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.
The announcement ends nearly a year of talks 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,” Mark Brodie, chairman of the NRA, wrote in an email to NRA members on Tuesday morning.
Brodie listed several sticking points, including 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.
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.
The main hurdle, however, seems to have been the inability of 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.
Brodie said 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”.
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, Brodie wrote in the email to members.
“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,” he 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, executive director of the ARA 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.