The National Retail Association (NRA) has called off a proposed merger with the Australian Retailers Association (ARA), over concerns the new organisation would not represent the interests of small and medium-sized retailers, according to a recent Inside Retail Australia report.
The talks ended after nearly a year of negotiations between the two groups to form a single national representative body for the industry, which the NRA said it conducted “in good faith”.
“Sadly, we were not able to strike a deal that would have secured a merger while also protecting the interests of NRA members,” NRA Chairman, Mark Brodie wrote in an email to NRA members on August 13, according to the Inside Retail Australia report.
Several sticking points included the large increase in executive salaries in the proposed new entity, which raised concerns about financial viability, and the imbalance in the financial situation of the two organisations, which put at risk the contributions of NRA members over the years, Mr Brodie said in the email.
He also said the ARA did not accept the NRA’s legal advice on how a merger must proceed, given its status as a “registered organisation” under Federal workplace laws, and said the other parties involved in the talks did not honour commitments around sharing financial information and not entering into major contracts during the negotiations, according to the report.
Mr Brodie said the main hurdle was the inability for the two parties to agree on the focus of the new entity, with the ARA predominantly representing the interests of larger retailers, and the NRA more geared towards small and medium-sized businesses.
A proposal to reserve two positions on the board of the new organisation for major retailers would “tilt the balance in favour of one small sector of the industry”, according to Mr Brodie.
The NRA ultimately believed the proposed merger would be a “takeover of the NRA by the ARA and large retailers” and would not benefit its members, Mr Brodie wrote in the email.
“In fact, the proposal had the potential to seriously damage our members’ interests. It would weaken or give away our strong financial position, reduce the ability of our members to have their voices heard in a balanced fashion, and would hand control of our organisation and assets over to an entirely new Board and management team,” Mr Brodie wrote.
The committee leading the talks was made up of three NRA board members, three ARA board members and three major retailers, including Chemist Warehouse founder Jack Gance, Woolworths’ head of government relations and industry affairs Christian Bennett and JB Hi-Fi CEO Richard Murray, who chaired the committee.
Russell Zimmerman, ARA Executive Director, expressed disappointment about the turn of events.
“The ARA was fully supportive of the merger. I’m somewhat surprised at this result, having not been given any prior warning,” he told Inside Retail.
The NRA said the formation of one industry body is still its long-term goal.