Industry fight brews over pop-up store code

Matthew Elmas

21st Dec 2017

[UPDATED] The competition watchdog has re-authorised the code of conduct guiding the operation of pop-up stores in shopping centres, with amendments that will increase retailer participation and introduce an independent mediator.

The ACCC’s decision to renew the casual mall leasing code comes after several months of tension between industry bodies over the administration of the voluntary scheme after concern emerged that temporary retailers, often online players, were introducing unfair competition into many shopping centres by being placed in close proximity to permanent stores.

Under amended code the Australian Retailers Association (ARA), Franchise Council of Australia (FCA), Pharmacy Guild of Australia (PGA) and the National Online Retailers Association (NORA) will join the National Retailers Association (NRA) and the Shopping Centre Council of Australia (SCCA) on the committee administering the scheme.

A number of shopping centre members will also be added to the committee, Internet Retailing, understands, as part of a quid pro quo arrangement proposed by the SCCA to ensure even representation among stakeholders with competing interests.

“The Code is likely to deliver certainty and transparency for permanent retail tenants about how casual mall leasing will operate near them,” ACCC Deputy Chair Dr Michael Schaper said.

“In our draft determination, we noted concerns from some tenants that the Code hasn’t served all retailers well in practice. The ACCC strongly encouraged the Shopping Centre Council to increase retailer representation on the Code Administration Committee. The SSCA accepted this suggestion and has invited additional retailers to join the Committee.”

The list of nominated mediators within the code has also been abolished in favour of delegating dispute resolution to the relevant state or territory small business commissioner or the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.

The expiry date on the code, or the time before it must be re-authorised by the ACCC, has also been shortened from five to three years.

Dispute already brewing in new committee

The changes are in line with recommendations made by the ARA, FCA and PGA, all of which initially argued against the re-authorisation of the code unless their concerns about representation were addressed.

The ARA, FCA and PGA also recommended the provision of a “reasonable line of site” between competing tenants, which the SCCA opposed, claiming line of site protections already exist under the current code.

This means that a dispute will likely brew within the committee, with ARA executive director Russell Zimmerman intending to move that the code be changed to reflect its recommendations.

“We now have a mandate from the ACCC to push ahead with making the necessary changes to the Code to ensure it is fair for everyone concerned,” Zimmerman said.

“The news couldn’t come soon enough for retailers, who have endured skyrocketing rents and a barrage of pop-up shops right outside their stores at some of the busiest times of the year.”

The ARA does not oppose pop-up stores in principle, but believes changes should be made to their placement within centres.

While the SCCA and its shopping centre members oppose the ARA’s recommendation, the NRA remains undecided on how it would vote.

“There are currently a number of differing views regarding the definitions of ‘adjacent lessees’ and ‘line of sight’. Careful consideration must be given to any practical implications of amending or broadening these definitions,” NRA CEO Dominique Lamb said.

“For instance, it would be incredibly difficult to enforce a more stringent definition requiring any lessee to be ‘seen’ from the casual mall license area in a large, multi-level shopping centre. In theory, this would mean the ‘line of sight’ would be extended between the various levels of a shopping centre, which is clearly not practical.

“It should be noted that ‘sightlines’ are already dealt with in Clause 5 of the Code, which outlines the rules dealing with obstruction of sightlines of any lessee in a shopping centre, as well as ‘adjacent lessee’.

“Any proposal to amend the current definitions would see the NRA consult widely with our members and relevant stakeholders before coming to a final decision on which way to vote,” she continued

The SCCA (including its members Scentre Group, Charter Hall, QIC, Dexus, Stockland, Vicinity and Perron), NORA and the NRA originally advocated re-authorisation of the code with no changes.

The NRA and NORA both cited the importance of the code in the development of new retail models, while the former also said in its submission to the ACCC that that the code had worked well over the last three years.

The SCCA ended up recommending changes to the make-up of the committee and the addition of an independent meditator in the lead up to the ACCC’s draft determination to secure the support of the ARA, PGA and FCA.

“We thank the ACCC for their courtesy and professionalism, and for engaging constructively to reach this sensible outcome,” SCCA executive director Angus Nardi said.

NRA CEO Dominique Lamb said the re-authorisation was a win for retail innovation, stating that she looks forward to working co-operatively with the SCCA and other industry stake-holders over the next three years.

“This decision will enable tomorrow’s retailers to grow and flourish, while also supporting longer-term retail tenancies to harness the power of the more dynamic, changeable shopping centre environment consumers have come to expect,” she said.

ARA claims NRA “abandoned” retailers

However, the ARA has lashed out at the NRA, claiming that it “abandoned” retailers in favour of its “landlord friends”.

“It was astounding to see the NRA standing on the side of unfair competition and supporting the standover tactics of landlords when it comes to pop-up shops,” Zimmerman said.

“The ACCC have had to drag landlord advocates like the NRA to the adult’s table this Christmas. However, these efforts have not gone unnoticed as shopping centres will no longer be able to introduce unfair competition, or bully their tenants into submission when they make a reasonable request.”

Lamb believes the ACCC has endorsed the position of the NRA and the SCCA in re-authorising the code.

“The decision by the ACCC demonstrates that the system works and that everyone is welcome to have a seat at the table,” she said.

The casual mall leasing code has been in place since 2007 and was re-authorised in 2013.