Licensed to trade
With Forfás on the cusp of publishing a study into the area of regulation and licensing in the Irish retail industry. Fiona Donnellan examines the current system and potential changes in the offing
Print16 November 2012
Opening a retail business involves a great deal of paperwork and planning. Along with the expected responsibilities of finding a suitable location, hiring the right staff and stocking products that will drive footfall; there are the regulation requirements that are essential to the running of your business. For many retailers, the paperwork and inspection regimes take up a significant amount of time and place additional burdens on resources. Forfás is on the verge of publishing a study into this area of licensing and regulation for retailers. The study was commissioned by the government following recommendations made by the high-level Better Regulation group and the Small Business Forum.
The study’s focus is on the value of the local shop and will set out clearly, from a government department, what licenses and inspections are applicable to retailers in Ireland today. The study will also make recommendations to the government to improve the system.
A report into the licensing, regulation and inspection requirements of the grocery retail industry was carried out a number of years ago by Jim Power and RGDATA. That report found over 20 different licensing and regulation rules that applied to the market. Tara Buckley, director general of RGDATA, was involved in that report. "One of the aspects we’d focused on was this burden of red tape on independent retailers. We went in and spoke in the Dáil before an Oireachtas committee and we highlighted this issue." Following on from that report, a high level Better Regulation group was established, of which Buckley is a member, along with the Small Business Forum. Together, these two groups recommended to the Minister that the issue of regulation should be looked at.
Licenses on the increase
Buckley says the new study from Forfás has "looked into that whole area and they have come up with around 50 current different licenses, registrations, inspections that somebody running a grocery convenience store with maybe a little café area needs". These licenses and regulations are split among a number of different authorities across government and State departments. This is an issue for RGDATA members, according to Buckley: "The argument we would make is for a lot of people who run one or two shops, the burden of regulation is significant for them. It’s different if you are a big multiple but usually, in our case, it’s the RGDATA member, the owner, who’s got the burden of all this regulation."
Thomas Ennis is a retailer with four stores in Dublin. He says the extra work created by regulation is "all part of the norm now" but does think the system could be streamlined to make it more efficient. "I think it’s typical of the environment that we’re all operating in at the moment, [going through] different departments. You have about four or five people to go through to open a shop, if you had just one department that you dealt with for this and they covered everything, I’m sure it would make everything a lot easier."
Ennis is not resentful though, of the range of different regimes and inspections that are carried out: "I’ve yet to come across anybody in my seven years in retail who put up a wall. Nobody puts up a barrier for you, they all have their job to do and you have to tick all the boxes for them. Everybody now is more aware of their accountability, so if they’re signing something off they’re making sure that you have everything done correctly."
Tara Buckley, director general, RGDATA, has highlighted the burden of red tape on independent retailers
Tara Buckley, director general, RGDATA, has highlighted the burden of red tape on independent retailers
The cost of compliance
Retailer and executive member of the National Federation of Retail Newsagents (NFRN) John Prendergast says the cost of licensing and compliance can overwhelm a retailer. "There’s up to 17 inspections a year that we can have, there’s over 18 licenses in total and an average cost of about €5,500 per year if you have to have all the licenses and permits. On average it costs between 45 and 55 management hours to manage the licenses, the cost of compliance to the average retailer is €6,000-€7,000. So in total you’re probably looking at somewhere in the region of €11,000-€12,000 a year, just in licensing."
An EU directive to reduce the burden of regulation on the retail industry by 25% was issued a number of years ago and the deadline is approaching. Prendergast believes that so far, there hasn’t been a reduction in cost: "I don’t personally feel that there’s been a reduction in the cost of us operating our businesses at the moment. I feel that with all of the pressure on the government to tighten up on things, they’ve been bringing in new legislative changes. I feel there’s a lot more compliance and we’re probably one of the most heavily regulated industries in the country."
Inspections
The frequency of inspections for the various licenses and regulations varies depending on the department. The majority of inspections can be carried out anytime by the various authorities while the payment of licenses occur both annually and as a once off payment. These payments can range from €20 per year for WEEE to €1,250 for weights and measures for pumps. Prendergast says the departments are doing double work. "There’s no cross control of the licenses. There’s two or three licenses coming in from the same department but they’re inspected by and looked after by different people. Even for the department, they’re trying to save money. We could have one inspector walk in today; we could have another one walk in tomorrow, both from the same department, but both effectively looking for different licenses."
Among the current regulations are signage requirements. These are signs that must be displayed on the premises and in view of the customer. They include the age restrictions for Lotto, alcohol, cigarettes and tobacco. Signs for health and safety in food areas must always be on display while CCTV signage must be displayed if there are security cameras in operation. Thomas Ennis feels that the amount of signage required can be off putting to customers: "You pepper your window fairly quickly, it’s like before the customer even steps in the door you’re putting blocks in their way, telling them what they can’t do. It’s very unwelcoming but it is a legal requirement."
Crossing the T’s and dotting the I’s
Buckley says RGDATA members can get frustrated by the amount of paperwork involved in full compliance: "There is a feeling amongst compliant retailers who fill in their forms, who fill in all the data, that they are the ones whose heads are over the parapet. They get hammered from every angle. They are the ones who set themselves out there to try and be as compliant as possible and they feel that they get every form then."
John Prendergast says: "The problem is if somebody feels that a law is stupid or blatantly absurd or silly, they don’t respect the law. If they don’t respect it then they don’t do it and you’re bringing in something that people won’t follow. Once you start that process it becomes the norm and the black market just gets bigger and bigger, it’s a slippery slope. Once somebody gets used to being non-compliant, and gets away with it, then they can potentially become more non-compliant."
Possible changes in the offing
The upcoming release of the Forfás report is highly anticipated by the retailing industry. In an ideal world, there would be a ‘one stop shop’ retail license that would cover all aspects of trading; the more likely scenario is recommendations for a more streamlined approach for the current system. Buckley hopes that the report clarifies the exact licenses and permits required by Irish retailers. "First of all it’s setting out from a government department what the licenses and inspections are. Certainly the recommendations will be around streamlining I think, possibly extending licensing periods so that you don’t have to apply annually. We’ll be pushing for the recommendation to be some kind of one stop shop license that covers a convenience retailer."
Prendergast believes that the government needs to streamline its inspections from the same departments. "The feeling within the NFRN is that there should be one license for a retailer and this license would encompass all of the licenses. As a retailer, everybody is trying to cut the costs, it gets to a point where you get down to your fixed costs which you can’t cut and in fact a lot of these are government controlled and they’re rising. These licenses and costs could be cut if the government streamlined the operation and removed a lot of the inspections. There are a number of departments doing double work. That saving then can be passed onto the retailer, that’s where we’re coming from."
The likelihood of a one stop shop for licenses is uncertain but changes to the current regulatory system would be welcome. The Forfás report is due to be released in the coming weeks and ShelfLife will report on the industry’s reaction in our next issue.
Various licensing requirements for retailers, depending on their retail activities:*
• Tobacco
• Wine/Off
• Irish Music Rights Organisation (IMRO)
• Phonographic
• Performance Ireland (PPI)
• Hydro Carbon Oil
• Dangerous Substances Act
• REPAK
• WEEE (Batteries)
• Video & DVDs
• Weights & Measures for pumps
• Gambling
• Weights & Measures for weighing scales
• Stamp sales
• Entertainment/Gaming machines (ie teddy bear machines)
• Chewing gum machine
• Water
• Waste water
• Salmon
• Shellfish
• Freshwaters eels
*Source: Jim Power report
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