Coles Group, Australia’s number two grocer, has stood firm in the debate over lease arrangements as local reports claimed the country’s regulator could succeed in its bid for reform of the system.
A report in today’s (21 August) Australian newspaper said the Australian Competition & Consumer Commission (ACCC) was “close to declaring victory” over Coles and Woolworths Ltd, the country’s largest retailer and pushing through changes to shopping centre leases.
The ACCC is in talks with Coles and Woolworths over the leases, which some see as discouraging rivals from opening stores in a shopping centre and protecting the big two retailers from fresh competition.
Coles, however, said negotiations with the ACCC are ongoing. “There is no deadline and no agreed position yet,” a Coles spokesman told just-food.
“Coles believes all its current lease agreements are legal and fair. They do not stop competitors coming into properties but require landlords to have a rent review if they do to compensate anchor tenants for the loss of certainty on their up-front investment to get the shopping centre up and running.”
Officials at the ACCC and at Woolworths Ltd did not return requests for comment.
Aldi, the German discount giant, is looking to expand further in Australia, while earlier this week, US retailer Costco opened its first store in Australia.
The Coles spokesman, however, insisted the retailer is sanguine about the prospect of greater competition in the Australian grocery sector.
“Coles is focused on its own turnaround strategy but is comfortable with competitors,” the spokesman said. “We recently sold 45 stores to an Australian-owned retailer, FoodWorks, as our focus is on getting better returns from our larger stores and providing a better service to our customers.”
Yesterday, Coles owner Wesfarmers said like-for-like food and liquor sales at Coles rose 7.3% in the fourth quarter to 30 June, and 4.6% over the full year.