The Australian Retailers Association (ARA) has urged the government to correct the power imbalance that exists between landlords in shopping centres and bricks-and-mortar retailers
Retail tenancy agreements unfair to jewellers
Posted June 07, 2011 | By Sonia Nair
The Australian Retailers Association (ARA) has called for key reforms in retail tenancy agreements, further exposing the unfair advantage landlords hold over jewellers in lease renewal negotiations.
The retail industry body lodged a submission with the Productivity Commission, urging the government to correct the power imbalance that exists between landlords and bricks-and-mortar retailers, amongst other requests.
ARA executive director Russell Zimmerman said the one-sided retail tenancy agreements are driving many retail business operators into the ground.
“The oligopolistic nature of shopping centre ownership and a retail tenancy regime which is skewed in favour of these large-scale landlords presents an inherent disadvantage to Australian domestic bricks-and-mortar retailers in terms of equitable competition,” Zimmerman said.
Zimmerman’s views mirror that of JAA chief executive Ian Hadassin who spoke to Jeweller after the JAA lodged its own submission with the Productivity Commission. Hadassin called lease renewal negotiations “a David and Goliath contest between landlords who have stronger negotiating skills compared to jewellers”.
To combat the problem, the ARA has called for the right of existing tenants to obtain an independent market rental valuation of their tenancy and it will also cal for the adoption of a national registration system of retail leases whereby registration of retail leases is recorded with an appropriate regulator.
The ARA also called for third party reporting of turnovers to prevent predatory negotiations by landlords who knew specific details of a company’s business activity.
Hadassin hoped legislation would come into place “to prevent landlords from coming up with unconscionable increases in rent”.
“In the past, rent has gone up by 30 per cent after five years and no one knows if this is the market rate or not. There needs to be a balance where rental increases must be reasonable and not what landlords think they can get away with,” Hadassin said.
Zimmerman said the current flat retailing conditions is worsening the situation for retailers. “While retail trade is flat, rents for bricks-and-mortar stores continue to increase – driving up prices for consumers and ensuring a sustained retail exodus from the market,” he said.
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JAA seeks government action to assist jewellers