Independents lose on Tasmanian deregulation

JUST six months since its introduction, shopping hours deregulation is already reshaping Tasmania’s retail sector — and the news is not good for WA independent operators watching for the results of competition review here.

Already a dominant retail force that held around 80 per cent share of the State’s grocery market prior to deregulation, Woolworths and Coles have picked up an additional 5 per cent to 7 per cent of market share since deregulation, according to trade association Tasmanian Independent Wholesalers.

The news, which was disputed by Woolworths, comes as the WA Government goes through masses of submissions as part of a National Competition Councilled review of retail trading hours in WA.

TIW represents 137 independent stores on the Apple Isle and said Tasmania’s three independent grocery banners were suffering big losses with Festival IGA, Value Plus IGA and Friendly Grocer IGA losing 18 per cent of sales across the board.

One of Tasmania’s largest independent supermarkets, located in Hobart, has recorded a loss of $100,000 a week in turnover and has had to cut 30 staff to keep its head above water.

TIW general manager Peter Wise said around 110 jobs had been wiped from small retailers’ payrolls in the past six months.

He said that around 65 per cent of independent stores in Tasmania had annual sales of less than $1 million and the deregulation had made a huge dent in their sales and bottom lines.

“95 per cent of Tasmanian businesses already could open seven days a week … nothing has changed except Woolworths and Coles are open till 9pm seven days a week,” Mr Wise said.

To add insult to injury it has been rumoured that Woolworths plans to sever ties with Statewide Independent Wholesalers. The pair have had a joint warehousing facility for the past 20 years.

Woolworths owns a 60 per cent stake in the facility that supplies the 29 Woolworths stores in Tasmania and 95 per cent of the State’s independent grocers.

Woolworths also wholly owns a second warehouse in Hobart.

Mr Wise said that if Woolworths exited the shared facility the warehouse would no longer be viable and in excess of 300 jobs would be lost.

“Independent groceries may have a real problem getting groceries and competing with Woolworths and Coles,” he said.

Woolworths consultant and Statewide Independent Wholesalers chairman Michael Kent strongly denied the rumours and said Woolworths had no plans, at this stage, to pull out of the shared warehouse facility.

Mr Kent said the shared facility was reviewed on an ongoing basis.

“It will continue to be reviewed and if and when there is any thought of withdrawing from SIW there are clauses within the contract that specify six months’ notice,” he said.

Mr Kent said that by gauging the movement of stock from SIW, he determined that Woolworths had only picked up 2 per cent to 3 per cent of the market share since December.

“There have been one or two independents located right next to a Woolworths or Coles that have lost 12 per cent to 15 per cent but over the State the shift for Woolworths has been 3 per cent.”

Mr Kent said the next six months would be interesting as retailers head into the quieter winter period.

Mr Wise said Woolworths and Coles had access to 90 per cent of Tasmania’s population and the impact of deregulation on small business was proving to be far greater than expected.

What had really killed off turn-over for small independent retailers was that the big chains were trading 22 hours longer than was expected, he said. Woolworths and Coles now trade 7am to 9pm, seven days a week.

“The going home trade for small business has been severely impacted for not only the small to medium businesses but your corner stores and delis.”

Mr Wise said TIW was undertaking a detailed study of independent supermarkets, to be released in the near future, that will gauge the economic impact of the legislative change last year.

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