RGDATA calls for emergency supports for retailers in Budget 2023
Shops will close if the government does not act, RGDATA warns, while CSNA has also said relief is urgently needed
20 July 2022
RGDATA has called for emergency State supports for local community food retailers in its Budget 2023 Submission.
The RGDATA submission, which is directly informed by feedback from members who operate 3,500 shops, convenience stores and supermarkets throughout Ireland, highlights the huge pressures that recent cost increases have placed on community-based retailers.
The submission says that the extent of recent cost increases, especially rapidly escalating energy costs, is challenging the viability of many family-owned food businesses.
RGDATA director general Tara Buckley informed Ministers Donohoe and McGrath that the inflationary pressures on retailers has placed family grocers under unprecedented pressure.
“All retailers are reporting that consumer spending in their stores has retracted as consumers tighten their belts – some estimating that consumers are spending up to 10% less year on year,” Buckley said.
“At the same time, input costs are racing ahead, with energy costs doubling year on year. Independent shopkeepers are also facing significant increases in labour costs, supplier cost, logistics costs, and the financial and red tape burden of a swathe of employment and sustainability regulatory changes,” she added.
The scale of the crisis requires urgent intervention and support by the State in Budget 2023 to ensure that these vital community stores remain open and viable.
“During the pandemic the assistance of the State through support and relief schemes was vital to assisting SMEs to retain staff, maintain their operations and continue to serve their local communities,” Buckley continued.
“Given the scale of the challenges being faced now by food retailers, similar measures will be required from the State as a matter of urgency. This is a major crisis and local food shops will close if the government does not act.”
Range of measures needed
The RGDATA Budget Submission calls for a range of measures to help support the sector through the current challenging operating environment. These include:
- A commitment from government not to increase taxes on consumers and businesses in the next Budget
- The inclusion of the independent retail grocery sector in energy grant schemes and Green Transition Schemes
- A rebate scheme to offset the burden of increased energy costs on independent retail businesses. The rebate should be calculated at a minimum to remit to shop owners the increased tax yield that the Exchequer has recovered from increased energy costs. Given that energy costs have doubled – the State has doubled its tax take from retailers as a consequence – the State should not be benefiting from energy inflation and should remit any gain back to retailers, who have a significant 24/7 reliance on electricity for lighting, refrigeration and air conditioning/ heat. Individual supermarkets have seen energy costs double from €200k per annum to €400k per annum. This is completely unsustainable.
- A halt on any new State imposed labour cost increases until the impact of proposed Government initiatives on a Living Wage, Statutory Sick Pay and Pension Auto enrolment has been independently assessed. The Government cannot impose new cost pressures on retail businesses at a time when their turnover and operating costs are under enormous pressure.
- An immediate moratorium on any additional State imposed or sanction costs on retailers – until at least the end of 2023. This must include ensuring that the new Deposit & Return Scheme is cost neutral to non-producer retailers and an early assessment of the impact of the Latte levy on consumer habits and footfall in local food shops.
- The introduction of a levy on insurers who refuse to reduce their premiums despite the significant reforms and savings that have been delivered to date.
- No new excise increases
- A series of measures to support Urban renewal and town centre living, including
- Commercial rates relief until the end of 2023
- A vacant property tax and ringfenced funds to invest in regenerating our towns through a Town Centre Partnership.
- Providing attractive Capital Allowances for retailers who invest in their businesses
- Tax incentives to retailers developing and offering over the shop residential accommodation.
‘Tone deaf’ to realities of SME businesses
Tara Buckley said that Budget 2023 would be an opportunity for the government to demonstrate if it really is going to support those who get up early in the morning to open and run their businesses and deliver essential community services.
“It is utterly disheartening for retailers and other SMEs to sometimes hear Ministers talking about piling on more costs on their businesses which are under real pressure,” Buckley said. “At times it can appear that Ministers are tone deaf to the needs and realities of SME businesses, while paying lip service to the need for new enterprise or industrial policies.
“The Covid 19 crisis showed that the government can respond to business challenges where there is a will do so,” she added. “The need to demonstrate that will is more acute now than ever. The Government needs to respond to the independent retail grocery sector and show solidarity to support them to continue to run their businesses, employing over 100,000 people providing essential services to urban and rural local communities throughout the country every day.”
CSNA says support urgently needed
The CSNA has also called for government to immediately implement a series of measures to provide badly needed relief to the SME retail sector.
Writing in this month’s edition of ShelfLife, CSNA president John Paul Lonergan said: “We need a temporary financial support package that will give immediate assistance by way of a suspension of commercial rates, a number of measures specifically designed to acknowledge the importance of energy in our business, including making provisions for inclusion in schemes from which we are currently excluded, and the application of a rebate or refund scheme to reduce the effect that community-based retailers are experiencing with increases of over 200% the cost of energy.”
The CSNA has said it will seek the assistance of other representative bodies with similar concerns to join the call to action.