Ms Tara Buckley:

I thank the committee for the invitation to appear. I would like to introduce our delegation.

I am the director general of RGDATA. I am joined by Padraig Broderick, an RGDATA director and retailer from Croom, County Limerick, and Yvonne O'Meara, who is a member of RGDATA and a retailer from Portumna, County Galway. I offer my apologies on behalf of the president of RGDATA for his absence. As is the nature of this type of business, unfortunately, he was called away at the last minute and cannot be here. He would have liked to have been here, however.

To set some context, RGDATA represents the independent retail grocery sector in Ireland, which covers about 3,000 retailers who operate locally owned and run grocery outlets. Our members include grocery retailers who are not multiples or part of the big chains. Most trade under their own family names, and the majority are members of symbol groups. They have had to do this over a number of years. When RGDATA started out, there were 13,500 small shops and dairies throughout the country. Now, it is 3,000. Many of them have joined a buying group in order to stay in business.

Our members have some particular characteristics. They own and operate their shops within their local communities. They employ locally, source goods and services locally and are a key part of their communities. RGDATA members are estimated to employ more than 100,000 people nationally and are a core part of the vitality and vibrancy of local towns, villages and communities. They also compete daily against some of the largest global retailers. Our members work hard and are diligent and adaptable. The local food shop is a core part of the dynamic of a local community. In addition to providing a core economic service, the shop is also an important community hub and acts as a draw to bring people into a local area.

Costs and competitiveness are closely linked in a low-margin business such as grocery retailing. In recent years, retailers have seen an unprecedented increased in a range of costs that directly impact on their businesses, including those they have very limited opportunity to control or reduce. I will give some examples. One of the key operational costs for our members relates to labour, which represents a high element in the convenience retail sector, given that it is a service business. We have plenty of boots on the ground in our members' stores. Wage costs have increased significantly as a result of Government initiatives in recent years.

Energy is another area. Refrigeration, light, heat, catering and IT equipment all need to be powered up every day, and our energy bills are substantially higher than they were prior to the war in Ukraine. Our members deal daily with regulation and with compliance costs relating to permits, waste management, recycling and regulatory commitments. Yesterday, after we had written this statement, we got another notification that on 1 October our water charges will increase by 10%. Every day, we get notice of increased charges from different providers. In the end, there is a very small pot in a shop and there is nowhere to find extra money to pay.

We also have to pay significant amounts, maybe €100,000 per shop, in respect of security. We have a significant problem with retail crime and our members need to invest in security, CCTV, staff training and staff time. They experience a huge amount of shrinkage in their stores due to retail theft. Business service costs, such as maintenance, insurance, banking, cleaning, payments, rent, commercial rates and other utility charges, have increased substantially in recent years. The wholesale and supplier costs for products and services we sell in our stores have increased substantially.

Against each of these headings there have been considerable increases in the costs that retailers have to meet. Labour costs have increased through a range of new Government requirements, including increased statutory pay rates, new sick leave requirements, additional bank holidays and, with advent of auto-enrolment, new pension costs. We are good employers and have long-standing staff working with us. They have stayed through the generations. Their children come and work in the store. We are good employers and we want to treat our staff really well. However, with all of these things happening at the same time it has created a perfect storm for retailers in terms of the costs they have to manage. From a public policy perspective, there are clear benefits behind these employment requirements, but from a business perspective they impose a new cost which has to be borne from the existing business turnover.

Likewise on energy costs, retailers have seen electricity costs rocket in recent years. Our members have put a significant amount of investment into sustainability and new measures in their stores to be more energy efficient. The reality is they have reduced their consumption but their bills continue to go up. One concerning feature on energy costs is the increasing number of levies and standing charges that are being imposed by energy companies, which can amount to as much as a third of each energy bill. These charges include the public service obligation levy, a capacity charge, a standing charge, an electricity tax, use-of-system charges and an I-SEM trading charge. All of these are pushing up the costs of a necessary commodity which retailers cannot do without.

Some costs have remained consistently stubborn. For example, insurance remains a major bugbear for our members who seem to witness a never-ending spiral of costs.

It is increasingly evident that all suppliers of goods and services to retailers are facing similar challenges and therefore are increasing their costs due to the same pressures that our members are facing. The opportunity to shop around for lower cost service providers or supplies has been significantly reduced. They are just not in the market.

If costs increase, retailers have limited options to respond to stay in business. Given that we operate in an extremely competitive grocery retail market, increasing retail prices remains a very limited option for our members. Consumers are extremely price sensitive and are shopping around. Another option for a retailer is to try to do more with less, but this is challenging when it comes to energy, supplier and staff costs. Ultimately, if turnover does not increase to match rising input costs, the viability of a retail business suffers.

What can be done to address this high-cost environment for retail businesses? The State needs to limit the number of additional costs it imposes on businesses at this challenging time. Greater costs lead to higher prices and fewer businesses in operation. If the State wishes to increase business costs, then there needs to be some quid pro quoto address affordability on the part of the businesses, such as a reduction in employer PRSI rates or reductions in VAT rates. The State should relentlessly pursue all the input costs that impact on competitiveness and efficiency, such as energy costs, insurance charges, regulatory and compliance costs, and banking and payment costs. It needs to assess if all the recent price hikes in these areas are justified. Can a targeted programme be delivered to secure price reductions? Reducing the cost of these charges will lead to lower prices and more efficient businesses right across the economy.

Looking at rising costs in the round, as my colleagues will outline, there are some business costs that can be tackled directly by meaningful measures from Government. One area is clamping down on retail crime. Theft from shops represents a direct hit to the bottom line in each business and costs a medium-sized grocery store up to €100,000 per annum. Similarly addressing anomalies such as the concept of retail defamation is vital. RGDATA has heard many concerning stories from retailers who have had to fork out tens of thousands of euro in settlements and legal fees, simply because they asked a customer politely if they had a receipt for an item purchased in the shop.We urge all Members of the Oireachtas to support our amendment on this issue and ensure that such cases do not get into court.

Our members are resilient, inventive and creative, but they also must operate within the realities that they face. It is imperative that there is a relentless focus on reducing the input costs for business. The Government and politicians have a key role to play in this regard, not just in halting what appears to be a relentless imposition of new costs and hikes on business, but also through tackling elements impacting on business costs which the Government can reduce and influence.

We welcome the committee’s focus on this issue. We will be happy to answer any questions that members wish to pose.