So what does plain packaging of tobacco mean for Convenience Retailers?

Jeff Rogut
June 2012

You’ve read all about it in the media and trade press. You’ve heard how the drab packs are designed to reduce the attractiveness of smoking. You’ve no doubt heard about the $220,000 fine for retailers if they contravene the regulations from December 1st 2012.

With the announcement that Canberra will spend $3 million over the next three years on a ‘plain packaging police force’ to ensure retailers are complying with the legislation, small businesses such as Convenience Stores – which have a highly impractical timeline to comply with the new regulations – have every reason to feel they are being unfairly targeted.

What you will not have read or heard is what the federal government is doing to assist retailers through this radical transition……because to date there has been nothing to hear, or read.

The legislation requires retailers to comply with the new packaging regulations when they commence on December 1 2012, with manufacturers required to comply by October 1, 2012.

Most disappointing is the fact Government has refused to invest time to communicate details that would enable us to educate and train our members on the practicalities of the legislation, yet has taken the time to threaten small businesses with extremely harsh penalties and a dedicated policing regime for non-compliance.

Convenience stores will face immense pressure to trade through stock with existing packaging in such a short timeframe, while there will be no obligation for manufacturers to accept unsold stock in existing packaging back. The costs risk sliding into the thousands for many individual convenience stores, particularly where stock of slower selling lines is concerned. Stores stock on average 210 sku’s plus, and all are not fast selling.

Activities and procedures surrounding new inventory checking processes, security, product identification and placement and counterfeit stock monitoring all require significant employee training, a prospect that will prove impossible for many store owners given the brevity of the eight week compliance timeframe.

So how might a delivery look when it arrives in store?

Below is an example of a delivery as it might be received in store.

How easy is it to identify the products in these packs? There are actually 6 different brands in these packs – how long will it take to check these off when delivered? How will you display the packs in fixtures so that customers can be easily served?

Manufacturers are not obligated to take back ‘old’ stock – this is potentially the responsibility of the retailers.

Compounding the negative impact is the fact that the proposed timeline for implementation directly corresponds with the lead up to Christmas, easily the busiest and most important trading period of the year for the industry. It is unfair to force small businesses to disrupt their normal trading practices at this time, while they potentially risk being left with large quantities of stock unable to be sold and hence written off, or sell at discounted prices prior to the 1st December in order to clear stocks.

AACS has again called for a moratorium on prosecution of retailers for at least a three month period following the December 1 compliance date.

This is not about delaying the introduction of plain packaging, it’s about a fair go for retailers and not lumbering them with the financial burden of the legislation.

We have met with various government representatives but at the time of writing have had no real answers ….watch this space for future updates.