Opinion: Why the time is right for the ARA and NRA to revisit a merger

sis-202208″ target=”_blank” rel=”noreferrer noopener”>labour and skills shortages, and new economic policy settings for inflation management, government spending, debt reduction, taxation, and interest rates are all in play.

The summit agenda and broader issues – such as supply-chain challenges, development constraints, and inconsistent regulation across the states – raise the question of whether the retail industry has the firepower to successfully influence government policies that impact on the sector.

Retail – Australia’s largest private-sector employer and a key economic driver – has too often been found wanting in its role in public debate and the shaping of government policies, because of fragmented industry representation.

The influence of industry associations has been constrained because they are under-resourced and struggle for authority, as none of the organisations can claim to represent the entire industry.

Highlighting the problem of fragmented representation for the retail industry when trying to influence national policy, the NRA was not invited to the Prime Minister’s jobs and skills summit, while the ARA’s CEO, Paul Zahra, attended and was a panellist.

Arguably, the time is right for the Australian Retailers Association and National Retail Association to explore a merger that would create a more formidable and effective industry lobby and services organisation.

The timing is politically important, with the new federal government in office and with elections in the next six months in Victoria and New South Wales.

Exploring a merger of the two industry associations at this time also makes sense given the departures of chairperson Mark Brodie and CEO Dominique Lamb from the NRA.

The NRA has arguably been an effective retail association with a broad range of services but, despite attempts to expand into other states, has substantially remained a Queensland-based organisation.

The ARA, on the other hand, has never fully recovered from the exit of Coles and Woolworths to form the now-wound up Australian National Retailers Association (ANRA).

The two retail goliaths recruited other retail heavyweights on the basis they were not getting enough backing from the ARA’s broad membership base and would have more success with their issues in Canberra with an entity composed of the country’s largest retailers.

The exit left the ARA in a perilous state financially that required drastic cuts to services.

The ANRA was not long-lived, however, with the retail heavyweights finding that the smaller chains and independents in the retail industry were more a benefit than a hindrance when trying to get their views heard in Canberra.

The venture provided an important lesson for the retail industry: there is greater strength and influence if the membership is larger in number and more diverse, if the association represents and speaks on behalf of the entire industry rather than a just group of prominent brands.

The ARA has certainly regained the large retail members lost to the ANRA and has been rebuilt under Zahra, a former CEO of David Jones.

Industry groups have pursued merger talks previously but they foundered due to personalities clashes and disagreements over assets and service parameters.

The NRA scuttled the most promising merger talks with the ARA, expressing concerns that the voices of small and medium-sized retailers would be lost in a merged organisation.

The failure of those merger talks has left the industry divided, not just between the two larger associations but also among a number of other category- or state-based associations with limited resources and clout.

Indeed, the recent departures of the NRA chair and CEO appear to be at least partly due to a campaign alignment on e-cigarettes with the Australian Association of Convenience Stores, the Master Grocers Association, and the Australian Lotteries and Newsagents Association.

Fragmented industry representation has left associations vulnerable to financial arrangements like the apparent tobacco lobby sponsorship of the e-cigarettes campaign, a sponsorship that the ARA rejected.

As long as the industry associations remain fragmented, their credibility and clout in national policy debates is diminished and their services are limited by their financial resources.

The retail industry has faced major challenges in recent years, with flat economic conditions preceding the Covid-19 pandemic, and it is now confronted by the prospect of significant and far-reaching changes on the political and industrial relations fronts.

It will be critical for the industry to provide informed, constructive input to the government on regulation, taxation, skills training, supply-chain challenges, technology changes, wages and working conditions in a period of inevitable review and change.

The retail industry needs a strong and effective voice, and all players matter, large and small – mum-and-dad retailers as well as franchise and corporate retailers.

The industry needs a loud voice in debates, inquiries and regulatory forums and that would clearly be achieved if a merger of the two leading associations were achieved, along with, ideally, the inclusion of some of the other representative organisations.

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