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Kaufland stores in Victoria

Addendum Report

Statement of evidence of Anthony Dimasi

6 December 2018

Dimasi & Co

Tony Dimasi

[email protected]

Table of contents

Expert witness details 1

Addendum Report 3

Appendix 1: Curriculum Vitae 8


Addendum Report 1 Statement of Evidence of Anthony Dimasi

Expert witness details

Name and address of expert

Mr Tony Dimasi

Economic Consultant

Dimasi & Co

12 Argent Court

Riddells Creek VIC 3431

[email protected]

Expert’s qualifications and experience

• Bachelor of Arts (Hons.), University of Melbourne

• Master of Arts, University of Melbourne

My CV is included as Appendix 1 to this statement of evidence. I have extensive

experience in the field of retail economics and analysis gained over the past 32 years,

having provided independent advice on numerous retail development projects and

proposals throughout all parts of Australia, to a broad range of clients.

Expert’s area of expertise

• I have practised as a consulting economic and retail analyst since 1982. During that

time I have worked in all states of Australia and also in New Zealand and Asia, and

have advised on many thousands of retail developments of all types and sizes.

• My assessments have covered demand and supply analysis, commercial feasibility

assessments and economic impact assessments, for many thousands of shopping

centres of all sizes and mixes, as well as numerous freestanding retail stores, including

supermarkets, discount department stores, toys category killer stores, book stores,

special apparel stores, smaller foodstores and packaged liquor stores of all sizes.

• I have appeared as an expert witness in the various jurisdictions across all states of

Australia and New Zealand on numerous occasions, including:

- The Administrative Appeals Tribunal (AAT) of Australia;

- The Land and Environment Court of New South Wales;

Expert witness details



- Independent Ministerial Panels and VCAT in Victoria;

- The Planning and Environment Court of Queensland;

- The State Administrative Tribunal in Western Australia;

- The Environment, Resources and Development Court of South Australia;

- The Resource Development Planning Commission in Tasmania;

- The Liquor Licensing Court of South Australia; and

- The Petroleum Products Retail Outlets Board of South Australia.

I have also appeared as an expert witness before various government and ACCC

inquiries into the retailing of food, liquor and groceries industry in Australia,

including:

- the 1999 Joint Parliamentary Inquiry into the Australian Retail Sector (the Baird

Inquiry);

- the Inquiry into the Competitiveness of Retail Prices for Standard Groceries

(2008) undertaken by the Australian Consumer and Competition Commission

(ACCC); and

- the 2004 ACT Grocery Inquiry (the Martin Inquiry).

• Over the past 36 years I have provided, and continue to provide, research and

advisory services to a wide range of clients, including major retailers and most of

Australia’s shopping centre management and development groups.

• I have undertaken work on numerous occasions throughout Epping, Chirnside Park

and Dandenong, relating to both existing and proposed retail developments.

I have made all the inquiries that I believe are desirable and appropriate and no

matters of significance which I regard as relevant have to my knowledge been

withheld from the Panel.

Anthony Dimasi

6 December 2018



Addendum Report

1.1 This Addendum Report presents further information relating to a number of points

which I am advised were raised in evidence by the Master Grocers Association

(MGA). Those points relate primarily to the claim by MGA that the likely impacts

on a number of businesses owned and operated by members of the MGA have

not been taken into account in the EIAs prepared by me for the proposed

Kaufland developments at Epping, Chirnside Park and Dandenong.

1.2 I deal with each of the three sites in question in greater detail below, however, as

a general comment which relates to all of the locations pointed to by the MGA

the following information is of relevance.

1.3 First, I am aware of, and have inspected, each of the various Foodworks outlets

which have been raised by MGA, and in a number of instances I have made

comment in the EIA’s which is pertinent to those premises. For example, in each

of the three EIA’s I make the following comment at Section 1:

For the purposes of this analysis supermarkets are defined as food & grocery

stores which are greater than 500 sq.m in size. Smaller food & grocery stores,

such as convenience stores and corner stores, also contribute to the total

retail turnover of the Supermarkets & Grocery Stores category as measured

by the ABS. However, those very small stores are not considered to be

competitive in a direct sense to larger supermarkets, as they operate in a

quite different manner to a full range supermarket, and are not, for the

great majority of the population, considered to be a viable destination for

the typical weekly food & grocery shopping trip. (p. 6)

1.4 In the Dandenong EIA I make the following comment at Section 3.3 of the report:

There are two quite small independent stores, an IGA foodstore located a

short distance west of Dandenong CBA and a Foodworks store at Doveton,

which are estimated to be larger than 500 sq.m., as well as a further two

smaller Foodworks stores, each less than 500 sq.m., in the northern part of

the trade area. (p. 29)

Addendum Report



1.5 As I discuss further below, in all of the cases raised by MGA the premises in

question are not what could reasonably be termed supermarkets, but rather are

generally convenience stores, and in all cases they are less than 500 sq.m GLA in

size. As I also make clear in the further information below, typically these various

FoodWorks stores are well presented, well stocked, and are operating effectively

even though in most cases they sit in the shadows of full-scale supermarkets, e.g.

as operated by Coles, Woolworths and/or Aldi.

1.6 These small convenience stores/foodstores are not substitutes for the typical

weekly supermarket shopping which the vast majority of Australian consumesr

would undertake on a regular basis. Rather, they operate as convenience stores,

with most purchases usually being generated as spur of the moment, emergency,

passing by, or walk-in trade. That is not to say that some consumers might not wish

to use them for all of their supermarket shopping – there might well be some

customers who, for whatever reason(s), prefer to shop at such small premises. In

those instances though, the reasons why those customers choose to use such

small foodstores in preference to the larger supermarkets will not change simply

because another large supermarket is added somewhere within the general

area.

Chirnside Park

1.7 In the case of Chirnside Park, there are three FoodWorks outlets which are

referred to by MGA, as well as two bottleshops and one IGA X-press store. The

IGA X-press store is situated at Croydon South, some 7 km by road from the site

for the proposed Kaufland store at Chirnside Park, and outside the expected

trade area I have defined for the Kaufland store. I consider that there is no

likelihood of any noticeable impact on the trading performance of such a small

facility, situated such a distance from the Kaufland store.

1.8 Similarly, for the two bottleshops raised by the MGA – Cellarbrations at

Mooroolbark and the Bottle-O at Croydon – I consider that on these small

businesses, located substantial distances in each case from the site of the

proposed Kaufland store and offering only packaged liquor (the range of which

Addendum Report



I would expect to be significantly more limited than that which would be

available in the Kaufland store) there will be minimal, if any, trading impact.

1.9 MGA has also raised three FoodWorks outlets for consideration in the Chirnside

Park matter – at Croydon (on Main Street); at Wonga Park; and at Lilydale.

1.10 The Croydon FoodWorks store, branded as FoodWorks Local, is approximately

400 sq.m in size based on my estimation. The store is located on Main Street within

the heart of the Croydon strip centre, which is a busy pedestrianised centre. The

store does not appear to have any dedicated carparking and has a frontage of

only some 5 metres to Main Street, with its packaged liquor offering is situated at

the front of the storeand the grocery aisles tucked away at the rear. The store is

also entered via a side entrance, and the facility generally slopes down away

from Main Street. As a possible alternative for typical regular supermarket

shopping, this store would be quite unattractive in my view – quite apart from its

very small size - and it is noteworthy that it already sits in the shadows of three full-

scale national chain supermarkets that are available in Croydon – Woolworths,

Coles and Aldi. Therefore, the future viability of this store will not be impacted by

the provision of a new Kaufland store at Chirnside Park, which in any case is

situated some 5 km away. The competitive overlap between what this store offers

and what the new Kaufland supermarket will offer will be minimal.

1.11 The Wonga Park FoodWorks store is situated approximately 6.1 km by road from

the site for the proposed Kaufland Chirnside Park store. Based on my inspection,

the FoodWorks store appears to be the only retail facility in Wonga Park, and it is

well located, well stocked and appears to be trading solidly. Wonga Park is a

relatively isolated residential area, set within a bushland context. This store, which

is an estimated 350 sq.m in size, will in my view continue to play its expected role

as a successful convenience shopping facility for Wonga Park, and is unlikely to

experience any trading impact from the new Kaufland store.

1.12 The third FoodWorks outlet referred to by MGA in relation to Chirnside Park is

FoodWorks at Lilydale. The former FoodWorks store at Lilydale, situated in what

was previously the Olive Tree Shopping Centre on Main Street, was long ago

closed (October 2015), and the site has since been redeveloped into a Bunnings

hardware store.

Addendum Report



Epping

1.13 The FoodWorks outlet identified by MGA in Epping is the FoodWorks Local which

is situated within Dalton Shopping Centre, on Dalton Road. The store is

approximately 400 sq.m in size, and it sits only a few doors away from the anchor

store of Dalton SC which is an Aldi supermarket. Clearly, the FoodWorks

convenience store is able to operate successfully as part of the same centre

which contains a much larger, full range supermarket, in essence because the

respective offers are sufficiently different that there is customer demand

available for both. Given this situation, and given the relevant other factors

relating to the Epping trade area generally – in particular the future growth in

trade area population as outlined in the EIA – there is no reason why the

FoodWorks convenience store at Dalton SC is likely to experience an impact

which would be higher than the average for existing Epping supermarkets as

outlined in the EIA, i.e. in the order of 5% - 6%. Rather, it is to be expected, and it

is certainly my expectation, that the likely impact on FoodWorks at Dalton SC will

be considerably smaller than the average, if there is any noticeable impact at

all.

Dandenong

1.14 There are two FoodWorks stores which are raised in the MGA response to the

Dandenong EIA – FoodWorks/Menzies Cellars which is located on Menzies

Avenue in Dandenong North, and FoodWorks Dandenong which is situated

approximately 2 km further to the north on Brady Road, also in Dandenong North.

1.15 Both of these stores are less than 500 metres in size, with FoodWorks/Menzies

Cellars estimated at approximately 400 sq.m based on my field inspection, while

FoodWorks Brady Road is approximately 350 sq.m in size.

1.16 FoodWorks/Menzies Cellars is part of a local strip shopping centre which is

situated directly opposite a community centre and associated playground

facility. The total strip centre is very well presented, and certainly appears to be

in excellent trading health. In addition to FoodWorks/Menzies Cellars, the strip

centre also contains a wide range of supporting retailers. The FoodWorks store is

itself very well presented and stocked, and appears to be trading strongly. The

FoodWorks Brady Road appears to be not quite as well presented as the Menzies

Addendum Report



Avenue store, nor to be trading as successfully, although it too, based on my

inspection, appears to be trading soundly. It forms part of a smaller strip centre

than Menzies Avenue, but which also contains a number of other retail stores and

services.

1.17 As I have pointed out at para. 1.4 above, the EIA which I prepared for the

proposed Kaufland store at Dandenong had regard for both of these stores, and

for all of the reasons that I have identified both in the EIA and in this Addendum

Report, I do not consider that the likely impacts on either of these two FoodWorks

store will be such as to, in any way, imperil their continued operation.

1.18 In my various inspections of all of the above facilities, as well as a number of other

smaller supermarkets, including numerous FoodWorks stores, which I have

undertaken as part of the field work research for both the three EIAs which have

already been submitted to the Panel, and further EIAs which I understand will be

submitted in the near future, I have observed that the presentation and apparent

trading performance of these various small convenience stores/ foodstores can

vary noticeably between premises. In my view, the management of these stores

is paramount in their trading success, and the examples that I have observed

which are well presented, well stocked and appear to me well managed –

usually with some point of difference from a typical Coles or Woolworths

supermarket – generally appear to be successful regardless of the competitive

context in which they operate. Again, I make the point that the customer offer

available in these smaller foodstores is very different to the offer of a full-scale/full

range supermarket, and the reasons why each attracts customers are quite

different. These two quite different offers co-exist across all parts of the Melbourne

metropolitan area.

Appendix 1: Curriculum Vitae

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