Inside FMCG | Friday 2 November 2018
An industry group made up of FoodWorks, IGA, Friendly Grocer and more are stepping up a campaign in protest at the arrival of German hypermarket, Kaufland, to Australia.
Jos de Bruin, CEO Master Grocers Association, who is involved with the Save Our Shops campaign said that the retailer poses a “major risk to any family enterprise and private business”.
There are six sites in Victoria that have been earmarked for the German retailer. The first two hypermarkets are expected to open in Australia in fiscal 2019 with plans for 32 stores by 2023.
De Bruin told Inside FMCG that the campaigners are frustrated because the consortium went straight to the Minister for Planning instead of the usual process of going through councils.
“No one knew anything about it. None of our members from independent supermarkets and liquor stores, no local shopping centres, the councils had no idea about it,” de Bruin said.
“That’s really alarming when you think that people like our family enterprises and private businesses work for decades investing their hard earned, they have to work with councils and local communities, it takes them a long time to build their businesses and yet overnight the fourth largest retailer in the world is able to just come into Victoria, go straight to the State Government and override or seek consent from the Minister to have land rezoned to accommodate their massive mega stores.”
The Save Our Shops campaign believes that the German retailer has cut corners and are asking that it is made to follow the same process as anyone else.
“What we’re saying is the minister should be pushing back and putting all Kaufland sites back in the hands of councils. That’s where it should be. It should be discussed with local communities rigorously to understand the impact of having major sites rezoned and having 7000 square metre plus boxes put on them,” de Bruin said.
Planning Minister Richard Wynne has formed a planning advisory to look at the proposed rollout of six stores and the national headquarters in Melbourne. The committee can receive submissions from the general public and report back to the minister with a recommendation.
“The planning committee is there to do a job and we’ll go through that process of giving our views forward to say why the minister should not be calling these projects in” de Bruin said.
He is, however, concerned that the terms of reference are very narrow and worries that not enough will be done to halt the retailer.
Kaufland is known as a “destination retailer” as its stores are planned for large sites outside of the main town centres. De Bruin says that from past experience, destination outlets put the high street and local shops at risk as they take away foot traffic.
“This is absolutely major. There’s no doubt about it. We’re not just talking about small supermarkets here.”
“We ought to have a government policy of some description which encourages retail and activity centers to be together, creating a commercially economically viable model but also a socially economic model as well.”
He says that the councils want to create opportunities for activity centres to be close together so as to minimise car usage. He believes these proposals would “defy those planning scheme visions”.
De Bruin says that as it is, Victoria is “over indexed” on supermarket floor space, with more floor space per capita in Victoria than any other state.
“Sustainability is difficult. We have intense competition out there and what we have seen is that those with market power, those large enterprises with very deep pockets, they are able to sustain themselves in this very challenging market. Those families and private businesses are becoming less and less viable because there are too many retailers out there who are after the same dollar.”
He believes the economy is not growing fast enough to justify all the floor space that’s given to retail and supermarkets in particular.
Many could argue that the introduction of the retailer would be good for the economy, considering the addition of more jobs. The retailer already operates in seven countries across Europe, employing more than 150,000 people.
De Bruin believes that the government will want to see that investment and might feel threatened if the retailer takes an “all or nothing” approach.
“The governments are there for the people they’re not there to be threatened. If someone like Kaufland or Aldi goes to the state government to have properties or these sites rezoned and called in and then be threatened by saying look if you don’t call these sites and don’t allow us to develop what we’ll do is we’ll take this money and go and develop in another state. That immediately puts up the red flag to anyone in government because what they want is investment.”
“Then suddenly it’s gone from a planning committee remit to a political situation where one politician, with the wave of the wand, can allow this big retailer to just come in.”
“It’s just not fair that’s the bottom line.”
Inside FMCG contacted Kaufland Australia for comment but had not received a response at the time of publication.