Su-Lin Tan
June 15, 2017
AFR
Westfield shopping centre manager Scentre Group has rebutted retailer Sumo Salad’s claim the increase in the number of food outlets in centres has hurt its sales, arguing that the increase in sales exceeded the growth in retailers.
Since 2008, retail space allocated to “food catering” grew by 4.5 per cent but sales for food catering increased by 6.8 per cent, Scentre chief executive Peter Allen told The Australian Financial Review exclusively.
“What we are seeing is that our productivity, our sales per square metre is increasing. So even though we are increasing [food catering] space, retail is doing better. ” Mr Allen said at the Australia-Israel Chamber of Commerce retail briefing in Sydney on Thursday.
“We have got to be very careful we don’t mix up what we are trying to do in terms of having a competitive environment with the business performance of retailers.”
Fast food chain SumoSalad put two of the 20 companies in his group into voluntary administration this week in order to force several Westfield centres to the negotiating table on rents after many failed attempts over the past six months to negotiate cuts.
SumoSalad founder Luke Baylis also said the dispute was triggered by the decision of the shopping centres to expand the number of food outlets within shopping centres.
Scentre and SumoSalad were still negotiating, Mr Allen said.
“SumoSalad, that’s a franchisee model. How good is the model, we don’t know,” he added.
“We would love to have Sumo Salad brand in but if you have the franchisee performing badly, it doesn’t help the franchisee and it doesn’t help us.”
Despite claims from SumoSalad, Westfield was focused on ensuring retailers were profitable, because having a profit formula shared by both parties was crucial against a changing retail landscape threatened by online shopping, Mr Allen said.
Each mix of retailers has been curated carefully, and an increase in outlets was a means of capturing the growing number of shoppers.
“We have a a population which is growing and we are taking a bigger share of that catchment. We are not taking from other retailers in the centre,” Mr Allen said.
Harris Farms Markets co-founder Catherine Harris, who was also on the panel on Thursday, said landlords today were constantly collaborating rather than working against their tenants.
“I find that centres want to genuinely help retailers. That’s a huge change from 10 years ago when landlords say they are the boss,” she told the Financial Review.
Alternatively, if smaller retailers were not able to make it work in “larger centres”, smaller neighbourhood ones or going independent were options, but only if those retailers have the “brand” to command foot traffic.
“You can go to a neighbourhood centre, but you need the brand to bring in shoppers. And big centres do that for you. Our argument is we have a brand, we can negotiate on rents,” Ms Harris said.
Panelist Rebel Sports founder Hilton Seskin reaffirmed the need for centres and retailers to stand together against the onslaught of heavy discounting from businesses like Amazon, due to enter the Australian market.
“We haven’t seen it this tough. The toughest thing is the constant discounting,” he said.
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