IN THE MATTER of the Planning and Environment ... - Amazon …



INDEPENDENT PANEL APPOINTED BY THE MINISTER FOR PLANNING PLANNING PANELS VICTORIA

IN THE MATTER OF KAUFLAND STORES IN VICTORIA

GROUP 1 SITES (CHIRNSIDE PARK, DANDENONG & EPPING)

Submissions on behalf of

Master Grocers Association Independent Retailers

Introduction

1. These submissions are made on behalf of the Master Grocers Association Independent Retails (the MGA).

2. The MGA is an industry association that represents independent supermarket, liquor and hardware retailers in Victoria and Australia. MGA Members include: IGA, SupaIGA, Ritchies, FoodWorks, Bottlemart, Cellarbrations and a number of independent hardware/timber merchants.

3. The Committee will hear submissions from a number of MGA’s Members who own and operator Independent supermarkets within proximity of the proposed Kaufland Hypermarkets. Some are small family owned supermarkets located within traditional neighbourhood shopping centres. Others operate larger supermarkets within a town centre. The Committee will also hear from the Chief Executive Officer of Ritchies who operate many supermarkets around Australia and employ thousands of staff. Combined, the operators would have over a hundred years’ experience in the supermarket/retail industry.

4. What the operators, and the MGA, will say to the Committee is that Victoria has arguably the most competitive supermarket environment in Australia. Consumers are well served by a wide range of supermarket operators and other grocery retailers. Competition between supermarkets is fierce. Profits are tight. New entrants, and new stores, into this highly competitive supermarket environment have an impact. Aldi had an impact. Costco had an impact. A new, or refurbished, Woolworths or Coles located near an Independent supermarket has an impact.

5. New entrants are not just other supermarkets. A Dan Murphy outlet will have an impact on alcohol sales. Chemist Warehouse impacts toiletries sales. Tasman Meats impacts meat sales. The impacts can result in losses in profits, a loss of staff, loss of businesses and store closures. The impacts are real.

6. The MGA has consulted with its Members regarding the introduction of Kaufland in Victoria. There are a number of consistent concerns that Members have expressed:

a) Why has Kaufland been able to bypass the Council process to obtain their approval? The MGA, and its Members, think that the bypassing of the planning permit process is extremely unfair and gives Kaufland a huge “free kick” in a highly competitive environment.

b) The Kaufland stores are in inappropriate locations. They do not attempt to co-locate or integrate with other existing retailers, other supermarkets, Town Centres or local shopping centres.

c) Kaufland stores do not encourage walkability or the use of public transport. Walkability is highly valued by the Planning Scheme as it promotes healthy communities, social interaction and place making. The Kaufland model is almost entirely car dependent which is an outcome the Planning Scheme seeks to avoid. What happens if you don’t have a car?

d) The Kaufland store is not a traditional supermarket. It is a Hypermarket that is a combination between a supermarket and department store. Consequently, the extent of the trade area or catchment served by a Kaufland Hypermarket in Victoria is simply unknown.

e) The trade catchment nominated by Kaufland’s retail experts do not appear to have included some Independent supermarkets/retailers. It is unclear whether or not the trading impacts of the proposed Kaufland Hypermarkets have been considered on these Independent supermarkets/retailers.

f) The trading impacts of a Kaufland Hypermarket is extremely difficult to predict with any certainty. The MGA is very concerned that Kaufland will have an adverse trading impact on Independent supermarkets/retailers. This may result in the loss of jobs or the inability to upgrade their store. It may require operators to reduce their offer to their customers which in turn will make their store less active to shop for their customers.

g) Many Independent supermarkets are the retail anchor in a traditional neighbourhood shopping centre. Neighbourhood shopping centres are simply more than places to buy groceries or other goods. They are very important community building institutions that promote social interaction and are important meeting places for the local community. They are an essential part of the social fabric of a local community.

h) The success or failure of an Independent supermarket may dictate the success or failure of the neighbourhood shopping centre. A poorly performing Independent supermarket may result in a poorly performing neighbourhood shopping centre. Many MGA Members are concerned that adverse trading impacts generated by a Kaufland Hypermarket may undermine the ongoing success and vitality of their shopping centre as a whole.

i) Independent supermarkets have strong relationships with local producers who supply items such as bread, fruit & vegetables, specialised cheeses or nuts and fresh meat. Adverse trading impacts may result in an Independent supermarket ceasing or reducing the sale of locally produced products. This may have an adverse economic impact on a local producer, many are small family businesses.

7. The Terms of Reference requires the Committee to report to make:

Recommendations for each proposed development site including advice on whether the site is an appropriate location for the proposed use.

8. It is clear that a key outcome that the Minister requires the Committee to report on is the appropriateness of the location of the proposed Kaufland Hypermarkets. This is regardless of whether or not the proposed land use is as of right.

9. The MGA submits that each location is an inappropriate location for a large Hypermarket. By way of opening, the MGA submits that:

o All three stores fail to integrate with the retail core of the existing Town Centres.

o All three stores fail to co-locate with existing retailers or supermarkets.

o All three locations are car dependent and fail to encourage walking, cycling and the use of public transport.

o Being car dependent, all three locations fail to promote energy efficiency policies.

o All three locations fail to promote a diversity of separate land uses.

o Each location are ad hoc single use retail developments:

o The Epping proposal is inconsistent with the outcomes sought by the Structure Plan and the ACZ for the location.

o The Dandenong proposal is an out of centre development that fails to generate a net benefit to the community.

o The Chirnside Park proposal fails to have regard to the strategic vision for the Town Centre and Mixed Use Precincts set on in Chirnside Park Activity Centre Policy (Clause 22.06).

10. The MGA submits that there is no need to panic or rush to approve Kaufland stores in inappropriate locations. Residents in the areas surrounding each of the locations are extremely well served by existing supermarkets, other retailers and large Activity Centres.

11. What is required is orderly and proper planning. It is submitted that the Committee should not abandon orderly and proper planning principles and support proposals that are being dictated by the Kaufland business model. Irreversible unforeseen social and economic impacts may be the end result. Victoria and Australia is living with a legacy of rushing to facilitate competition. Masters was to be the champion of competition in the hardware industry. Who would have thought that in less than 10 years of the arrival of Masters, they are gone?

Master Grocers Association Independent Retailers

12. Australia wide, the MGA has approximately 2,700 Members that employ approximately 115,000 full time, part time and casual staff. MGA Members generate around $14 billion in sales. In Victoria, the MGA has 850 Members that around 27,000 full time, part time and casual staff. Victorian Members generate around $5 billion in sales.

13. Members’ stores range in size from small local convenience supermarkets to large full line supermarkets. Staffing levels also range from less than 10 for a small family run supermarket to more than 100 for a full line supermarket. Independent supermarkets receive a large percentage of their products from Metcash Limited: groceries, fresh produce, fruit & vegetables, alcohol and other consumer goods. However, most Independent supermarkets also source some of their products from local producers or farms.

14. MGA Members play an important role in their community and their local shopping centres. More often than not, an Independent supermarket will anchor the local shopping centre. The success or failure of the local shopping centre is largely determined by the success or failure of the local supermarket. A successful supermarket is a drawcard for local customers and other shops. Business will feel confident to set up shop in a shopping centre that has a successful supermarket. A supermarket that is trading poorly will have a flow on effect on the other shops within the centre.

15. Many Independent supermarkets have Community Reward Programs that support local not for profit and community organizations. The Community Reward Programs donates a percentage of what customers spend in-store to these organizations.

The Process

16. Kaufland is one of the world’s largest supermarket operators, yet has been able to bypass the planning permit process. In a highly competitive retail environment, this provides Kaufland with an unfair advantage. It is not a level playing field.

17. Planning Schemes are a very important expression of community values, aspirations and outline their vision for their municipality. Planning Schemes provide certainty and confidence for investors. Most MGA Members have experience in the planning permit process and require certainty to make decisions regarding expansion of their stores or opening a new store.

18. MGA members do not get any special treatment from the Minister for Planning when they wish to expand a store or construct a new supermarket. They must apply for a planning permit, engage with their local Council and are often required to engage with their local community. This process can, and does, take years.

19. Why shouldn’t Kaufland follow the rules and apply for a planning permit? They are a good set of rules that have been developed over many years. The planning permit process allows Council, stakeholders and the community to comprehensively assess the proposal.

20. The process that the Minister for Planning has pursued has resulted in some Councils providing little assistance to this Committee or assessment of the proposals. The proposal in Dandenong is a very large out of centre development. According to the written submission of the City of Greater Dandenong, the proposal could have a negative economic impact as a result of the loss of jobs and businesses in the Dandenong Activity Centre.

21. Yet in response to this major development, with potentially significant negative economic impacts to the Dandenong Activity Centre, the City of Greater Dandenong’s response is a six page submission with six paragraphs dedicated to the issue of out of centre development. How is this a rigorous assessment of the proposal? Does this assessment assist the Committee or indeed the Minister for Planning?

22. There has been little, if any, community/stakeholder consultation regarding the introduction of Kaufland into Victoria. To the MGA’s knowledge, none of its Members were notified that there was to be an Advisory Committee to assess the initial establishment of the Kaufland stores. The MGA was not notified. Nor were MGA Members who operate stores within proximity of the three locations the subject of this hearing.

The Kaufland Trading Model

23. Kaufland has a distinct business model. It operates a Hypermarket model. The business model seeks full ownership of sites. The model is a stand-alone Hypermarket with limited ancillary retail uses. It requires extensive car parking and convenient access to the surrounding road network. It requires very large site (preferred site area of 2 to 3+ hectares) that include retail footprints of up to 7,000m2. All of this is to be delivered in a big box store surrounded by a sea of car parks.

24. Because of its desire to be a car dependent retailer, Kaufland has chosen three locations that are easily accessible by car. The car is king. The Kaufland model is not driven or informed by planning policy, but rather the desire to secure development approval to establish at a location that satisfies its business model.

25. The Kaufland model seeks to establish a retail format of a nature and proportions not previously seen or planned for in Victoria. The Kaufland model challenges the land use definitions of the VPP’s in so far as it comprises a consolidation of retail premises and shop land uses including:

o Supermarket;

o Department Store;

o Restricted retail premises;

o Bottle shop; and Food hall.

26. The preferred site area of 2 to 3+ hectares to facilitate the Kaufland model is the size of a lower order activity centre. Yet Kaufland is a car dependent single retail use that does not offer the other retail activities, housing and community services commonly associated with traditional activity centres. Is this what the Planning Scheme is seeking for each of these locations?

27. The Kaufland model challenges the Victorian Planning Policy Framework in relation to the following matters that are elaborated below:

- Transport and accessibility

- Design and Place Making

- Social/Economic impacts

28. Transport and accessibility issues with locating a Hypermarket on each proposed location includes:

o They seek to establish on arterial roads, focusing on access by car.

o They do not encourage patterns of development that reduce car dependency.

o They seek to attract customers from a wider region than a traditional supermarket.

o They marginalize people who do not have access to cars.

o They are a heat island development model in terms of expansive car parking areas.

o They increase traffic and congestion in the surrounding road networks.

o They increase energy consumption and pollution associated with the encouragement of car use.

29. The Kaufland model creates a tension with outcomes sought by Clauses, 11 Settlement, 11.03-1S Activity centres, 15.01-4R Healthy neighbourhoods - Metropolitan Melbourne, 15.01-1R Urban design – Metropolitan Melbourne, 15.02-1S Energy and resource efficiency, 18 Transport, 18.01-1S Land use and transport planning, 18.02-1S Sustainable personal transport, 18.02-2S Public Transport, 18.02-4S Car parking and 18.02-1R Sustainable personal transport – Metropolitan Melbourne.

30. Design and Place Making issues with locating a Hypermarket at each of the proposed locations includes:

o A failure to achieve Place Making. There is a failure to incorporate community uses, public plazas/spaces, and pedestrian pathways or improve the pedestrian experience.

o Negative visual impacts of mass car parking areas.

o Single use large footprint model undermines urban regeneration policies, strategies for local character and sense of place.

o Big box format designs and a general lack of progressive thinking in design/layout.

o Big box buildings are not adaptive to market changes as they do not meet the future needs of businesses and the community. For example, the increase in shopping online could have serious implications for the big box format.

o Legacies of failed big box format retail stores eg: Masters.

31. The Kaufland model creates a tension with outcomes sought by Clauses 11 Settlement, 11.01-1R Settlement – Metropolitan Melbourne, 11.01-1S Settlement, 11.02-2S Structure planning, 11.03-2S Growth areas, 11.03-1S Activity centres, 11.03-6S Regional and local places, 15 Built Environment and Heritage, 15.01-2S Building design, 15.01-5S Neighbourhood character, Clause 15.01-1R Urban design – Metropolitan Melbourne and 17.02-2S Out of centre development.

32. Social/Economic issues with locating a Hypermarket at each of the proposed locations includes:

- They do not support economic resilience of existing supermarkets and shopping centres.

- Out of centre developments may lead to closure of retailers in designated Activity Centres or local shopping centres.

- Hypermarkets create sustainability issues for smaller retailers as competitive power is smaller and ability to adapt is limited.

Inappropriate Locations

33. Whilst Epping and Chirnside Park are located within Activity Centres, the proposed stores should be integrated with the prime retail activity precincts of these centres. The Kaufland model has lost sight of what Planning Policy demands in terms of Activity Centre planning; the concentration and colocation of retail in one location; reducing the number of private motorised trips to Activity Centres; and improving the health of a community by encouraging walking, cycling and use of public transport.

34. The MGA has reviewed the City of Whittlesea’s submission/evidence to the Committee and appreciates why the Council is concerned with the Epping proposal. The MGA understands that the preparation of the Epping Central Structure Plan involved a significant amount of work and consultation with a wide range of stakeholders. The Structure Plan sets out the strategic vision for this important higher order Activity Centre. The strategic vision set out in the Structure Plan has taken many years to develop and should not be undermined to satisfy the Kaufland model.

35. The development of the Chirnside Park Activity Centre is guided by Clause 22.06 Chirnside Park Activity Centre of the Yarra Ranges Planning Scheme. The Policy makes it clear that:

The implementation of Council’s strategic objectives for the activity centre will be a long term process. It is important to ensure that these objectives are not compromised by inappropriate land use and development decisions.

36. There is also clear policy guidance that:

o The Town Centre Precinct is the primary retail area.

o Land uses that may result in the fragmentation of the Town Centre Precinct not be allowed in other Precincts.

o Residential, commercial, entertainment and retail uses which adopt a multi-level mixed use format are encouraged in the Mixed Use Precincts.

37. Locating a large single retail use outside of the Town Centre (across a major arterial road) does not promote or achieve these important policy outcomes. The Kaufland Hypermarket will operate completely independent of the Town Centre. Shoppers will simply not walk between the two centres. Walking between the two centres would be neither easy nor convenient. The proposed location undermines the Town Centre as the primary retail area.

38. Dandenong is an out of centre development. Clause 17.02-2S outlines a number of strategies to manage out of centre developments. The starting point is that the Policy seeks to discourage proposals for expansion of single use retail, commercial and recreational facilities outside activity centres.

39. Kaufland relies on the strategy that seeks to ensure that out-of-centre proposals are only considered where the proposed use or development is of net benefit to the community in the region served by the proposal.

40. The MGA submits that it is highly questionable that the proposal will generate a net benefit to the local community. The City of Greater Dandenong does not think it so. As the Council has outlined in its written submission: the location of this proposal is highly likely to pull people away from the Dandenong Activity Centre and may result of the loss of jobs and businesses in the Dandenong Activity Centre. It will also pull people away from the surrounding neighbourhood shopping centres.

41. The MGA is very concerned that the trading impacts of the proposed Dandenong store have not been considered on some of its Members within the catchment. If this is the case, how can the Committee properly assess net benefit?

Economics

42. In relation to the economic debate, there is only so much cash consumers can spend each week. Each Kaufland Hypermarket will substantially increase the supermarket floor space in each location. All three locations are not located within new growth areas. They are within established urban settings. It is acknowledged that the population in these areas will slowly increase over time. However, it is highly questionable that any increase in population can justify the level of additional supermarket floor space.

43. Kaufland will create jobs. However, there is a real risk that any increase in employment at Kaufland will be offset by a reduction in employment at other supermarkets/retailers, including MGA Members. In response to a loss of revenue from new competitors, established retailers may need to implement measures to remain profitable. Retail is a highly casualised workforce and it is relatively easy to reduce employment in response to a loss in revenue.

44. Kaufland stores are promoted as producing significant consumer benefits in terms of improved choice, convenience and competition. The MGA submits that this assertion is questionable. In all three locations, the community is well served by a range of supermarkets/retailers and large Activity Centres. Consumers are blessed with choice, convenience and competition in Epping, Chirnside Park and Dandenong in the form of supermarkets. The Dandenong Market which is less than 700 metres from the proposed Kaufland store also plays a very important role in providing fresh food groceries for the local community.

45. There is strong planning policy support for the co-location of retail facilities on one site. Retail facilities that are co-located perform better than separate facilities by making the location more, rather than less appealing to customers. There are a range of economic benefits associated with concentrating retail, commercial and community services in one centre. These include:

• Reduced cost of reticulated infrastructure and car-parking.

• Reduced car travel by shoppers, with savings in energy use and time.

• Benefits of concentrating businesses together – reduced freight costs; more efficient marketing, recruiting and purchasing; improved prospects for investment through enhanced collaboration and competition

46. The co-location of retail in one location is best for consumers:

o Promotes competition and service.

o Consumers prefer to do one trip to do their shopping.

o Consumers do not like to drive around to get discounts or do their shopping.

o Walk between supermarkets and other shops.

o Consumers can get everything they want on the same trip.

o One stop shop: an efficient and convenient outcome for consumers.

47. It is questionable whether or not a stand-alone Hypermarket is the best outcome for consumers.

The Proposed Statutory Control

48. The MGA would like to very briefly comment on the proposed Statutory Control to regularise the use and development of Kaufland stores.

49. Clause 51.01 Specific Sites and Exclusions has the following purpose: To provide in extraordinary circumstances specific controls designed to achieve a particular land use and development outcome.

50. The MGA submits that extraordinary circumstances would relate to a land use or development proposal that has a significant (or extraordinary) public benefit such as: the construction of significant public infrastructure, a hospital, a health facility or a school/university. The introduction of a new retailer would not amount to an extraordinary circumstance.

Conclusion

51. The MGA submits that the Committee should report to the Minister for Planning that:

a) For the reasons outlined above, each site is not an appropriate location for a Kaufland Hypermarket.

b) Kaufland should not be able to bypass the Council planning permit process.

c) There is a real risk that Kaufland stores will have a detrimental impact on Independent supermarkets/retailers and local neighbourhood shopping centres.

d) On balance, each proposal do not represent a net community benefit and should not be supported.

Jason Kane

Isaacs Chambers

3 December 2018

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