‘Where is the government’s support for the retail industry?’
Following the government’s recent summoning of grocery retailers to discuss unverified “price gouging", Excel Recruitment’s Nikki Murran shares her thoughts on how the government should stop admonishing and instead support independent retailers who are coping with price increases
27 June 2023
There was widespread press coverage last month on 8 May announcing that the government was summoning grocery retailers to discuss “unverified reports of price gouging”. Excel Recruitment has been in partnership with the grocery retail industry for over 20 years and is placed in a somewhat unique position of speaking with competing grocers on a near-daily basis.
Absorbing cost increases
We reached out to various retailers to discuss their thoughts on this supposed price gouging and found a consistent response across the sector. Most retailers were quick to point out that they have been absorbing cost increases over the past three years, with little to no price hikes for a large proportion of this time.
From the outset of the pandemic, when most of the world was locked in their houses, retailers ranging from 16 to 65 years old were working on the frontline. As panic buying ensued and grocery trips became the highlight of households, stores saw an increase in sales. However, along with this surge, there were dips in margins as delis rapidly declined and consumers shifted to online ordering. Rather than passing these costs onto the customers, most food retailers absorbed them.
Additionally, when hospitality reopened, a staffing crisis emerged. Many retailers experienced a large exodus of employees who opted for Pandemic Unemployment Payments (PUP) rather than progressing their retail careers. Others chose to pursue online degrees or returned to their home countries. In this highly competitive employment market, entry-level staff rates increased in many retailers, and once again, this cost was predominantly shouldered by the retailers themselves.
Fast forward a year later, and retailers are now juggling the impact of war causing an energy crisis, spiralling supply chain costs, and the increasing cost of goods. At this point, many retailers were striving to minimize the impact on their product lines while balancing these rising expenses.
Increased employment costs
In January 2023, the government implemented a 7.6% increase in the minimum wage. They also announced the Sick Leave Act, which is funded, in large part, by the employer. These two measures proved to be the proverbial straw that broke the camel’s back when it came to price increases.
So, the consistent response we have seen from retailers is contempt. They feel contempt towards the same government that imposed these costly measures, not to mention the impending mandatory pension enrolment, onto retailers, only to announce a few months later that they are summoning these same retailers to discuss food price increases.
Knock-on effect on hiring
This situation has a knock-on effect on hiring. Few people aspire to join a company or industry that is seen as greedy or unethical. Nearly all independent retailers we have spoken with are effusive in their assertions that they have, at best, maintained their margin over the past number of years. They emphasize that this accomplishment was hard-fought through strategic product placement and department participation, rather than resorting to price hikes.
It begs the question: rather than the government making sweeping statements and accusations, where is their support for this industry? This is an industry that supported the economy and the community in a time of crisis, an industry that rallied around the vulnerable to deliver their shopping, often, at their own expense.
The government’s response reads to many retailers as a deflection from their own failings and lack of support as the country faces rising inflation and energy crises. Not to mention the staffing crisis they fuelled with a mostly unregulated Pandemic Unemployment Payment system, minimum wage increases and sick pay schemes.
If the government truly wants to help retailers to lower costs which can be passed on to the consumer, why not start with a scheme whereby those on social welfare are incentivized to work in their local store to gain experience? Or invest in better transport infrastructure so those without a car can reach more retail jobs, which likely operate outside of current public transport hours?
It seems that announcing meetings to discuss unverified claims was a much more effective publicity move than actually implementing any real changes that would make a tangible impact.