Australia's Plain Packaging Law Negatively Impacting Retailers

SYDNEY -- Australian retailers worried new regulations requiring plain packaging for tobacco products would affect their bottom line, and new research indicates they had a right to worry.

Roy Morgan Research, based in Australia, found that increased administrative and labor costs are combining with restrictions on the ability of stores to serve non-tobacco customers, adding to the cost burden felt by retailers.

"The Impact of Plain Packaging on Small Retailers" report from Roy Morgan, commissioned by Philip Morris and with Australasian Association of Convenience Stores (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.

According to (AACS) CEO 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 the government ahead of the introduction of the legislation," Rogut said. "Should the retail sector been able to work with the government in developing this legislation, measures to minimize negative impacts may have been possible to implement."

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

• Ninety percent of small retailers experienced increases in time taken to serve tobacco customers and 75 percent reported additional time spent communicating with these customers about tobacco products.
   
• Seventy-three percent of retailers faced increased frustration from adult tobacco customers, and 59 percent have seen an increase in the frequency of staff supplying the wrong products, primarily due to difficulty in recognizing and distinguishing between brands.
   
• Nearly half of small retailers believe 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 percent have experienced an increase in the occurrence of out of stocks since the transition.
   
• The majority of small retailers reported their staff now has a heavier workload.
   
• Almost two-thirds of small retailers have spent additional time training staff as a result of the changeover, while 40 percent have faced additional costs from training staff members.
   
• Two-thirds of small retailers do not perceive that governments consider the needs of small businesses at all in its tobacco legislation, while the same amount report their feelings towards the government are now less favorable as a result of the plain packaging legislation.
   
• Seventy-seven percent 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.

Rogut explained 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," Rogut added.