Woolworths Ltd, Australia’s largest retailer, will be “more affected” than Coles by the changes to tenancy agreements with landlords, its fierce local rival said today (18 September).
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
After weeks of talks with the Australian Competition and Consumer Commission, it was announced earlier today Woolworths and Coles would put a halt to practices that, the watchdog claimed, prevented competing stores from entering shopping centres where the two retailers were based.
ACCC chairman Graeme Samuel called the agreement “a major breakthrough” for Australia’s grocery sector and could lower the barriers to entry for current smaller – and new – players into the industry. Consumers, Samuel said, could benefit from more choice and lower prices.
A Coles spokesman said the undertaking with the ACCC covered around 250 of the company’s outlets. “About 170 stores will be immediately affected and the remaining 80 over five-plus years,” the spokesman told just-food.
Under the deal with the ACCC, new leases will be free from the “restrictive provisions”, the watchdog said, while provisions in leases currently up and running will be phased out over five years.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe Coles spokesman said it was “premature” to speculate about what kind of impact the agreement with the ACCC could have on Woolworths and Coles.
However, he hinted that Coles’ larger rival would feel a greater impact.
“In theory it should help the smaller retailers gain access to shopping centres but it will take two-three years before any property developments can occur,” he said. “In practice, it will also allow Coles to enter shopping centres that it has not been able to get into and vice versa for Woolworths – which is more affected by the decision because it has 500 stores impacted, most immediately.”
The spokesman added: “Coles does not think the decision will have any material impact in fiscal year 2010 and beyond. The big impact will be on shopping centre owners who will not be able to get rents from anchor tenants up front in new property developments and individual rents will drop in existing shopping centres as competition reigns.”
Non-Australian retailers are starting to make inroads into the country’s grocery sector. Aldi, the German discount giant, is looking to expand further in Australia, last month, US retailer Costco opened its first store in the country.
