Home' Convenience and Impulse Retailing : April May 2014 Contents 39
April / May 2014 | C&I | ww w.c-store.com.au
clubs in Sydney's CBD to lock out new customers
from 1.30am and cease alcohol trading by 3am.
It's hardly the sort of political climate in which
convenience stores will finally be allowed to sell
beer, wine and possibly spirits to its customers.
Nonetheless, there are those who continue to
argue that alcohol sales are what is required to
help convenience stores deal with the potential
lost revenue caused by the introduction of
tobacco plain packaging legislation.
The Australasian Association of Convenience
Stores (AACS) has long championed this particular
cause, arguing that packaged beer and wine has
the potential to generate a new revenue stream
for convenience stores, making them more
competitive and protecting their viability.
Just last year, the organisation made a submission
on Western Australia's Liquor Act review arguing that
there was 'no credible reason' why convenience stores
should not be permitted to sell alcohol products.
It argued that the way in which the vast majority
of convenience retailers sell tobacco proves they
can be trusted with the responsible retailing of
alcohol and compliance with all regulations.
And AACS proposed that convenience stores
be subject to limits on the proportion of
refrigerated shelf space and floor space devoted
to liquor and maximum limits of packaged
alcohol available for purchase per customer.
AACS believes that allowing convenience stores
to get in on the act will enable the channel
to break the supermarkets' stranglehold on
liquor. It argues that the two main supermarket
chains have "successfully used the existing
regulatory framework to dominate alcohol sales
to a level that has become unsustainable".
... the way in which the vast
majority of convenience retailers
sell tobacco proves they can be
trusted with the responsible
retailing of alcohol and compliance
with all regulations
A recent IBIS World report into alcohol sales in
Australia concluded that the big supermarket
duopoly had taken advantage of their dominant
market share to strike favourable agreements
with alcohol producers and to discount some
liquor products to levels that independent
retailers struggled to compete with.
"The supermarkets have also exploited
their market position to reduce shelf space
dedicated to branded products and push their
own, higher-margin private and control-
label beer and wine," the report said.
Perception or reality?
So, other than a recent spate of highly publicised
violent incidents on the streets and a perception that
youth are being given too easy access to alcohol,
why have the arguments in favour of alcohol sales in
convenience so far fallen on deaf ears?
After all, convenience stores in the United States,
Europe and South East Asia have long been permitted
to sell alcohol products, and doing so has provided
an important source of revenue for them. Alcohol is
among the three biggest convenience categories in
both the US and UK. Customers in these overseas
locations have come to expect to be able to buy a
six-pack from a convenience store on their way
home and this doesn't appear to have caused any
particular problems. Certainly, governments there
aren't scrambling to introduce an Australian-style
'no alcohol from convenience stores' model.
And, research would indicate that, if the laws
were changed, the demand would be there.
A Monash University survey conducted a couple
of years ago showed 52% of respondents were
in favour of Australian convenience stores
being permitted to sell packaged alcohol.
... if laws were changed,
the demand would be there
Nonetheless, it would require some time and
e ort on the channel's behalf for the Australian
public to get used to the idea that convenience
stores sold alcohol, and for them to be seen as a
destination for beer and wine. Australia simply
has a di erent culture surrounding where
people buy their packaged alcohol than exists
in South East Asia, Europe, the UK and the US.
In Australia, shoppers tend to visit bottle shops
knowing that they are going there to buy alcohol
and often the exact brand they are going to buy.
It is very much a planned purchase. The challenge
for convenience stores would be to try make
themselves known as an alcohol 'destination'
despite the fact that not all stores would carry
alcohol and, those that did, would be forced by
space restrictions to only carry a limited range.
Clearly, given the fact that their alcohol
o ering will probably be significantly more
expensive to customers than that available
in a supermarket-owned outlet, convenience
stores would be hoping to pick up significant
impulse sales. However, it is very hard to
predict how successful that would be.
The Monash report revealed that, not surprisingly,
a greater proportion of younger adults indicated a
willingness to purchase beer and wine products
from convenience stores, while older respondents
cited reasons such as drink driving and underage
drinking as to why they didn't believe convenience
stores should sell alcohol or, if they did, why they
wouldn't purchase alcohol from these stores.
While there is certainly hostility in some
quarters of the community, the real answer as
to why convenience stores will probably have a
very, very long wait before they can sell alcohol
along with milk, bread and phone cards lies in
the way in which a complicated web of alcohol
related rules, regulations and laws have slowly
evolved and span several levels of government.
A licence for the retail sale of alcohol has to be
obtained from the liquor licensing authority
of the State or Territory in which the sale takes
place, and there are also local planning laws to
consider and other restrictions which ensures
local government also become involved.
The rules control the hours during which alcohol
can be sold, as well as the location and, crucially the
type of establishment. In some areas, supermarkets
have been able to o er alcohol for sale but in a
separate, often adjoining, space with its own
sales register. Whether many convenience stores
would have the space -- or the money -- to make
the necessary changes is a matter of debate.
Domenic Greco, the Executive Director
of the Convenience and Mixed Business
Association (CAMBA), is the first to admit
that it is a highly complex issue.
"There are all sorts of di erent classes for the
licences and, here in Victoria, milk bars and
convenience stores cannot sell alcohol while
supermarkets can," he said. "In grocery, you have
to have a separate register for liquor and there
has to be a physical barrier separating that part
of the shop .. . just that stipulation alone would
make it very di cult for most convenience
stores - with their size limitations - to comply."
While Mr Greco considers the fact that
convenience stores are barred from competing
in a sector in which many supermarkets are able
to is unfair . . . he thinks the sale of alcohol is not
necessarily the silver bullet that will transform
the profitability of the convenience channel.
... the sale of alcohol is not
necessarily the silver bullet that will
transform the profitability of the
"There would be a huge set up cost with
a separate sales register, a separate area,
refrigeration, the need to apply and receive the
relevant permits and just the cost of buying
the stock," he said. "And it is very debatable
whether it would be worth it for most stores."
Among the other key costs that convenience
stores would need to take into consideration
would be sta training. This would not only mean
ensuring sta had good product knowledge but
possibly also mandatory training in the responsible
service of alcohol (RSA). Certainly, it would require
sta handling alcohol to be aged over 18 which
could change the sta ng dynamics and wage
bills for many convenience store operations.
Furthermore, there would potentially
be security implications -- and costs --
for stores seeking to sell alcohol.
The simple fact is that it is a very crowded and
very competitive market and Mr Greco says
that, in Victoria at least, some liquor stores have
been unable to compete with the buying power
of the supermarkets and have shut down.
And, of course, there is the surprising fact
that, despite all the recent negative publicity,
alcohol sales are actually declining.
An IBIS World Market Research Report
into Liquor Retailing in Australia released
earlier this year was pretty downbeat.
Links Archive February March 2014 June July 2014 Navigation Previous Page Next Page