NEW RESEARCH CONFIRMS RETAILERS’ PLAIN PACKAGING FEARS

7th March 2013

New research from internationally recognised research house Roy Morgan has confirmed what retailers expected: that plain packaging is affecting their bottom line. Increased administrative and labour costs are combining with restrictions on the ability of stores to serve non-tobacco customers, adding to the cost burden felt by retailers.

According to Australasian Association of Convenience Stores (AACS) Chief Executive Officer Jeff Rogut, the lack of consultation with retailers in the lead up to the introduction of the legislation represented an opportunity missed in terms of understanding and preparing for its likely impacts.

“It was quite clear from our point of view that the timeline for introduction of the regulations would negatively impact retailers, so it was disappointing not to have been granted an opportunity to consult with Government ahead of the introduction of the legislation,” Mr Rogut said.

“Should the retail sector been able to work with Government in developing this legislation, measures to minimise negative impacts may have been possible to implement,” Mr Rogut said.

The Impact of Plain Packaging on Small Retailers research report from Roy Morgan, commissioned by Philip Morris and with AACS support, is the first major comprehensive review of the actual retail impacts of tobacco plain packaging across 450 retail outlets. The findings largely echo the concerns retailers held leading up to the introduction of the legislation.

It also debunks other hastily produced and fundamentally flawed theoretical ‘research’ that argued plain packaging actually improves transaction times.

Some of the findings of the Roy Morgan research into small retailers included:

• 90% of small retailers experienced increases in time taken to serve tobacco customers and 75% report additional time is spent communicating with these customers about tobacco products.
• 73% faced increased frustration from adult tobacco customers and 59% have seen an increase in the frequency of staff supplying the wrong products primarily due to difficulty in recognising and distinguishing between brands.
• Nearly half of small retailers consider that plain packaging has negatively affected the level of service they are able to provide their non-tobacco customers.
• The large majority of small retailers find it takes more time to order stock and around 80% have experienced an increase in the occurrence of out of stocks since the transition.
• The majority of small retailers reported that their staff now have a heavier workload.
• Almost two-thirds of small retailers have spent additional time training staff as a result of the changeover while 40% have faced additional costs from training staff members.
• Two-thirds of small retailers do not perceive that Government considers the needs of small businesses at all in its tobacco legislation while the same amount report their feelings towards the Government are now less favourable as a result of the plain packaging legislation.
• 77% of small retailers said plain packaging is having a negative impact on their business overall.
• Small retailers are concerned that plain packaging will result in an increase in illicit trade.
• Couriers delivering stock face longer waiting times in store, a loss of productivity and potentially increased costs.

Mr Rogut said that while plain packaging was always unlikely to impact the volume of tobacco consumed, retailers expected that it would force some tobacco customers to change their purchasing habits.

“It was also obvious that retailers would need to invest significant time and money in re-training staff, preparing stock returns and implementing new inventory management procedures,” he said.

“It is disappointing that these legitimate concerns were unable to be voiced. As such, no support or subsidies for the cost burdens were considered. The rushed timeline for the introduction of the legislation was, from a retail trade perspective, unfortunately not realistic.

“We therefore renew calls for current and future Governments to commit to consulting with retailers in the development of legislation that stands to impact their businesses. After all, retailers are often at the very coal face of these changes and they are the experts in their field” he said.

Click HERE to view the complete report