How should Australian Supermarket Shopping Centre and Department Store space within closed market Shopping Centres be rent charged - on usage!

The direct responsibility of State and Local Council Retail Planning and Zoning Competition Regulation – we think so!

Supermarkets have changed in mix and style from the supermarkets which existed when shopping centres were ‘borne’ in Australia during the late 60’s and early 70’s.

• In the 60’s and 70’s supermarkets were generally dry goods retailers with dairy products and some pre-packaged frozen meats and small goods; a case for low rent.

• In 2009 many Australian supermarkets are full food product retail outlets which have quietly soaked up specialty food retail categories such as bakery; fresh vegetable, fruit and salads; liquor stores; butcheries; delicatessens; health foods and a degree of organic products; no case for preferential rent and lease terms.

Supermarket in the 60’s and 70’s had a case for cheap space; very low hard goods and canned goods margins.

Within 2009 closed market Shopping Centres Australian Supermarkets and their Australian Department Store cousins’ are ‘mini shopping centres’ in their own right and should not get preferential space cost advantages in closed community Shopping Centres controlled by local councils and or State governments.

• In 2009 major space using Australian Supermarkets still have the core 60’s and 70’s low margin products but achieve the same or better margins on all the new categories than the specialist baker, butcher, fresh vegetable, fruit and salad, delicatessen, health food, liquor stores and organic product retailers paying massive shopping centre mall rents.

• Mid to high range Australian Department Stores within closed market Shopping Centres have large amounts of space given over to concessions; many previous ‘departments’ run solely by ‘brands’ – the Department Store simply acting as a controlling landlord.

Many specialty food retailers’ take the major supermarkets on with equal or lower prices for many products; it is a Furphy to argue that supermarkets in these categories are cheaper – they are not.

• The RETAiL Alert Group believes in a competitive closed market shopping centre that the price a major supermarket retailer pays for space, where it is obvious that the product is a specialty food category should be similar to that paid by the specialist small food or liquor retailer.

• The same should apply to Australian Department Stores within closed market local Shopping Centres.

This should not be difficult to structure; existing Australian Shopping Centres hammer small retailers on strong usage clauses, the supermarkets should feel the same pain.

• The lie should be killed that the supermarkets offer better value than specialty food retailers’ – in general terms they don’t.

• Shopping Centre space should not be abused by major supermarkets; there should be a reasonable, equitable, competitive space costs for supermarkets and specialty food retailers in a closed market Australian Shopping Centre – the same applies for Australian Department Stores.

Giant Australian supermarkets based in high cost closed market Shopping Centres are progressively sponging up more and more product categories selling those products out of low preferential cost shopping centre space.

Major space using Australian Supermarkets are, as are their Department Store cousins’ within closed market Shopping Centres are ‘mini shopping centres’ in their own right.

This is how Australia’s giant Supermarket and Department Store retailers have gained and are gaining such enormous and powerful market share – cheap preferential occupancy costs within Australia’s closed market Shopping Centres over the last thirty years.

• Australian Supermarket and Department Store growth is being driven by the preferential rent and lease terms and conditions between the Giant Supermarkets, Department Stores and the Australian Shopping Centre Industry– not out of efficient use of valuable and costly closed market Shopping Centre space.

The progressive losers - the 10’s of thousands of specialty chain, medium and SME retailers who have paid or are paying an unfair cost for closed market shopping centre trading space.

In these savage economic times this massive imbalance is costs of doing business is a ‘crunch’ survival issue for many high employing Australian specialty chains, medium and SME retailers.

A direct Australian retail competition challenge only resolved by an ACCC with anti-trust Creeping Acquisitions and Obligation to Divest Powers.

It is also a matter for serious consideration for those States such as current New South Wales review of Retail Planning and Zoning Regulations.

Australian Supermarket Shopping Centre space should be rent charged on usage; the same to apply to Australian Department Stores located within closed market council controlled Shopping Centres!

To comment on Supermarket Shopping Centre Space Costs email Supermarket Shopping Centre and Department Store Space Costs.

Tony Standley

Principal
The RETAiL Alert Group (Australia)
Mobile +61 (0)41 924 0497
e-mail info@adsass.com.au
Fax +61 (0)2 9987 0633
Website http://www.retailalert.com.au
 
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