Online retail of alcohol, some dilemmas for professional SIA practice

Abstract

Online retail is burgeoning, challenging ‘bricks and mortar’ retailers and changing both purchase and retail distribution practices in many countries. At the same time, this growth is challenging some established social impact assessment (SIA) frames of reference, creating new dilemmas for professional SIA practice. This paper examines some of these dilemmas as they are revealed in decisions published by the NSW Independent Liquor and Gaming Authority in the calendar year 2017.

Key words:

• Community
• online retail
• packaged liquor licences
• social impact assessment

Introduction

This paper examines the adequacy of some social impact assessment (SIA) guidance and standard practice for the growing phenomenon of online retail, as exemplified in the assessment of online packaged liquor licence applications (OPLLs).

While many online retail businesses are not subjected to SIA, in the Australian state of New South Wales (NSW), all retailers of alcohol require a liquor licence. The licencing authority, the NSW Independent Liquor and Gaming Authority (ILGA), is required by law to be satisfied that the likely consequences of granting a liquor licence will not be socially detrimental.

The Authority publishes many of its OPLL decisions. In each published decision ILGA sets out the basis for its satisfaction regarding assessment of overall social impact. The OPLL decisions published by ILGA in 2017 provide the source material for this paper.

This paper begins by briefly describing the growth of online retailing in the liquor industry in Australia. Secondly it describes guidance and regulatory requirements on social impact assessors which encourage or require a place-based definition of community. In the third section, some of the difficulties arising from these requirements are shown with reference to online retail of alcohol.

The growth of online retail of alcohol

Online retail generally is experiencing rapid growth in Australia. ‘Mean value of monthly [online] purchases by Australians grew by 5.8% from 2011 to 2013 and the number of purchases grew by 46.2%’ (Ewing 2014).

In May 2017, the Australian Bureau of Statistics reported that in 2015–16, ‘Non-store retailing and retail commission-based buying and/or selling, which include retailers operating only in the online space, grew 23.7%’ (ABS 2017). Annual ‘e-tail’ sales in Australia were estimated as $21 billion in 2016 (Mortimer 2017).

The online retail sector in Australia has long included packaged liquor retailers. These retailers utilise several online types (Van Vliet and Pota 2001) including purely online enterprises and traditional stores with both a bricks and mortar and online presence, among them large packaged liquor retailers. In March 2015, Inside Retail Australia predicted

The online alcohol sales industry in Australia is expected to be worth more than $1 billion in the next five years as more consumers order their drinks through their computer, tablet or smartphone. (Inside Retail 2015)

In 2017 the research company, Roy Morgan, noted that these large

… supermarket-owned chains now account for 72.3% of the total market share (up on 69.1% in 2015), with other alcohol retailers trending either downwards or steady. The independents’ share declined markedly (from 12.7% to 10.4%), while duty free stores also suffered (now accounting for just 0.5% of total alcohol retail dollars spent, down from 1.4%). Hotel bottle shops and wine clubs were relatively stable. (Roy Morgan 2017)

Roy Morgan names the chains as the ‘Woolworths Group = Woolworths Liquor, BWS and Dan Murphy’s; Coles Group = Liquorland, First Choice and Vintage Cellars’. These bricks and mortar stores have added online retail options to their businesses including click-and-collect and home delivery options.

The emergence of online retail has also seen the arrival of a new sub-class of liquor licence in NSW namely ‘online (only) packaged liquor licence’ (OPLL). Like liquor licences for conventional businesses such as bottle shops or hotels, these OPLLs licence the retail business at a specified premises. In 2017, 72 decisions were published for this licence type.

The geography of SIA

The contemporary definition of SIA began as an effort to include social impact considerations in environmental impact assessment (EIA) (Interorganizational Committee 1994). The EIAs of concern were proposals for infrastructure development and resource extraction and thus social impact issues were linked to land use planning and development assessment. These 1994 guidelines were updated by the Committee in 2003 noting

Properly done, SIAs help the affected community or communities and the agencies plan for social change resulting from a proposed action or bring forward information leading to reasons not to carry out the proposal. The SIA process also brings local knowledge to the decision process. Those who live in the affected area are knowledgeable about their human environment. With the use of local knowledge, SIA saves both time and money as affected populations are identified and involved in the process. (Interorganizational Committee 2003, p. 232)

The updated guidelines make repeated reference to the role of and impacts on the local community in the assessment process. The area of impact is considered to extend from the physical location of the proposed development, and the primary social group of concern is the local community.

Similarly, a recent review of the state of SIA practice noted that current good practice in SIA includes identifying community needs and aspirations, inclusion of local communities in governance processes, ‘local capacity building’, and ‘local community liaison’. A statement that Indigenous communities should have ‘a fundamental right to say no’ follows a discussion in which Indigenous communities are treated as relatively local. The authors conclude that community is a core concept for SIA (Esteves et al. 2012, pp 35–39). A 2015 set of SIA guidelines defines community as

a commonly-used, yet contested concept that can apply at different levels, although generally refering to a place-based grouping of people who are presumed to have some sense of shared identity, some shared interactions of everyday life, and some common social and political institutions. Although individuals experience some social impacts at a personal level, the general assumption in SIA is that people live, work and play in social groupings called communities, which are therefore a primary focus in SIA. (Vanclay et al. 2015 Glossary p. 76)

Consistently, these documents which have considerable standing among compilers of SIA guidelines (for example, NSW DPE 2017) drive a focus in social assessment towards residents and workforces in the locality of a development. This focus has been made explicit in NSW legislation. For example the Environmental Planning and Assessment Act (NSW) 1979 requires decisions about development applications to take account of social impacts ‘in the locality’ (currently section 79C(1)(b) see endnote ¹). The Gaming Machines Act (NSW) 2001 requires the licencing authority to be satisfied that a proposal for additional gaming machines will ‘have an overall positive impact on the local community’ (section 36(3)(d)(i)).

The same approach appears in the Liquor Act (NSW) 2007. Section 48 of the Act requires ILGA to become aware of the views of the local community and any concerns the local community may have about a proposed liquor licence. An application for a packaged liquor licence (PLL) must be accompanied by a community impact statement (s48(3)) and ILGA must not grant a PLL unless it is satisfied ‘that the overall social impact of the licence… will not be detrimental to the well-being of the local or broader community’ (s48(5). While the Act does not define local and broader community, ILGA has issued Guideline 6 (ILGA 2015) in which it defines local community as a ‘state suburb or town’ and the broader community as the local government area (LGA) in which the licenced premises is to be situated. In NSW these definitions lack a common basis whether in terms of area or population numbers. However, both definitions are place-based and relatively local.

These definitions are based on an assumption, that the relevant community is defined either by the majority of customers who visit the licenced premises or by non-customers affected by their proximity to the premises. The definitions rely on a physical relationship between customer/resident and premises even if that relationship is brief (purchase for consumption elsewhere) or indirect – for example an impact on amenity mediated through the behaviour of some customers. Either way the definitions tie the assessment of social impacts to a physical connection and overlook customers who are not local by any definition and whose place of residence or work or consumption of alcohol has no necessary connection with the location of the licenced premises.

As a result, these definitions do not take account of the rise of the online retail. Online retail is driven by digital infrastructures which allow retailers to access a customer base which is not defined by geography. Once the proximity connection is removed, a number of standard approaches to SIA are rendered inappropriate or ineffective. This outcome can be seen in OPLL decisions.

Online packaged liquor licence decisions in NSW in 2017

Unless sale of packaged liquor is permitted as part of another licence type (a full hotel licence for example), a PLL is required to sell alcohol for consumption off-premises. If the packaged liquor is to be sold online only, an OPLL is required.

In NSW public information about the growth of OPLLs is available on the ILGA website in pages titled Decisions of Interest. Between 2009 and 2015 ILGA seems only to have published refusals but from 2016 most of the published decisions are approvals. Although these may not include all OPLL decisions in these years, the decisions published in the calendar year 2017 show a marked increase in published decisions about OPLL applications.

Only one of these 2017 decisions is for an OPLL for a premises of one of the large supermarket style retailers, 7 December approval for a Woolworths Ltd premises in Brookvale, NSW. There are no 2017 published decisions regarding an OPLL for BWS, Dan Murphy’s, Liquorland, First Choice or Vintage Cellars. However, all these retailers offered online retail options during 2017.

With these large retailers of packaged liquor already licenced for online sales, it is not surprising that most applications in 2017 for an OPLL came from small operators, more than half of whom, 57%, were applying to sell alcohol online from a home office (Tables 1 and 2).

Table 1. Published Decisions by ILGA re. online PLL applications, 2015–2017.

Year	Decisions re. applications for an online PLL	Number of applications granted	Number of applications for which text of the Decision not available*
2015	0	–
2016	34	32	1
2017	73	72	1

^* Premier Wines 4 in 2016 and AC Liquor in 2017.

Source: ILGA Decisions of Interest, Liquor Decisions published between 02 January & 31 December 2017.

Table 2. Approved online PLL premises, 2017 published Decisions of Interest.

No. online PLL applications in 2017	Home office	Commercial office	Industrial/warehouse unit	Not stated /unclear
73	41	16	11	5

Note:

Source: As for Table 1.

Definition of the local and broader community

In accordance with s48(5) of the 2007 Liquor Act and Guideline 6, each decision names the local and broader community in regard to which social impacts must be considered. In every published decision in 2017, the local community named was the suburb in which the premises to be licenced is located. No justifications were presented for this, for example, there was no consideration of the proximity of the premises to other suburbs.

Regarding the definition of the broader community, in the majority of decisions (72%) the whole of NSW was chosen. Often this choice was made without comment but sometimes the decision-maker provided a generalised basis, for example: ‘the nature of the licence allows for convenient access to liquor by persons located anywhere in NSW’ (ILGA Decision Andrew Guard Wine Imports 2017a, p. 5). Specific LGAs were named as the broader community in 20 decisions. As the LGAs named are very different in terms of area and population, it is not clear why they were chosen rather than NSW as a whole (Table 3).

Table 3. Local and broader community definitions in 2017 online PLL published Decisions of Interest.

Local community defined as the suburb of:	Lovedale; Granville South; Fairfield; Alexandria; Rozelle; Newport; Hornsby; Wollongong; Strathfield; Orange × 3; Pendle Hill; Clovelly; Baulkham Hills; Eleebana; Pokolbin; Moorebank; Milsons Point; Regents Park; North Willoughby; Matraville; Oxley Vale; Lane Cove West; Lilli Pilli; Neutral Bay × 2; Sutton Forrest; Kings Park; Glenwood; Gladesville; Narrabeen; Coledale; Redfern; Mosman × 3; Ingleside × 2; Prestons; Leichhardt; Edgecliff; Marrickville × 2; Pyrmont; Terrigal; Cessnock; Unanderra; Griffith; Belrose; Wollombi; Queanbeyan East; Dungog; Northmead × 2; Dulwich Hill; Petersham; Coogee; Gymea Bay; Surry Hills; Lane Cove North; Paddington; Naremburn; Five Doc; West Gosford; Kioloa; Jamisontown; Alexandria; Mudgee; St Leonards; Artarmon; Brookvale
Broader community defined as: A local government area: in 20 published decisions	Orange City × 2; Liverpool LGA; Northern Beaches LGA × 3; Inner West LGA × 2; City of Sydney LGA × 2; North Sydney LGA Mosman LGA × 2; Cessnock LGA; Griffith LGA; Cessnock LGA Queanbeyan-Palerangl LGA; Sutherland LGA; Woollahra LGA Willoughby LGA
NSW as a whole	Cited as the broader community in 52 Decisions

Source: as for Table 1.

The distributions in Table 3 might be interpreted as the decision-maker having greater confidence about the local customer catchment than the broader one. But this interpretation is undermined by the arbitrary use of the suburb in which the premises is located, as if every premises is centred in the suburb named. At the same time the considerable use of NSW for the broader community suggests that the decision-maker had no evidence with which to define customer catchment and was using the state as a catch-all. Further, if convenient access is available to anyone in the state then the local customer catchment is unlikely to be confined to a suburb. Having observed for the broader community that online retail is not limited by locality, the naming of suburbs seems to have had no useful function other than to comply with the geographies named in the Act and defined in Guideline 6.

The assessment of social impact

These difficulties spilled into the assessment of likely social impacts which was often treated routinely, with the same wording used in decision after decision. Typically:

6. Overall social impact

(1) Positive benefits

The granting of the licence will potentially result in positive economic benefits for the applicant, and will increase the variety and competitiveness of liquor retailers, which will benefit consumers.

(2) Negative impacts

No objections were received and no concerns were raised. This licence application is for a home office at which orders will be processed, with liquor to be stored and dispatched from a separate location. Customers will not be attending the premises to browse, purchase or taste products. The nature of the licence sought means that there are unlikely to be any amenity impacts on the local community (ILGA Decision Northern Beaches Liquor 2017b, p. 5)

In this decision the local community was identified by the decision-maker as the suburb of Ingleside and the broader community as the whole of NSW. Positive social benefits were interpreted as financial benefits to the applicant and to liquor retailers generally although neither are necessarily local. The decision-maker assumes these financial benefits to the industry will flow on as social benefits (undefined) to consumers whose proximity to the premises is neither stated nor necessary.

In considering negative impacts, lack of footfall is interpreted as a lack of negative impacts and considerations of amenity have taken the place of adverse social impact. The decision-maker has relied on amenity at the premises taking no account of social impacts on a wider area.

Only one published decision in 2016–17 contemplated social impacts arising from an online PLL. This was the first published decision for an OPLL in 2016. It concerned an application for The Wine Bandits operating from a North Bondi premises. This decision noted

6.1 Positive benefits The licence will be operated from a residential location by internet and telephone during retail hours. Liquor is dispatched from a warehouse located on an industrial estate. Customers will not be attending the premises as sales are limited to telephone, facsimile, mail order and internet.

6.2 Negative impacts A number of concerns were raised by NSW Police to the liquor licence including minors buying alcohol via online shopping; age verification procedures on delivery; number of online packaged liquor licences in existence; and the Wine Bandits’ business model (specifically liquor trading hours, pricing strategy, bulk sales and projected turnover). The applicant addressed these concerns and I am satisfied that adequate measures will be put in place to ensure that the granting of the application will not be detrimental to the wellbeing of the local and broader community. (ILGA Decision The Wine Bandits 2016a, p. 5)

The positive benefits are simply a description of the business. The potential negative impacts raised by the police are not discussed in the decision. The way in which this applicant addressed the police concerns is not stated nor does the decision advise what measures were considered adequate.

These concerns are not listed as potential negative impacts in subsequent OPLL decisions published in 2016 and 2017. However, OPLL decision-makers appear to consider some of the concerns raised by NSW police through licencing conditions rather than by assessing the social risks. Every published decision states that the decision-maker is satisfied with the contents of the plan of management for the premises. As these were not published it is not possible to say what is in them. However, the decision approving an OPLL for The Wine Bandits in 2016 stated

5. The licence will be exercised in accordance with a Plan of Management that addresses the location, storage of liquor, hours of trade, signage requirements, responsible service of liquor, measures to ensure that minors are not sold or supplied liquor, delivery of liquor and cooperation with the Authority, Police and Council. (ILGA Decision The Wine Bandits 2016a, p. 4)

This paragraph refers to some key social impact issues – trading hours, secondary supply (to minors) and supply of alcohol to persons who are intoxicated. Where these issues are dealt with in published decisions, it is via the inclusion of controls in the conditions of consent.

Delivery controls – trading hours

Trading hours are a condition of consent in every approval for an OPLL. For example among the conditions set for Woolworths Limited’s premises at Brookvale are ‘Normal trading Monday to Saturday 08:00 AM to 10:00 PM’ (ILGA Decision Woolworths Ltd 2017d, pp. 1, 2).

However, online orders can be placed 24 hours a day and 7 days a week. The carry-over of ‘trading hour’ terminology from bricks and mortar to online retail suggests that hours of purchase are being limited, whereas in reality it is only dispatch times that are limited. Further, since licencees using couriers cannot fully control delivery times, again the condition realistically only applies to dispatch times. This is especially the case for small operators relying on taxis or couriers to deliver orders.

While some online retailers deliver during business hours, other online retailers specialise in immediate delivery after hours.

6 (1) The business model involves customers placing orders via a website or mobile phone application. The order will then be sent to a delivery driver who will purchase the liquor at a selected pre-approved bottle shop and arranges for immediate delivery direct to the customer. (ILGA Decision WeBring2U 2016b, p. 6)

In this decision, trading hours are stated as ‘from 10.00 am to 10.00 pm Monday to Sunday’.

Delivery controls – under-age or secondary supply

Delivery method is noted in 26 OPLL decisions published in 2017 and in each of these the delivery method was by courier. Most decisions, however, simply note that the liquor will be despatched. The category ‘courier’ describes diverse delivery services. Online retailers may have their own vans. Late night deliveries might be made by taxi.

One delivery issue is that alcohol should not be delivered to minors. For example, approval of an online PLL for True North Spirits includes the requirement

5. The licensee must ensure that the liquor is delivered and received by persons aged 18 and over. (ILGA Decision True North Spirits 2017c, p. 2)

While the deliverer as a licenced driver is likely to be aged 18 or over, it is not clear what instructions the diverse population of drivers and couriers in NSW is under with regard to age identification of recipients.

Australia Post permits liquor to be sent by mail providing the items are appropriately packed (Australia Post 2017), but does not verify the age of recipient. Ebay (one of Australia’s major online retail platforms) notes ‘many states require that the carrier be licenced to transport alcohol. Your carrier must be able to obtain the signature of an adult’ (Ebay 2017). It appears that NSW is not one of these states. Some online retailers permit packaged liquor to be left at the door or with a concierge. Among the couriers who deliver in NSW, at least three do not include alcohol in the list of goods they will not carry (Couriers Please 2017; Fastway Couriers 2017; Zoom2u 2017).

Delivery controls – responsible service of alcohol

A further issue concerns the supply of alcohol to persons already intoxicated. Most OPLL decisions refer to S45(3)(b) of the NSW Liquor Act and require the licencee to take all reasonable steps to serve alcohol in a responsible manner and prevent intoxication on the premises. However, the premises referred to are the licenced premises which for these licences have no customers arriving in person. ILGA’s 2017 published decisions do not say how an OPLL licencee will prevent delivery of liquor purchased online to persons already intoxicated. If the licencee is not also the courier, which in most applications seems not to be the case, it seems that ILGA is requiring the licencee to guarantee the behaviour of a third party.

This situation is unlike that in the US where alcohol may not be sent by mail (USPS.COM 2017) and the delivery service FedEx has strict rules about alcohol delivery including that an adult signature is required, delivery must be to the addressee and the courier may not deliver to an intoxicated person (FedEx 2015). In NSW it appears that delivery by courier or taxi to intoxicated persons is effectively permitted.

Each of these delivery controls uses terminology and concepts which, like the definitions of local and broader community, do not apply to, or fit with online retail. This makes the controls illusory. Further, the most notable feature of these published decisions is that they do not discuss potential social impacts of alcohol purchased online. Among the impact considerations omitted are some basic issues such as the relationship between increased availability of alcohol and alcohol-related harm, and the relationship between increases in packaged liquor licences and rates of domestic violence – issues receiving considerable research attention (Connor et al. 2011; Livingston 2011; Donnelly et al. 2014; Livingston et al. 2015 among many others).

Discussion

Particularly in urban areas, it has been a long time since ‘community’ has been able to be defined as a geography (Ziller 2004). The difficulties encountered by decision-makers dealing with OPLLs make this clear. Many social groups, with interests or experiences in common, do not have definable or local boundaries. Many customer catchments are wide and dispersed and social impacts extend well beyond simple amenity in a locality. Although social impact concerns about local communities harmed and displaced by resource extraction and other developments are important, these are readily identified in an analysis of distributional equity. They do not suffice to limit the areas of impact with which all SIA practice should be concerned.

This review of a year’s decisions by one Authority demonstrates that confining consideration of social impacts to people with a geography in common undermines the integrity of the SIA process. In the decisions reviewed, this has resulted in the Authority treating each liquor licence application as a stand-alone request. The frame of reference is the individual application for a single premises and its effect on a small area. Within this limited focus the Authority can avoid considering both the distribution of impacts and their cumulative effects.

Further, the idea that impacts to an online customer community only matter if they are local to the premises, allows other out of date ideas to persist, for example trading hours and delivery controls. And, the sheer repetition of narrowed assumptions about the scope of an assessment creates the appearance of normality and acceptability. The decisions reviewed in this paper revealed no decision-maker qualms about the assessments they signed their names to. In these circumstances, repetition further discredits the practice of SIA.

The online economy may be the lever that prises SIA and the decision-makers required to use it away from a single location focus to a long overdue consideration of complex and cumulative social impacts across large areas. This is not an impossible task. The section of the NSW Environmental Planning and Assessment Act which restricts SIA to the locality, places no locational restriction on assessments of environmental impacts, and advocates of environmental issues have long taken advantage of this. For example, the NSW Environmental Defenders Office has raised concerns about the climate change impacts of coal mines and assesses water management decisions that affect large areas of the state and indeed beyond. Liquor licence decision-makers should similarly be addressing social impacts in terms of the public health consequences of their licencing decisions across regions and large areas, examining, among other factors, the distributions of outlets and outlet types, the accumulation of trading conditions and population indicators of alcohol-related harm.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. The NSW Environmental Planning and Assessment Act 1979 is being updated. From 1 March 2018, section 79C of the Act is expected to be renumbered as section 4.15. http://www.planning.nsw.gov.au/Policy-and-Legislation/Planning-legislations/Guide-to-the-updated-Environmental-Planning-and-Assessment-Act-1979.