7 Day Trading - The two sides

Watching the presentations to council at the CGG meeting on Tuesday night, you couldn't help but feel the pain of what it is to be a small or medium sized retailer. 

Retail is a tough gig at the best of times. And right now is not the best of times. If you speak to a lot of retailers in town they'll tell you things aren't going gang busters right now.

Perhaps it's because the nation is in limbo waiting for an election, or perhaps it's the wider impact of a struggling world economy. Let's face it, there is a reason the Reserve Bank just cut interest rate levels to record lows. And it's not that the economy is humming nicely. 

And being a small business owner is a tough gig. Unless you invent a brand new way of selling things, there's very little room to become another Coles, Woolworths or Wesfarmers. Next year Coles will celebrate 100 years of being in business, and Woolworths Australia will celebrate 80 years. Those guys started back when supermarkets were in their infancy. To think you have a chance of tackling them and overtaking their market share as a small retailer you would have to be on drugs... drugs you probably purchased from a Woolworths owned chemist.  

In Australia it is pretty much agreed that the supermarket sector is basically a duopoly. On one side you have Woolworths, which owns Big W, Safeway, Thomas Dux, Food for Less, lots of Woolworths Liquor stores, Flemings, Dan Murphy's, BWS, Tandy, Masters and more. Then there's Wesfarmers, which owns Coles, Target, Bunnings, Bi-Lo, Pick n Pay, Liquorland, Vintage Cellars, 1st Choice Liquor, Officeworks, Harris Technology, KMart, KMart Tyre and Auto, Blackwoods, CSBP, Kleenheat Gas,  plus mining companies, coal companies and a heap more. Oh, did I mention both of those two are into Petrol too?

These two guys are behemoths in the Australian retail sector. If they want to enter your sector, they'll throw boatloads of cash at it until they're successful and then rinse and repeat.

And there's nothing intrinsically wrong with that. They're in business. If we as consumers want what they have, we'll give them money. If not, we won't. Capitalism at its purest.

So the only thing you have to offer as a small business is, what they call in the trade, your "USP"; your Unique Selling Proposition. It could be that you provide better service, or you have better choice, or you carry the purchases to the car for your customer, or you a known in the community, or you stay open later. 

And up until now, our local by-laws in Geraldton gave smaller retailers a helping hand in having at least ONE USP in the struggle to compete with large conglomerates, the ability to trade whenever they wanted. It was kind of like an Aussie way of backing the underdog. We said, "hey, we know you can't buy the same sort of volume as those guys, but we'll let you have the market to yourself on Sunday and in the middle of the night, and at least you'll be able to offer better service to your customers." 

And some of the smaller retailers said "thanks, but no thanks. It's not profitable for us to open on Sunday", or "we'd rather have a day off". And others said "yes please. It's our only way to distinguish ourselves from the big guys so we'll make the most of it."

What about us, the consumer?

The biggest argument FOR deregulated trading hours, is that ultimately the consumer will be better off. If every business has the freedom to open whenever they want, then us as the consumer will have the best of both worlds. We'll have cheap Coles & Woolies prices, and the convenience of 24 hours, seven days a week. What could possible be bad about that? 

But remember when Woolworths fuel came to Geraldton? We all thought it was going to be the end of ridiculously high fuel prices in our town. And for a time it was. They were cheap, the other fuel stations near them played the price war with them until they went out of business, and slowly but surely, Woolworths crept up it's fuel price. Today, you can buy fuel from Woolworths fuel for 144.9c per litre, one of the cheaper prices in town to be sure. But Woolworths are selling their fuel in Whitfords 400km south of us for only 130.6c per litre. Does it really cost 14.3c per litre more to sell fuel in Geraldton? 

Or maybe it's not Woolworths goal to sell cheap fuel. Maybe they're in business to make a profit.

When is a consumer better off?

A consumer is only better off when there is competition. Healthy competition. And that's the platform governing bodies (including a local council) should be trying to establish to allow the private sector to do its thing. 

Do we want all the shops open seven days a week for our convenience? Of course we do.

Do we want all the smaller retailers to go out of business, and then only be able to choose between Target or a trip to Perth? Of course we don't.

The questions we have to ask ourselves as consumers are:

Will deregulated trading hours make it harder for smaller retailers to compete?

If yes, will some of those retailers go out of business because of it?

If yes again, would I prefer to have more choice 6 days a week, or less choice 7 days a week?

That's not a trick question. It's a genuine one. Ask 40% of the people in Geraldton what we need here most, and they won't say "better rehab facilities" or "more police". They'll tell you straight we need a KMart and a BigW.

And they seem to believe that deregulated trading hours will bring them to town.

Noone's judging them saying they're wrong. 

It's just a conversation that Geraldton needs to have.

What about Innovation?

This is the toughest question law makers have to tackle when forming policy. Essentially, by propping up one group you remove their need to think innovatively about how they can please their customers. At least in theory. 

And so as consumers we live in fear that by making it easy for smaller retailers to compete by stopping the Wesfarmers and Woolworths groups from trading on Sunday, we run the risk of those same small retailers taking us for granted and failing to delight us with simple pleasures like EFTPOS and smiles. 

And sometimes it ends up being the big guys who have to think innovatively, and who end up being the first to implement handy things like Paywave and self serve checkouts. 

There's no easy answer to this. Law makers need to find a balance between protecting the wider community from a monopoly (or duopoly) easily forming where competition dies, and leaving enough freedom in the market place that innovation and ideas thrive, and the business sector seeks to delight its customers.  

Back to last night's meeting

There were presentations made by representatives from McDonald's Wholesalers, IGA, Mid West Chamber of Commerce and Industry and others.  

Councillor Van Styn challenged the IGA representative who spoke asking if they would be willing to close on Sundays seeing they supported the argument that Sunday trading would hurt the wider community. A very calm response told those who listened that their store didn't roster people on Sundays who had sporting commitments.

Jody Bevan, representing the MWCCI and its members, said that while people claim they want the ability to shop on a Sunday, it just hasn't proven viable because not enough people actually do when the chance arrises. He stated that lots of local businesses are struggling at the moment, and if they could make an extra dollar by opening on Sunday, they wouldn't hesitate. But it just wasn't viable. 

This seemed to fly in the face of the argument that others were trying to make, that Sunday trading was intrinsically bad for the community by stopping people from participating in sports etc. 

Councillor Chris Gabelish pointed out that the Chamber of Commerce's own survey, which had 170 responses, could not actually verified if it was completed by 170 different businesses, or by just a handful of businesses filling the survey in multiple times. Jody Bevan from the Chamber agreed that they had no way of telling, but was happy to use the data the City had acquired from conducting its own surveys, which showed the community was quite split on the matter. 

Councillor Nino Messina stated that the shops that did open on Sunday were flat out, remarking that you couldn't get close to them, arguing against the Chamber's point that Sunday trading wasn't viable. He made the point that he felt it was his job to consider what the community at large wanted, and not just businesses.

McDonald's Wholesalers made the case that they cannot purchase Vegemite for less than $6.75, but see it for sale at larger retailers for only $6.00. Councillor Van Styn asked how that related to Sunday day trading, but wasn't quite answered. He was left to draw his own conclusions about the difficulties smaller retailers already face against the big guys, and how Sunday trading might add to the challenges. 

With the survey showing the community rather divided over the issue of deregulated trading hours, its clear that council won't be popular with half the population no matter what gets decided.

However it is interesting to note that there haven't been any "pro deregulated trading hours" groups form in Geraldton, and the people that show up at the meetings on the issue are predominantly those opposed to it. 

And with all the submissions that have been called for on the matter, only 2 retailers voiced a preference for it and 10 members of the public. There were overwhelming numbers of submissions against. Yet the surveys commissioned by council show almost a 50/50 split in opinion. It seems people who would like deregulated trading are happy to vote for it, but not fight for it. Those against it on the other hand are very vocal. 

Expect a decision on the issue next week.