As business prepares for a year of heightened economic uncertainty and unprecedented legislative change, Olivia Collings spoke with in-house lawyers from a diverse range of industry sectors to find out their take on the road ahead.

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The Australian retail sector has been facing tough conditions for the past few years and 2012 is set to be no different. A slower world economy, the growth of online retailing and weak consumer confidence have all played a part in making the sector more vulnerable than usual.

The Australian Retailers Association is predicating sector growth of around 2.3 percent this year following one of its worst years in history. According to a Deloitte Access Economics report the sector grew only 1.3 percent in the 12 months to June 2011, making it the worst year in two decades. Meanwhile the Australian Bureau of Statistics reports show retail sales grew 2.4 percent in 2011. However, in the crucial month of December, retail sales fell 0.1 percent.

For general counsels in the sector this manifests itself in renewed budgetary challenges and new obstacles. “The key challenges for the year ahead will be determined by what happens in the global
economy,” says Westfield Group general counsel Simon Tuxen. “There is a lot of uncertainty and the capacity for really serious disruption if things don’t go right in Europe.”

At Woolworths the situation is no different. Group legal manager – corporate and commercial, Rod Bordignon says the low margin retailer is continuing to face “challenging trading conditions” in the
consumer marketplace. In order to address this and ensure profitability now and in the future the company is looking at introducing new businesses and channels, selling some existing businesses, changing the mix within stores and more. “Our legal team is heavily involved in all of these areas,” he adds.

Regulatory requirements and the new Carbon Tax are also set to impact the sector which is already struggling. “[Regulatory requirements] have been a significant burden in the last four or five years and I don’t see that changing. But I don’t see the burden getting significantly worse as a result of new laws,” says Tuxen.

In the case of Westfield, Tuxen nominates the harmonisation of OH &S laws as a key legislative change. “There will be a significant dialogue with boards because directors will want to understand what the regime is,” says Tuxen. While it won’t necessarily require a significant amount of change, Tuxen says the introduction of the harmonised laws in Queensland, NSW, Northern Territory and the ACT “is a good opportunity for the legal team to go back and reinforce the basics.”

The hotly debated carbon tax or carbon price is set to have significant flow-on impacts at Woolworths. For example pass-through costs from upstream include energy supplies and cost of goods increasing overall, while downstream costs include landfill levies. Woolworths has been investing in energy efficiency and low carbon technology to minimise the effect of a carbon price in recent years.

The legal team has played its part in those efforts, particularly in terms of equipment procurement and advising on lease-related aspects in relation to stores and will continue to have a role to play as suppliers and other business partners feel the full effect of the price.

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