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Kaufland stores in Victoria

Advisory Committee

Statement of evidence of Anthony Dimasi

7 November 2018

Dimasi & Co

Tony Dimasi

[email protected]

Table of contents

Expert witness details 1

Introduction 3

1. Epping proposal 4

2. Chirnside Park proposal 6

3. Dandenong proposal 7

Appendix 1: Curriculum Vitae 9


Advisory Committee 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

7 November, 2018



Introduction

This statement focusses on the matter of economic impacts relating to the proposed

Kaufland stores at Epping, Chirnside Park and Dandenong.

The statement has been prepared, for the assistance of the Advisory Committee, on

the instructions of Planning & Property Partners, acting for Kaufland Australia Pty Ltd.

I have previously prepared an Economic Impact Assessment (EIA) for each of the

proposed Kaufland developments at Epping, Chirnside Park and Dandenong, in

November 2018. I adopt the prepared EIA as my expert evidence in each case.

Prior to preparing the EIA for each of the three proposals, I also prepared an overview

report titled : Kaufland in Victoria, Consumer and Economic Impacts – Overview, June

2018. I also adopt that report as part of my expert evidence, subject to any

qualifications which I set out in this statement.

I have now had the opportunity of reading the various submissions made to the

Committee on each of the three proposals, and in the balance of this statement I

respond to the matters relating to economic impact that have been raised in those

submissions.



1. Epping proposal

1.1 There is only one submission made in relation to economic impact regarding the

proposed Epping store, and that is by the owner and operator of the IGA

supermarket located at 53 McDonalds Road in Epping, which is situated

approximately 2.3 km., by road, from the subject site.

1.2 The comments relating to impacts that are made by the submitter are general in

nature, including the view that “a large oversized” supermarket (i.e. Kaufland)

might lead to the loss of “our high street” and the claim that independent

supermarkets offer personalised service and that is how they establish a loyal

customer base. The submitter goes on to state that “We are personal and the big

supermarkets are not.”

1.3 The IGA store in question is located to the north of the subject site, on a significant

road (McDonalds Road) and quite close to the northern growth front of Epping,

with many new homes being delivered each year. It is closer to the growth areas

than the subject site.

1.4 As the submitter has also noted, the offer of independent supermarkets such as

Epping IGA, quite apart from being more physically limited because of store size,

is also predicated on significant differences as compared to much larger

supermarkets such as Kaufland. That is one of the main reasons why the new

Kaufland store is likely, in my view, to impact the larger footprint national chain

supermarkets to a greater degree than the smaller, independent supermarkets –

especially when those larger chain supermarkets are also located closer to the

store, as is the case at Epping.

1.5 I consider, therefore, that the likely impact on IGA Epping will be lower than the

average impact of 5%-6% across trade area supermarkets as assessed in the EIA,

and that such impact will occur within the context of the available food and

grocery spending market growing at around similar rates, each year, to the

expected average impact. Further, with the Kaufland store not expected to be

operational for at least another two years, Epping IGA can enjoy the benefit of

1 Epping proposal



such trade area growth without any additional trade area competition over that

period. Therefore, even after the impact which IGA Epping might experience as

a result of Kaufland’s entry, I consider that the store is still likely to be trading at a

higher volume than it is doing today.

1.6 In addition to the specific economic impact submission made by Epping IGA,

there are also two other generic impact submissions, made by the Master Grocers

Association (MGA) and Ritchies Stores Pty Ltd (Mr. Fred Harrison). The submission

by Ritchies Stores is a duplicate of that made by Epping IGA.

1.7 To the best of my knowledge, the closest Ritchies store is located at Diamond

Creek, approximately a 35 minutes drive away. I consider, therefore, that no

additional comment regarding economic impact of the Epping proposal is

warranted in response to the Ritchies Stores submission.

1.8 The main thrust of the MGA submission, with regard to economic impact, is an

expressed concern that no specific economic assessment of the proposal had

been undertaken at the time that submission was made. However, as EIA’s have

now been prepared for each of the three proposed Kaufland stores, which

address the economic impact issues of each proposal, I consider that concern

has been addressed.



2. Chirnside Park proposal

2.1 There is also only one submission made in relation to economic impact regarding

the proposed Chirnside Park store, and that is by the owner and operator of the

Supa IGA supermarket located at Mt. Evelyn, which is situated approximately 11

km., by road, from the subject site. That submission is also a replica of the

submission made by both the operator of the Epping IGA stores and the general

submission made by Ritchies Stores Pty Ltd.

2.2 Mt. Evelyn Supa IGA store, as I have noted above, is located some 11 km. away

by road from the Chirnside Park site in question. As shown on Map 3.2 in the EIA

which I have prepared for the Chirnside Park proposal, the Mt Evelyn Supa IGA

store is located well outside the extensive trade area which I expect the Kaufland

store to serve. Therefore, it is my view that the Mt Evelyn Supa IGA store will

experience no impact from the proposed Kaufland store, or any impact it will

experience will be so small as to be negligible.

2.3 To the best of my knowledge, the closest Ritchies store is located at Ringwood

North, some 9 kilometres away by road and also outside the defined trade area

for the proposed Chirnside Park Kaufland store. I consider, therefore, that no

additional comment regarding economic impact of the Chirnside Park proposal

is warranted in response to the Ritchies Stores submission.



3. Dandenong proposal

3.1 There are four submissions made in relation to economic impact regarding the

proposed Dandenong store, made by GPT, owner of Parkmore Shopping Centre;

the owner of IGA Dandenong; the owner of Menzies Cellars in Dandenong; and

Dandenong Council, on behalf of the Dandenong Activity Centre.

3.2 The main thrust of the GPT submission, with regard to economic impact, is an

expressed concern that no specific economic assessment of the proposal had

been undertaken at the time that submission was made. With the EIA that has

now been prepared for the proposed Kaufland store, which addresses the

economic impact issues of the proposal, I consider that concern has been

addressed.

3.3 The submissions from both Dandenong IGA (located at 78 Hemmings Street,

Dandenong) and Menzies Cellars (52 Menzies Avenue, Dandenong North) are

again replicas of the submission made by Epping IGA as well as Mt Evelyn Supa

IGA and Ritchies Stores Pty Ltd. In my view, the impacts on each of these two

operators are likely to be lower than the average impact across the trade area

of the Dandenong proposal, for reasons explained in the Dandenong EIA. Further,

as also explained in the EIA, very strong population growth is forecast for

Dandenong/Dandenong North.

3.4 The submission from Dandenong Council states that the subject proposal “…is

located in excess of 800m from the nearest point of the Dandenong Activity

Centre.” The submission acknowledges that the proposal would provide

additional jobs, both directly and indirectly, but expresses concern that “… it

also has the potential to have an overall negative economic impact as a result

of the loss of jobs and businesses in the Dandenong Activity Centre.”

3.5 I have addressed this concern in the EIA, and I consider that the likely impacts

on the Dandenong Activity Centre will not be of such a magnitude as to result

in an overall negative economic impact, both because the impact of Kaufland

3 Dandenong proposal



Dandenong will be spread across a number of centres, and because the

population of Dandenong/Dandenong North will increase significantly over the

next decade. Therefore, I consider that the likely impact on the Dandenong

Activity Centre will be mitigated by population growth within a period of 2 – 3

years. However, as the Kaufland proposal is unlikely, and not expected, to be

built for another two years, the Dandenong Activity Centre will be able to enjoy

further growth in advance of any impact.

3.6 Therefore, having regard to the various positive economic and consumer

impacts that will result from the proposed Kaufland development, it is my view

that in overall terms a net community benefit will be the result.

3.7 To the best of my knowledge, the closest Ritchies store to the subject site at

Dandenong is located at Rowville, some 10 kilometres away by road and outside

the defined trade area. I consider, therefore, that no additional comment

regarding economic impact of the Dandenong proposal is warranted in

response to the Ritchies Stores submission.

Appendix 1: Curriculum Vitae

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