CEO Welcome

Welcome to our first edition for 2022 of the Independent Retailer magazine, sharing significant challenges and achievements MGA is managing and advocating for on behalf of members.

Over the festive season many of us may have reflected on the past year - Unprecedented. Challenging. Frustrating. Lockdown. Changes. Borders. These words have become commonplace, each representing challenges that have cut down whole industries.

Two years ago we did not consider panic buying, wearing of masks, entering a premises via a QR code for COVID-19 contact tracing, COVID-19, Delta and Omicron variants, store limits, social distancing, COVID-19 safe plans, isolation rules, and COVID-19 vaccination requirements for staff and the community.

We have witnessed the rise of the Antivaccination movement – or ‘prochoice’ - which furthered members’ frustration and anxiety levels as this group threatened to disrupt the workplace. We are now having to live in a world of compliance to manage this pandemic.

Coupled with these challenges are additional complications threatening food and beverage supplies, including: shortage of shipping containers, shipping pallets and ADBlue (a diesel fuel additive that helps to eliminate emissions), staff shortages driven by employees having to isolate after being in close contact with a COVID-19 infected person, and more recently the shortage of Rapid Antigen Test (RAT) kits to enable a faster return to work of employees in close contact with an infected person but are asymptomatic.

MGA has been proud of members and food supply partners. From farmers and growers, freight forwarders, food and grocery wholesalers, transport, and logistics - you have all helped keep the independent food and grocery sector open and trading.

MGA and the Board, congratulates store owners, store managers, staff, and food and grocery suppliers for your outstanding efforts to deliver essential foods and groceries to local communities. It has been almost two years of working with uncertainty and ambiguity, as state and federal governments change public health orders on an ongoing basis to help protect communities.

We are now experiencing COVID-19 restrictions around the country, arising from the new Omicron variant rapidly spreading throughout the eastern seaboard states, at an unprecedented rate.

Western Australia (WA) continues to avoid infections, but this measure is coming at a high economic and social price with borders being closed and no travel between states permitted.

MGA is working closely with the WA Government to share food supply and food security learnings emanating from the eastern states, to guarantee that when the borders open businesses will be prepared, including staff being fully vaccinated with a booster. The WA border was planned to open on 5 February 2022 but owing to the fast spread of the Omicron variant in the eastern states and the low vaccination rates in WA, Premier Mark McGowan has decided to keep the border closed until further notice.

For the past two years, MGA has been heavily involved with various federal and state food supply and food security forums. One of these has been the Minister for Home Affairs Karen Andrews, Food Security and Food Supply Forum. At this table we have discussed potential causes to the interruption of food supplies to communities in which we trade, particularly remote and ultra-remote areas, such as in WA, QLD, and NSW. This forum facilitates collaboration and communication between various government departments, health officials and various COVID-19 recovery directors from all states and territories, as well as industry leaders across Australia.

A similar forum has been organised for small and independent food and grocery stores, restaurants and caterers, and food distributor organisations by the Federal Small Business and Family Enterprise Ombudsman, Bruce Billson.

The Critical Industries (Food and Grocery) Supply Chain Policy Forum, led by Social Services and Acting Small Business Minister Anne Ruston, has been critical in recognising the devastating staff shortage and food supply issues businesses are facing and discussing approaches to reopen businesses presently closed, such as cafés, bars, and restaurants.

With eastern economies opening up and movement restrictions being lifted, business have suffered a difficult trading period. Worker absenteeism has rapidly escalated, and businesses have been unable to trade and offer food and groceries to customers in the usual way. There have been food and grocery shortages experienced in Coles and Woolworths recently. The duopolistic market presence of Coles and Woolworths and their subsequent reliance on large central distribution

warehouses has put the public at risk of being unable to source and purchase desired foods. These distribution centres have incurred major worker shortages owing to COVID-19 isolation measures. Subsequent to this occurring, there had been calls for the duopoly to be split so as to help alleviate food supply and choice vulnerabilities. Members have improvised to cope with worker absenteeism and food supplies shortages. Member feedback is below.

Stores impacted by staff absenteeism

• The food supply and worker absenteeism situation are dynamic across the Eastern Seaboard. It varies each week deepening upon quantum of staff isolating.

• Absenteeism has been up to 40% - 50% in some stores for one to three weeks then after isolation periods staff returning to be at 10-20% absenteeism. This trend is rolling in each state as COVID-19 outbreaks occur, particularly with the younger cohort of workers (e.g. catching the virus in social settings).

Trading hours changes

• Stores in metro and regional areas report they had to open stores later, close earlier, close at lunchtimes, close departments such as deli, bakery and meat departments owing to staff shortages.

• At this point there is no end in sight, and it will be a long time before we achieve having a full team of staff back at work.

Rapid Antigen Test kits (RAT)

• Up until the time of writing RAT kits have been available to very few members and their staff in case, they need them. The majority of members (particularly regional and remote) have not had access to any RAT kits.

Based upon this issue how do we get workers back to work in a timely fashion?

• Some members who have ordered

RAT kits through importers have reported not receiving their RAT kits to factors unknown at this point.

• If we are to get workers who are close contacts back to work, we must have access to a quantum of

RAT kits per store immediately.

• RAT kits for employers to use with their staff must be provided at no cost to small businesses!

• Grocery margins are razor thin. Any additional costs cannot be absorbed into these margins without lifting retail prices to consumers which we cannot do in a highly competitive chain and ALDI dominated marketplace.

Food supplies

• Supplies of dry, frozen, and chilled groceries from Distribution Centres to members stores in the metro and regions have been impacted with delivery lags causing several out of stocks in stores, but not debilitating.

• Distribution Centres have done an outstanding job managing this very difficult worker absenteeism situation owing to DC staff having to test and isolate; but this ongoing matter of absenteeism may not be sustainable unless additional workers are found to relieve dedicated and overworked

DC workers who have been under enormous pressure for nearly 2 years now! • Regional stores report sourcing meat and chicken from local suppliers, albeit there are many reports of delivery driver shortages impacting upon timely deliveries into stores.

• Supplies of fresh produce into metro and regional stores have been marginally impacted owing to farmers inability to pick/harvest and deliver into the markets.

Supplies remain steady owing to the independent sector “local” sourcing model from various suppliers, including the produce market. This scarcity of supply has resulted in an increase in cost and sell price of produce across the board. Finally, I wish to leave you with a short message regarding you and your team’s wellbeing and workplace culture. Right now, the wellbeing of team members and managers has never been more important. We know some people are struggling and more importantly, we know some people are struggling in silence. We will not know the extent of wellbeing challenges in our stores unless we monitor and measure the wellbeing of team members by using some simple tools to take a regular pulse check of how team members are travelling mentally. Leadership teams need education about how to apply some practical tools so the early signs and symptoms of mental injury can be seen and addressed. Members, please contact MGA for assistance with this very important matter. We would like to refer to you our Industry Well Being Experts, Kevin Smith and Rachael Davidson, to assist you with a simple and manageable strategy to uplift wellbeing for you, your family and staff, which will directly impact the uplifting of your stores team culture.

Take care and until next time “Good Trading” Jos de Bruin Chief Executive Officer