Finance Consumer Westfield locks out brand-name retailers amid rental dispute

Westfield locks out brand-name retailers amid rental dispute

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Hundreds of workers have been stranded after shopping mall giant Westfield locked non-rent-paying retailers, including Mosaic and Strandbags, out of their stores in a bitter rent dispute.

Scentre Group, the parent company of the Westfield shopping centre chain, has locked down 129 Mosaic stores, including Millers, Rockmans, Noni B, Rivers, Katies, Autograph, W. Lane and Crossroads.

The company said the closures had affected up to 400 employees, who will be redeployed.

“These actions are extremely disappointing, given the current environment, and difficult to comprehend in the context of a relationship that spans close to 40 years,” Mosaic chairman Richard Facioni said.

“Mosaic continues to conduct rental negotiations in good faith with all landlords, including Scentre Group, in the spirit of sharing the burden of the impact of the COVID-19 crisis, consistent with government recommendations.”

The closures are the latest manifestation of wider tensions between landlords and retail tenants over rent paid during coronavirus lockdowns.

Retailers such as Solomon Lew’s Premier Investments have refused to pay rent during the period, saying wealthy landlords should share the burden of the COVID-19 crisis.

But the landlords argue retailers still need to abide by their lease agreements.

Mosaic has reportedly been paying Scentre a lower percentage of rents in recent months. It had been hoping to come to an agreement with Scentre.

A spokesperson for Scentre Group told ABC News: “We don’t comment on commercial arrangements with our retail partners.”

Luggage retailer Strandbags’ Westfield stores have also reportedly been closed over the dispute, and other major chains have been given notice to pay rent or face the same consequences.

The coronavirus has emptied Australian shopping centres.
Lockdowns due to COVID-19 emptied Australian shopping centres earlier in 2020.

Household goods retailing leads July retail sales

The dispute comes as the latest retail trade figures from the Australian Bureau of Statistics show retail sales rose 3.3 per cent July.

“Retail turnover rose in all states and territories except Victoria,” said the ABS’s director of quarterly economy-wide surveys, Ben James.

“Victoria’s decline in retail turnover coincided with increasing numbers of COVID-19 cases, and the reintroduction of Stage 3 stay-at-home restrictions in July, impacting turnover.”

At the national level, sales of household goods led the monthly rises.

Turnover in household goods was 30 per cent above the levels of July 2019, with sales of furniture, whitegoods and electrical items remaining high.

Other retailing and department stores had similar monthly rises in percentage terms.

Food retailing also rose 1.2 per cent, with supermarket and grocery store turnover elevated in Victoria, where shoppers rushed to stock up on non-perishable items.

BIS Oxford Economics chief economist Sarah Hunter said the rest of the country was compensating for a 2 per cent decline in overall retail sales in Victoria.

“All industries recorded an increase, with household goods leading the rise,” Dr Hunter said.

“More time at home and forced savings from limited travel is leading many households to improve their living environment.

“Clothing and footwear and cafes and restaurants also saw a further recovery, though the high frequency data suggests that spending in cafes and restaurants remains well below pre-COVID levels.”

She said the Victorian lockdown and slowing momentum could see August retail turnover slip back.

retail figures december 2020
Homeware retailers have ridden a sales boom in recent months.

Federal cabinet considers extending code guiding rent disputes

While retailers are slowly recovering, many still face dramatic declines in revenue and have been lobbying the federal government to extend relief.

In April, the federal government announced a COVID-19 emergency measure to help retailers and landlords navigate the uncertainty.

The national code of conduct’s objective is to “share, in a proportionate, measured manner, the financial risk and cashflow impact during the COVID-19 period”.

The code aims to give “proportionality to rent reductions based on the tenant’s decline in turnover to ensure that the burden is shared between landlords and tenants”.

But the code applies only to businesses with turnover under $50 million, meaning both Mosaic and Strandbags are not covered.

As federal cabinet considers whether to continue with the code, Victoria has already extended its rental relief scheme until the end of 2020.

Under the Victorian extension, evictions will continue to be banned, with limited exceptions, until December 31.

The Property Council has expressed concerns, saying the Victorian “extension will push many landlords to their limits or beyond”.

“Landlords cannot keep propping up the system,” Property Council of Australia Victorian executive director Cressida Wall said.