IGA grocer Ritchies calls for a two-year ban on building new retail space

The head of Ritchies IGA has accused the major supermarkets of land banking, which he says disadvantages small businesses, and has called for a two-year moratorium on building new retail spaces.

Ritchies operates 70 of the supermarkets which are part of the IGA’s network of 1,400 independent grocers.

Fred Harrison, chief executive of Ritchies IGA, told SmartCompany the current pace of retail development was likely to disadvantage small business and he called for a two-year moratorium on development.

“I just think there is basically an oversupply of retail in Australia at present and we know retail is genuinely struggling. It is not just one sector, it is across the board,” he says.

“There are enough indications now that retail life is fairly tough, it has not been tough for a day or week or month; it has been tough now for 18 to 24 months.”

Harrison said the amount of available retail floor space in Sydney and Melbourne had increased from two to three square metres per person in the three years to 2010.

“Our population is not growing at a dramatic rate but the level of retail development in recent years has been phenomenal,” says Harrison.

“Rather than just having more and more stores being built across the board maybe we should complete what we have and let existing businesses consolidate, because it is not going to be good if we end up with empty retail tenancies.”

Harrison says it is “not the most level of playing fields” for small businesses to compete with Coles and Woolworths and accused the two supermarket giants of buying up land in order to block competition.

“I believe there has been a lot of land banking and I think because of that they have such high subsidies across so many different businesses so they can use one business to subsidise another,” he says.

“Naturally, the big end of town is going to be anti these sentiments but there are a lot of small businesses out there that don’t have the clout or push to get on TV or to get in the business section of the papers so, in many respects, we are speaking for them.”

SmartCompany asked Harrison if it was realistic to propose a two-year moratorium on retail building.
“Everything is realistic: Did we think a carbon tax was realistic a couple of years ago?” he says.

“Do we want to go the path of the UK or Spain with acres and acres of empty tenancies? I think it needs to be discussed.”

Harrison’s comments follow the Australian Competition and Consumer Commission’s concession that there is not much it can do about claims of anti-competitive behaviour by Coles and Woolworths.

A spokesperson for Coles told SmartCompany, “Coles is not in the business of opening unprofitable stores, we only open stores where we believe there is customer demand for our offer.”

Woolworths did not respond to SmartCompany‘s request for comment before publication.