Liquor laws may force convenience stores to close

2640 IGA Hearne Place OK

 

By ERWIN CHLANDA

 

A cap on sales of alcohol at 25% of store turnover proposed for next year could have no impact on the total alcohol sales in Alice Springs, but would channel more trade to Woolworths and Coles.

 

“All interviewees who either worked or ran [the small] supermarkets indicated that their profit margin would be so compromised that it would almost certainly result in the closure of their shop.”

 

These  convenience stores are facing closure from a double whammy, with a drastic drop in sales – not just alcohol – also caused by the presence of POSI officers – cops at bottleshops.

 

That is stated by the Adelaide firm BDO EconSearch in a report commissioned by the company which owns the Flynn Drive, Hearne Place and Eastside IGA stores, Lhere Artepe Enterprises (LAE).

 

LAE is owned by the Alice Springs native title holders.

 

The report says the closure of these independent stores would impact employment, food security, convenience, displaced effort, equity and drink driving: “Social and cultural impacts will affect well-being, health, community cohesion, way of life, culture and people’s property rights.

 

“These impacts by and large will be long term and permanent.”

 

BDO found that the 2017/18 profit and loss position of LAE declined from a marginal profit of $116,108 to a loss – in one scenario – of $999,841, indicating “a deterioration in retained earnings and cash balances, which may present solvency issues.

 

“The direct and indirect impact of LAE’s closure would result in an ongoing (annual) economic loss to the Alice Springs community of $34.5m in business revenue; $8.6m in gross regional product; 154 jobs and $5m in household income.

 

Says the report: “It is recognised that the economic impact analysis is a partial analysis in that some of the lost trade would be picked up by the larger supermarket chains that are unlikely to be affected by the proposed restrictions.

 

“However, the likely increase in market concentration will lead to another significant and negative consequence for the community.

 

“The dominant market position of the two large supermarkets will only be strengthened by the reduced trading capacity, or indeed demise, of LAE and other independent supermarkets similarly situated.

 

“It is a painful irony that increased market concentration is often examined closely by government regulators to avoid these effects rather than to enhance them.

 

“Most countries have competition laws to prevent such market concentration, and government regulators to aid the enforcement of these laws, not to circumvent them.”

 

The BDO report says the LAE stores and other independent supermarkets have suffered “a deleterious effect on food and grocery sales” from the “full-time positioning of auxiliary police officers in front of the supermarkets, as well as inside the stores at the entrance to the liquor sections”.

 

The Flynn Drive store, where the percentage of Aboriginal customers is highest, was suffering the worst result, with a drop in grocery sales of 7.5% from 2017 to 2018.

 

Sally McMartin, CEO of LEA, says there has been a 10% drop in overall sales – groceries and alcohol – at Flynn Drive since the introduction of POSI “and this is even before the introduction of the 25% cap”.

 

Says the BDO report: “It is almost certain that these sales have been lost to the major supermarket chains that, due to the separation of the liquor outlets, do not have, in the eyes of some customers, the disconcerting presence of auxiliary police officers outside their main supermarket entrances.”

 

Meanwhile the Master Grocers Australia (MGA) says in its submission to the NT Alcohol Review Implementation Team that the government has to date not produced any fact based evidence to support that the introduction of a 25% cap would have any impact on the overall sales nor consumption of alcohol.

 

MGA states: “This blunt instrument measure … will only shift sales from grocery licences to hotel drive throughs, stand-alone licences and the two major grocery chain stores Woolworths and Coles.

 

“Both have some stores that would gross $1m in weekly sales allowing them to potentially sell up to $250,000 in alcohol, giving them a clear market advantage whilst punishing small to medium sized enterprises.

 

“This is not logical, nor is it a responsible change to a condition of licence.”

 

About the conduct of POSI officers the MGA says: “Our members have reported several instances … where Police Auxiliary Liquor Inspectors showed unacceptable behaviour towards citizens.

 

“MGA would recommend that there should also be an operational code of conduct on the manner in which citizens are approached and the manner they are communicated with.”

 

MGA has 2,700 members nationally employing more than 115,000 full time, part time and casual staff, representing more than $15bn in retail sales. Many MGA members are small family businesses, employing 25 or fewer staff, says the organisation.

 

 

 

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Erwin Chlanda, Editor


2 Comments (starting with the most recent)

NB: If you want to reply to a previous comment, start your comment with this notation: @n where n is the number of the comment you want to reply to.
  1. Psuedo Guru
    Posted May 31, 2019 at 6:30 pm

    Need a card – food only – no grog – no smokes – no cash for those out of control.

    View Comment
  2. Watch'n
    Posted May 31, 2019 at 2:04 pm

    If they didn’t sell alcohol, the cap would not affect them.

    View Comment

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