government and state agencies, such as the Competition Authority, are being blamed for doing little to help local shops, and the National Consumer Agency is being accused of acting like a “cheerleader for the global multiples”. Consumers are inevitably going to welcome lower prices and denouncing this makes about as much sense as decrying happiness.

Of course, the Government and its agencies should ensure that this price-cutting is not just a monopolistic ploy to squeeze out smaller competition. RGDATA should specify the kind of changes that should be introduced to help smaller shops. It is not enough to suggest that the Government should be more balanced.

Measures that increase costs and hinder competition from local retailers should indeed be avoided. A classic example of this is where local authorities offer rate concessions to attract the larger supermarkets, while the local shops have to pay full rates. In effect, the small stores are being compelled to subsidise the larger ones. This is grossly unfair.

The distorting impact of cross-border shopping is hurting many retailers, especially those close to the border. They have seen their trade cut by as much as 30%.

Raising VAT may be the easy option but in the last recession, VAT increases became counter-productive — that was why the rates were lowered. It is especially counter-productive when there is a cheaper alternative just across the border. Instead of making an irrelevant appeal to patriotism, Government should learn from past mistakes and engage common sense.