City Journal May 6, 2013 page 3

In-depth

Hot on their heels

by andrea nierhoff
THE supermarket sector say new state government legislation designed to encourage competition in the industry is misguided.
viously from the closure of an independent supermarket. We have an IGA down here and it closed for a period of time; it was a real negative situation for our local community, people stopped coming to the strip, It really impacted on our traders, she says. Smaller supermarket chains are also sceptical about the planning zone changes, describing them as ineffective for the wider industry. The problem with the Australian retail sector is were overshopped as it is, CFO of Ritchies Supermarkets Mal Cameron says. In Australia it seems like everyone just wants to put a little shopping strip on every corner they can find. Our perception is thats a new Aldi law, and that what theyre doing is theyre changing the rules so that (its easier for) a company like Aldi to put up their size supermarkets, which is usually about 1600 square metres, in more spots than they can now, Mr Cameron says. Master Grocers Australias Jos de Bruin agrees, and questions the efficacy of the laws in stopping bigger chains from also taking advantage of them. Aldi, we believe, have lobbied very very hard for this because they like industrial landits cheap, he says. (And) Coles and Woolworths have the ability to build 2000 square metre supermarkets and less and thats already evident around Australia. Mr de Bruin says this legislation could potentially prompt the two majors to take preventative action. Coles and Woolworths wont sit back and watch an independent come into a block of land next to a Bunnings, or in the case of The Baillieu government announced it will relax restrictions for where supermarkets and grocers of up to 2000 square metres can locate. The changes will affect planning zones Business 3, Business 4 and Industrial 3. In a media release Planning Minister Matthew Guy describes the move as making Victorias supermarket sector the most competitive in AusThe problem tralia. But Annie with the Opray of the Bentleigh Trad- Australian retail ers Association sector is were in southeast Melbourne says overshopped the effects of as it is. the legislation will be minimal. Mal Cameron, We already CFO, Ritchies. have a lot of the supermarkets represented here: we have Coles, we have Safeway (Woolworths), we have IGA, and then theres a lot of independent operators as well that might specialise in a certain cuisine, like Korean or Chinese or Indian groceries, she says. I dont think itll have an impact in this area. President of the nearby Murrumbeena Traders Association Sue Foley says the area has experienced negative consequences pre-

illustration by andrea nierhoff

Small supermarkets explain why new laws do nothing to help a sector under attack
Woolworths next to a Masters, because they just want to dominate. Ms Opray disagrees the market is overcrowded, believing consumers benefit. I dont know that theres too many (supermarkets), I mean the optimum for a shopper to have is a selection, a wide selection of stores so they can choose which one they prefer on whatever grounds, whether it be price or quality or service. Mr de Bruin thinks the new changes would be more beneficial if they were selective. If it was somewhat restricted, thats to say to disallow the chains from having a go at this, I would say it would probably maximise the competitive outcomes and competitive objectives of something like this, he says. I think hes (Mr Guy) genuinely wishing to create opThey por tunities smaller (Coles and for operators to Woolworths) create combut just want to petition, the unindominate. tended consequences are Coles Jos de Bruin, and Woolies Master Grocers jump on this Australia. real quick. Master Grocers Australia released a report on Monday following an investigation into the supermarket retail sector. Aldi Australia was unavailable for comment. graphic by andrea nierhoff information supplied by deloitte 2012 really care about them, about the socalled little-people. Theyre all about profits. And so they like shopping at smaller supermarkets where they know the people who run it and work there and they can have a conversation and build a relationship. Do you think smaller supermarkets like Ritchies are in danger from the majors? Yeah I mean the big ones like Coles and Woolies have the money to just buy up land and property and whatever they want so its much harder for the smaller independent shops. Just look at the milkbars, you used to see lots of them and now theyve disappearedit could be the same with small supermarkets.

Profile:

Kahlia Chapman: Ritchies Supermarket, Mt. Waverley.

How long have you been working at Ritchies, and what do you do? Ive been here for about five years now. I work at the deli counter slicing up cold meats and cheeses.I also stock the bread shelves and put out other things in the freezers. What do you enjoy about your job? I get to spend time with great people who are my friends outside of work

too! And of course we have lots of regular customers who always know my name and I know theirs. Its got a local shop feel here. Why do you think people choose to shop at an independent supermarket rather than one of the bigger names? I think they get sick of having advertised shoved in their faces, and they know big corporations like that dont