Enews May 2012

This month:

Three questions

All NARGON members should know the answer to these three questions:

  1. What colour will tobacco packets have to be if the Government's proposed reforms are passed?

  2. ho is the Minister for Small Business?

  3. What is a QR code?

Food prices dip, card transactions up

Official figures from Statistics New Zealand show food pricesfell 0.1 percent in April 2012. The most significant decreases were non-alcoholic beverages (down2.6 percent) and grocery food (down 0.7 percent). In good news for many, the price of sweets dropped 5.8 percent. Several food subgroups increased in price, most noticeably fruit and vegetables (up2.8 percent).

For the year to April 2012, food pricesshowed no change overall. Two of the five food subgroups went up, two went down and grocery food was unchanged for the year.

Statistics NZ has also released electronic card transaction data for April 2012 which shows the overall value of purchases made with debit and credit card was up 0.8 percent overall when adjusted for seasonal factors. The largest rise was in the Consumables category (which includes the retail grocery sector) which recorded a seasonally adjusted1.1 percent($16 million) increase in April 2012. The trendfor the Consumables industryhas been increasing since November2011.

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Political Comment: David Clendon (Greens)

In this issue, Green Party List MP and Small Business spokesperson David Clendon sets out the challenges facing the sector and some possible solutions. He notes that his "first career started as a supermarket management trainee. This background was valuable when later in life I became an owner-operator of two retail food stores in Auckland":

The wellbeing or otherwise of the retail sector is acknowledged as an important indicator of the state of our domestic economy. The December 2011 figures gave some cause for optimism, but the latest March quarter has shown a dramatic reversal, not least of all in the grocery and supermarket spend.

Despite the best efforts of groups like NARGON and other sectoral organisations, it is evident that the interests of the small and medium enterprises that make up the largest part of the retail sector are not that well represented in governance and policy making.

The SME sector is by its nature widely dispersed, and so struggles to make its voice heard compared with other sectors.

SMEs do a number of things very well they provide necessary goods and services to local consumers; create and maintain economic activity in a highly adaptable, responsive way; they provide employment.

It is important that central government provides the best macro-economic context to enable SMEs to thrive, and the current tax regime would seem to be at odds with that.

The recent changes to taxation have not assisted lower income earners, and yet we know that providing relief at that level provides the greatest degree of stimulus to the domestic economy. Nor have business owners gained much benefit from the tax changes, given the very slim profit margins that are the current reality for many of them.

The Greens have advocated for a tax free band of $10,000 for all income earners, which would provide a real boost for those on low incomes, giving them more capacity to purchase the daily necessities that many are now struggling with.

Business owners would benefit from a reduction in compliance costs.

We have supported the general thrust of the tax regime proposed by the Institute of Chartered Accountants last year, which would remove much of the burden of provisional tax from small operators, in favour of a pay as you earn process, and also reduce and simplify reporting requirements.

Managing costs is of course a major part of keeping a business head above water in trying times. During my period as a sustainable business adviser, I was surprised to find many businesses giving very little thought to managing energy, waste, transport, or human resources, in a way that maximised the bang for your buck.

It is remarkably easy to reduce energy costs by 10% or more, without any capital investment, but simply by raising awareness and changing behaviours.

Working with suppliers and transport companies to reduce everybodys overheads can require some out of the box thinking, but such collaborations can also pay significant dividends. The less waste coming into your business, the lower the cost of getting it out!

Working hard to create and maintain a good workplace culture, being attentive to the everyday experience of your staff, can reduce staff turnover and improve productivity. People certainly like pay increases, but the evidence is that staff can be just as readily motivated by feeling engaged and valued by their employers.

I know from experience that business owners are often too busy working in their business to work on it, and there is a role for government to provide practical and accessible information and assistance to help the sector thrive.

I plan to host a number of meetings around the country in coming months to talk about some Green proposals to enhance business success. I hope to see some of you there.

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Government intensifies anti-tobacco push

ust three years ago Health Minister Hon Tony Ryall repeatedly assured NARGON that his Government had no plans to restrict the display of tobacco products unless compelling evidence was produced that it would actually reduce smoking. Fast forward to today and the same Government is not only about to introduce strict tobacco display bans from 23 July 2012 but is also clearly signalling that all cigarettes will soon have to be sold in plain khaki packaging. Cabinet has made an 'in-principle' decision to introduce a similar plain packaging regime as Australia, although there will be public consultation later in the year

Given the serious questions around the Act party following what has been dubbed in Wellington as the "Banksdotcom" donation scandal, the Maori Party is in a very strong position and clearly knows it. Co-leader Hon Tariana Turia is determined to push through stringent anti-smoking laws before she retires at the next election and this is largely the impetus behind the Government's crusading anti-smoking agenda.

Cabinet's intention is that all cigarette packets will be a bland and deliberately unappealing khaki green colour, covered in graphic health warnings and display the brand and type of cigarette only in a small, uniform and non-descript font. The proposals appear to have broad political support and, if introduced, are expected to pass easily, if not unanimously. Act is the only party which might vote against the legislation.

Tobacco companies have warned against the move saying it will not reduce smoking rates, would infringe on their intellectual property rights and breach several free trade agreements signed by New Zealand. Australia was the first country to pass tough plain packaging legislation and the Government there is currently involved in a High Court case after the major tobacco companies took legal action.

Stores should be gearing up to ensure they are ready for the new tobacco display restrictions which come into force on 23 July. However, they also need to be aware that further restrictions on displays, packaging and sales are likely as the Government, pushed by the Maori Party, continues to clamp down on tobacco.

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Welcome changes in employment law

The National-led Government is continuing to reform New Zealand's employment law in order to encourage employers to take on more staff and to reduce unnecessary compliance and confusion. NARGON is broadly supportive of these initiatives because supermarkets and grocery stores are significant employers, particularly of young workers and those with little or no previous work experience.

One of the key policies National promised at the 2011 election was a new "Starting Out Wage" set at 80 per cent of the adult minimum wage. Minister of Labour Hon Kate Wilkinson told NARGON that "the retail sector, and supermarkets especially, employ a large number of youth workers. The Starting Out Wage will be an added incentive to give more young people a chance at work. It will give some of our youngest and most inexperienced workers valuable experience and a much-needed foot in the door."

NARGON has welcomed the Government's belated recognition that the abolition of the Youth Minimum Wage has seen thousands of young people lose the opportunity to work. The Starting Out Wage, while not perfect, is definitely a step in the right direction. Hopefully the Government will treat it as a priority and the legislation is passed quickly. National had hinted the policy would come into force this year but the months are quickly slipping by.

Although controversial at the time, the 90 day trial employment period is proving to be a valuable initiative. There have been a number of legal cases which have clarified the law and debunked many of myths around the issue.

NARGON notes that New Zealand was one of the very last OECD countries to introduce an employment trial period. The policy has helped give stores confidence to take a risk and employ people generally young and/or inexperienced who would otherwise struggle to find employment. Given the success of 90 day trials, NARGON would encourage all political parties to support the policy going forward and perhaps even look to extend it.

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The humble pasty proves a simple GST system is important

It is a quintessentially English snack of meat, vegetables and spices baked in a crimped pastry crust. Because the pasty was baked, hungry consumers in the United Kingdom have not historically paid VAT (their equivalent of GST) on it, while people purchasing pizza, fried chicken or fish and chips did. That anomaly was fixed in the last British Budget, largely to increase Government revenue. The Reform think tank has issued a report showing British VAT was the most complicated sales tax in Europe. They pointed to New Zealand saying "other countries like New Zealand manage perfectly well with a much simpler GST system. We should follow their example."

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Government launches new support for SMEs

The Minister for Small Business, Hon John Banks, has launched 'Start, Manage and Grow Your Business', an updated publication designed to help small business owners access government services and get the best value from them. He said "having been a business owner for many years, I understand how difficult it can be to constantly grapple with government regulation or to know what help is available. Keeping up with compliance information distracts business owners from what they do best running their business and growing our economy." This announcement echoes the theme of his speech at the recent NARGON Suppliers Awards 2012.

The document can be downloaded from: http://www.business.govt.nz/media/documents/Start-Manage-Grow.PDF

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UK: Heated debate over Sunday opening hours

The Olympics are rapidly approaching and while much of the media coverage has been dominated by sporting and security issues, changes to Sunday trading hours are causing a bit of a ruckus in the United Kingdom. Chancellor (Minister of Finance) George Osborne has announced he will relax stringent Sunday trading laws in England and Wales for a limited time around the Olympics in order to cater for the expected millions of visitors.

Under his changes, larger stores (over 900 square metres) will be allowed to open all day on a Sunday for several months. Currently, they can only trade for six hours on any given Sunday. Smaller stores are concerned the summer relaxation of the trading laws will become eventually become permanent. New Zealand liberalised weekend trading hours way back in 1990.

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UK: Technology high on consumers' wish list

Customer intelligence company Market Force Information has issued new research based on a recent poll of more than 5,000 British shoppers. In addition to confirming the importance of good service as well as competitive prices, it showed that technology which makes payment transactions quicker is also high on consumers' wish list. Six out of 10 (63%) said they like to use self-service checkouts. In an interesting development, over a third (37%) of shoppers said they pay less for items when purchasing through self-service checkouts. This throws up a range of issues for retailers.

Additionally, four out of 10 (49%) like contactless payment options (such as RFID-enabled cards) as they feel it speeds up the transaction process. Simply waving a card over a scanner can be up to twice as fast as conventional EFT-POS or credit card transaction.

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UK: QR codes used to promote Fairtrade Fortnight

Supermarket giant Sainsbury's has introduced a new initiative to help show customers the difference that buying Fairtrade products can make to the lives of farmers and growers in some of the world's poorest countries. Fairtradeis an internationalcertificationsystem designed to allow people to identifyproductsthat meet agreed environmental, labour and developmental standards.

Sainsbury's now features QR code technology on key Fairtrade brand lines which will allow customers to instantly find out the story behind the products in their basket. Customers can use their Smartphone to scan the digital QR code which instantly links through to a Fairtrade page providing more information about the growers and how they money raised from the purchase of Fairtrade product improves their lives.

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On a lighter note Satisfaction is Surely Assured

This conversation occurred at a supermarket in Lancaster, Pennsylvania, USA at least according to www.notalwaysright.com:

(At the supermarket where I work, we have a store rewards card we can scan if the customer forgets theirs or doesn't have one.)

Me:"Do you have your bonus card?"

Customer:"No. Could I use the store card, please?"


Customer:"Don't call me Shirley!" *laughs* "I've waited for years to make that joke!"

Me:"I'm glad I could help you live out that fantasy!"

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Answers to 3 Questions

  1. A deliberately drab khaki colour.
  2. Hon John Banks, Leader of the Act Party and MP for Epsom.
  3. A digital symbol which - when scanned by a Smartphone- can provide further information and interaction.