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Tara Buckley: Facing the challenges ahead

Posted on: 16 Feb 2022

Independent retailers are exhausted after a difficult two years, and the raft of new legislation being mooted is not helping their stress levels, according to RGDATA Director General Tara Buckley.


Ireland's independent retailers have consistently delivered top class service in adversity over the course of the Covid-19 pandemic, and now their ‘reward’ appears to be a raft of new legislation that is going to place additional stress on already beleaguered store owners and an extra squeeze on already tight margins.


“Whenever I take the temperature of the trade, they’re generally a very optimistic bunch, always looking forward and thinking what their next move is,” reveals RGDATA Director General, Tara Buckley.

“Heading into 2022, I can sense that there is a stress there that is a result of the last two years, particularly amongst the owners of a single store, which a lot of our members are; they’re the ones getting up to do the 5am shift to organise the newspapers, and they’re also the ones up late at night doing the regulatory stuff. They have been putting very long hours in, without a break, for two years, and they are very stressed about the proposals that are on the table in lots of areas, like sick pay, mandatory pensions, the Deposit/ Return scheme, new measures on sustainability, parental leave. All of these things are preying on them because they are very concerned about the rising costs of running a single shop.”


It has been well documented that Ireland’s grocery retailers really stood up to be counted during the pandemic.

“You could say they pioneered a lot of the health and safety practices,” Buckley notes. “A lot of our members were the first to look at how to manage a shop during Covid, from queuing systems to floor-signs, Perspex screens, PPE for staff, hand sanitiser at the door. They had to adapt their businesses with very little notice or guidance. They showed very clearly the unique abilities of local, independent shops that are rooted in their communities.”

The Irish public in turn was reminded of the importance of local shops. “There is no doubt that Irish people felt that those local, family-owned stores were the safest places to go,” the Director General opines. “I have members all over the country who got new customers during the pandemic because people felt their shops were safe and maybe they weren’t so happy going into big multiples. So it was an opportunity for the independent sector to show its abilities to adapt, under terrible circumstances.”


Covid-19 also meant most grocery retailers lost the higher margin categories of their store, particularly in the foodservice sector. “The deli counter, the ice cream; these were the parts of the business that had to close down. Now, these areas are challenged because of staff shortages and the difficulty in recruiting new staff,” Buckley reveals. “Dry groceries are not the area where you are going to make money in this marketplace.”


The pandemic hasn’t effected all stores equally, with shops whose customer base included large numbers of students or office workers particularly hard hit. “Retailers in busy urban areas, those beside universities and schools, or beside large office parks, their footfall just died away,” Buckley explains. “Overnight, their business changed from being a busy food-togo store to selling some dry groceries to a few local residents, but the reality is they were losing money to remain open and provide that service. Footfall still hasn’t come back for those stores, so that remains a huge challenge.”


For others, local supermarkets in particular, footfall was up and the RGDATA chief believes that independent store owners in particular will do everything in their power to keep those customers into the future: “You can never sit still and pat yourself on the back as an independent retailer; you have to constantly think about how you are going to drive more customers to your business, to keep those customers and to make your business as efficient as it can be so you are not a busy fool, ensuring that you can make money from your business.”


he last two years, between the pandemic and Brexit, have had another unforeseen effect on grocery retailers. While there are price increases in some groceries, the biggest changes have been in building materials, which is causing concern for those retailers considering revamping or extending their stores.

“Brexit has had a big impact on the cost of building materials, which has been a big challenge, particularly for people who were mid-way through projects and suddenly had huge cost increases to negotiate, or those contemplating projects where their budget suddenly soared,” Buckley explains. “When you’re operating in a very tight margin business, it is very frustrating to suddenly see costs hike by 50 or 60 percent in a matter of weeks.”


Costly legislative changes

Any price hikes will ultimately impact a retailer’s bottom line, and in a business where margins are already extremely tight, constantly increasing the cost of doing business will prove ultimately untenable. There are a lot of legislative changes potentially in the pipeline that will impact further on retail costs, including legislation on sick pay and mandatory pension enrolment.

“All of these changes need to be looked at in their entirety to assess the impact they are going to have,” Buckley insists. “You need the voice of smaller businesses to be right up there at the top table when these proposals and the way in which they are going to be applied is discussed.”


She believes that policy in this country is often “designed for large multinationals and the public service rather than for a small business with one owner and a small group of employees”. Another problem is the drip-feed of legislation, with a number of separate bills impacting the trade. 

“A business needs regulation to be joined up in its entirety so that its impact will be understood,” she argues. “With all of the different policies and proposals on the table at the moment, our members are very concerned about the impact these will have on their costs.”


Buckley estimates that the cost of proposed legislation on sick pay, which will introduce 10 days per annum of statutory sick pay, to be phased in over a four-year period, could be as much as €60,000 per year for a convenience store and twice that for a supermarket.

“These are huge costs, equating to a few extra members of staff who could have jobs on the shop floor,” she argues. “You can’t magic that money out of thin air; the money comes out of what you sell in the store and the margin you make on that. The reality is if the cost of employment goes up by that much, this is going to be extremely challenging.”


Using technology to cut costs

The end result will be the opposite of job creation, with at best stagnation and in some cases, people not being replaced or worse, job losses. Retailers are already looking at the opportunity to replace human staff with technology.

“There is no doubt that this sector is looking at how you can do things more efficiently with less people, with Artificial Intelligence playing a part in that,” Buckley admits. “The reality then is that you are pushing towards less jobs in the sector. The independent sector’s model has been based around fantastic service, being a hub of the community and often the place you come to chat to someone. That has been very successful for us. But it is important that when we make changes, we consider the smaller employers and make sure they are made in a way that doesn’t put them in a position where they are so out of kilter in terms of costs that it is starting to make their model look like it doesn’t have a future.”


The Irish grocery market’s ultracompetitive nature means that even though the independent sector’s USPs have always been “about top quality, great service, local food”, an independent retailer has to remain competitive on price as well: “You cannot be out of sync with the prices in the marketplace,” Buckley insists. “Margins are very fine, so finding a way to pay these increased costs of regulation etc. without passing those costs on to the consumer is the big challenge.”


The costs of doing business here are already very high compared to many of our European neighbours. The most significant cost any retailer has is their labour costs. “Your traditional independent supermarket could employ up to 120 people in one store, and is competing with a model that employs 15 people, so any changes to the cost of employment have a significant impact on the independent grocery sector,” Buckley argues.


The staffing challenge

However, when it comes to staff, the biggest challenge is not the cost of employment but finding and retaining staff in the first place. “It is a huge challenge at the moment,” the Director General agrees. “There is no doubt that there has been wage inflation, both to hold onto staff and to try to attract new staff to stores.”


RGDATA has just completed its submission to the Commission on Taxation and Welfare, which included a key recommendation that the Government introduce incentives for part-workers.

“All of the local retailers we represent have a core of full-time employees, who are very loyal and have worked very hard over the last two years. But they also need and rely on a steady stream of part-time workers and students who would fill in the extra hours required to run a busy supermarket or convenience store. That has been a significant challenge, trying to recruit new, young part-timers.”


RGDATA is urging the Commission to “look at the tax treatment of people earning between €18k and €22k, so that the vast majority of what they are paid is going into their pocket. ISME have done a lot of work in this area, looking at the breakoff point where it becomes less attractive to work because of taxation.”

“These are not low-paid workers, but they are workers who want to do part-time work,” Buckley insists. “Perhaps they are students who want to work at the weekends or those in caring or parental roles who want to work a few mornings a week. They don’t want 40 hours a week but they want a part-time job that allows them to earn some money and we are saying to the Commission to make sure there is enough incentive there to keep those part-time staff because they are very important to our trade.”


Other areas where RGDATA is seeking Government action include energy costs which are rising at “unsustainable levels, with some members seeing increases of 40% in the last year alone”, and commercial rates, which they believe needs a complete review. “The reality is that our rates system needs an overhaul to make it fairer, because it is so important for town centres to have an independent grocer at their heart, so it’s important that those shops are allowed to survive and thrive. They shouldn’t be penalised because they are town centre bricks and mortar shops, as they are vital for vibrant towns and villages throughout Ireland.”


She stresses the value of independent supermarkets to the fabric of Irish life, citing the example of “fantastic family businesses like Field’s in Skibereen or Scally’s in Clonakilty, who are invested in their local community and vital to the vibrancy of the towns”. In fact, the RGDATA chief believes that “having an independent grocery in your town centre gives that town centre a chance of surviving into the future.”


Town centre regeneration

The whole issue of town centre regeneration is one where RGDATA have been particularly vocal, with the Director General welcoming the Government’s Town Centre First policy, which was finally launched on February 4.

“RGDATA fought hard for a Town Centre First Policy and has been an active advocate for Government to take this issue seriously,” Buckley notes. “We welcome this new Policy and the initiatives announced by the Government and hope that they will be effective in halting the decline in so many of our towns and villages.”


While the Policy stopped short of RGDATA’s calls for a “national standalone agency” to deliver the expertise required for town centre regeneration across the country, the Director General believes it provides an opportunity for local authorities’ to adopt a new approach to the management and regeneration of town centres: “This is an opportunity for local authorities to make amends and demonstrate, through collaboration with town centre interests, in particular local businesses, that a bright future can be secured for Irish towns and villages.”

Buckley believes that for the Policy to be successful and achieve its objectives, it needs to be “genuinely collaborative and actively involve all town centre interests”.

“If you do a proper survey of townspeople, including business owners, shoppers and visitors, you will quickly find out what they like, what they don’t like, what they would like to see in the town; why they do things the way they currently do them and what would make them change,” Buckley explains. “When you have all that information and have mapped out the town to see where derelict sites are, where the brownfield sites are, then you can make a plan to really deliver a vibrant town centre. The towns that are approaching it in this methodical way are really starting to see the benefits.”


She points out that there is funding available from the EU and under various Government schemes, but “if that funding isn’t spent in a way that is based on evidence and data, driven by a strategic approach, it very often gets wasted.”


Another issue which hasn’t gone away is the cost of insurance, with Buckley insisting that RGDATA members are still seeing increases in the cost of their premiums, despite all the hard work that has gone into reform of the sector which has seen compensation payments fall significantly. “Our focus is on Government not just to implement reforms but to ensure that cost savings are passed on to policy holders,” she sighs. “We managed to push through quite a lot of significant reforms but we are not seeing a significant drop in premiums, but we will keep pushing and pressing on that.”


Retail crime

RGDATA has also made its voice heard on the issue of crime against retailers in recent years, covering everything from shoplifting to threatening and abusive behaviour towards store owners and staff, which increased during the pandemic with the proliferation of aggressive anti-mask wearers.

It was a small number of very angry people but they really created stress for staff and other customers,” Buckley says. RGDATA raised the issue with the Legal Services Regulatory Authority, referencing “some of the people who were drumming up this type of anti-social behaviour”, as well as in direct meetings with Ministers. “We wanted to make the Government understand what the reality was like for people on the shopfloor during lockdown, when we were one of the few sectors open, and we tried to explain to other businesses that they were going to face into this. You have to make sure your staff are trained to deal with this type of difficult customer, which shouldn’t really be what we are worrying about in the middle of a pandemic.”


RGDATA works with the Gardaí via the Rural Safety Forum and the Strategic Retail Forum and the Director General believes that “there is no doubt that the Guards have listened are trying to progress tackling retail crime”. GDPR legislation has proved a real challenge in terms of information sharing but Buckley is confident that progress is being made, with retail organisations and Gardaí “looking at a system that has been quite successful in Belfast at combatting serial shoplifting. We are working with the Guards to see how we can operate something similar in the Republic of Ireland, but progress has been a little slow as we work through all the legalities of doing that.”

The pandemic meant they had to cancel National Community Engagement Day with local Gardaí, where RGDATA members host coffee mornings in their stores, inviting customers in to meet the local Community Garda. “We will progress this initiative once the Covid rules relax as it was an important way of creating a link in the local community to bring people together to deal with issues around crime,” Buckley reveals.


Looking ahead

Economist Jim Power is currently finalising the Local Heroes 3 Report for RGDATA on the impact of local independent supermarkets and convenience stores on their local communities, which should be launched within the coming weeks.

“We are focusing and highlighting the key issues for 2022. We are looking at the cost of doing business here, the cost of employment and the challenges of recreating vibrant town and village centres, which are the three biggest areas for our members,” sums up Buckley. “Our members are recognised worldwide as international leaders when it comes to food retailing and convenience retailing, running brilliant shops that customers want to shop in. We want to make sure their voice is heard loud and clear at various debates on issues like sick pay, mandatory pensions and other changes to employment legislation, taxation and welfare legislation, sustainability, the circular economy and the Town Centre First programme.

“There are always challenges in this business,” she admits. “It is about how we deal with them and how we manage them.”