As the large format retail industry in Australia has grown, so too has the need for the development of large format retail premises. The proliferation of property development is being driven by consumer demand for greater large format retail precincts, the retailers who are keen to expand their store numbers, and developers and investors seeking to profit from the strength of the industry. The LFRA aims to work openly with planners,developers, agents and investors to ensure new developments meet business, consumer and community needs through informed, considered design and leasing strategies. New developments must include the appropriate infrastructure for frequent load access and customer parking; the design mustn’t create unnecessarily high occupancy costs, and it is essential that the mix of large format retailers be considered so as to ensure long-term success for every party committed to the development.

There is an undeniable structural shift in the retail market.  Many influences impacting on the market are entwined; they include online sales, technological advances including smart phones, increased travel overseas, price harmonisation, the diminished number of departments within department stores and the low value import threshold.  Retail needs to be adaptive; planning and zoning laws need to provide for the flexibility to allow retailers to meet current and future challenges.

In order to compete, most of the Australian Large Format Retail market is in urgent need of the appropriate freeing up and harmonisation of planning and zoning laws that impact our market.  This perspective is supported by the following reports/reviews:

  • Federal Government’s 2015 ‘Competition Policy Review’ otherwise known as the ‘Harper Review’;
  • Cutting Red Tape’ regulatory reform agenda being undertaken by the Federal Government;
  • Productivity Commission’s 2011 inquiry into the ‘Economic Structure and Performance of the Australian Retail Industry’;
  • Productivity Commission’s 2010 ‘Performance Benchmarking of Australian Business: Planning, Zoning and Development Assessments’;
  • Productivity Commission’s 2007 review into the ‘Market for Retail Tenancy Leases in Australia’; and
  • ACCC’s 2008 ‘Inquiry into the Competitiveness of Retail Prices for Standard Groceries

Particularly of note is ‘section 8.4’ in the Productivity Commission’s report on the ‘Economic Structure and Performance of the Australian Retail Industry’ which we wish to draw to your attention:

…Prescriptive Local Planning Restrictions on Retailers
To meet evolving product market requirements, store formats must also be allowed to adapt. Restrictions on store formats impact on a retailer’s ability to adapt to new competition and changing consumer preferences within the market.   The Commission’s recent benchmarking report identifies that even where businesses are allowed to operate in a particular locality — because their business model is consistent with the overarching activity centre policy or zone description — they then face a raft of local planning restrictions. This regulatory overlap arises because the legal framework for zones is at the state and territory level, but the detailed specification of zones is at the local level.   It is recognised that at times restrictions on competition may be required to achieve the objectives of the planning system, such as public amenity or equitable access to facilities and services. This is because commercial businesses are usually focused on the private costs and benefits of a development or planning proposal and may not necessarily consider the public environmental, social or economic costs and benefits associated with their decisions. Consistent with this rationale for government intervention, Stockland suggests:   … local governments should focus on those issues with external impact (either on the community or sites) such as traffic, servicing, noise, overshadowing where such issues impact public space or adjoining site amenity. (sub. DR203, p. 3)   Nonetheless, there are large numbers of prescriptive requirements which can be   found in approved council plans in some or all jurisdictions which appear to unjustifiably or needlessly restrict competition, including:

  • restrictions on business type (defined retail categories) allowed in particular zones in some council plans in New South Wales, Victoria and Western Australia
  • site-specific restrictions on type and size of businesses allowed
  • restrictions on business numbers (maximum) for different activities
  • restrictions on business size via use of floor space minimums and/or caps in all states and territories, but particularly in the ACT and some councils in Victoria and South Australia
  • restrictions on business location (zones for individual retailer types)
  • restrictions on business mix (floor space ratios)
  • detailed specifications on aspects such as the internal fit-out of developments, landscaping, advertising signage, and the minimum provision of vehicle and bicycle parking (PC 2011b).

Many of these local restrictions limit business expansion opportunities and capacity to compete. At worst, they may even discourage or prevent some businesses from entering the market in the first place. For example, restricting competition by placing limits on the number of a type of business that can establish in a particular geographic area or activity centre can have a number of adverse consequences. Protected from localised competitive pressure, incumbent businesses have greater incentive and more opportunity to charge higher prices and/or offer a lower quality…”

The full report ‘Economic Structure and Performance of the Australian Retail Industry’ can be accessed via the following link:

It’s important that Large Format Retailers are involved in the planning and development of Large Format Retail premises to ensure the best outcomes for everyone involved.

Important planning considerations include:

        • A large, flat site to accommodate a large format building, on-site parking, vehicular access for both customer and delivery, and landscaping.
        • Good site exposure to passing traffic with location on a major arterial road or with convenient access to the major arterial road network.
        • Affordable and sustainable rents in line with the retailers’ business strategies to permit the display and storage of large items.
        • A suitably designed site and building that safely accommodates the delivery of stock by large commercial vehicles and the loading/collection of bulky goods by customers.
        • A site which can conveniently and safely accommodate up to  40 trucks and semi-trailers per retailer per day.
        • A customer car parking ratio of at least 3 spaces per 100 square metres of floor space.
        • Suitably located premises to serve a wide regional catchment of over 100,000 residents, with some of the larger stores requiring catchments of 150,000 plus.
        • Co-location with other Large Format Retailers
        • A considered mix of retailers that promotes the long-term success of the development.

The LFRA plays a critical role representing the interests of its members on planning policy issues, environmental and other issues.  We work with governments to develop laws that accurately reflect and provide clarity, consistency and certainty for the Large Format Retail industry in Australia today.

While there has been rapid growth within the industry though retailer expansion; the prolific development of and investment into retail property; planning policy has failed to keep up, creating a lack of suitable premises to service the large format retail industry in Australia.  This is a major concern for LFRA members because it threatens the future growth of the Large Format Retail industry in Australia.

There are two factors which impact the availability of suitable premises; the recognition of Large Format Retail zones identified in planning policy, and the varied approach by state governments towards the definition of what constitutes Large Format Retail premises.

Planning laws are governed by the states and in many instances administered by local councils.  There is no uniform or national approach to defining Large Format Retail premises yet the vast majority of Large Format Retailers are national companies.

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