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Supermarkets – Scourge or Saviour?

Angus W Witherby

Senior Lecturer, Urban and Regional Planning
University of New England


The National and International Context

Supermarkets are an important and necessary part of the retail environment. However the more recent development of large standalone supermarkets away from existing retail cores, either with or without associated speciality shopping, is emerging as a major planning challenge both overseas and in Australia (1). Historically in New South Wales in particular, the major player Coles in its expansion phase during the 1970s and 1980s generally located within retail core areas. However in the current environment of aggressive competition between an increasingly smaller number of major players, another major player, Woolworths/Safeways, is actively involved in securing “out of retail core” sites in an extensive “push” across New South Wales, Victoria and Queensland into markets occupied by Coles and Independents. Increasingly new players within a town or existing players seeking redevelopment within a town are seeking to locate these sites outside or on the periphery of business zoned areas in rural and regional communities so as to access cheaper land, avoid heritage constraints in town centres, and able to provide more carparking. These factors combined deliver a semi-monopoly over in-core retail incumbents.

Australia currently has the highest concentration of retailing amongst the smallest number of players of any OEDC country with three players holding some 70 % of the market. This compares to Europe where six major players typically hold 57 – 67 % of the market(1). Recent statements by the Federal Government and opposition and by the ACCC suggest that attention is being given to policy that could limit the ability of large scale retail operators to develop and maintain commercial dominance in smaller communities at the expense of the small business sector(2). State governments, too, are increasingly looking at planning controls to avoid “out of centre” developments. With legislative control clearly on the agenda it is obviously in the major players’ interests to secure as many sites as possible. These sites would, because of their prior approval, be unaffected by any restraints and constraints proposed to be imposed.

Communities in the United States and United Kingdom are or have already passed legislation to manage the entry of large supermarket players into communities to ensure that the social and cultural integrity of town centres is preserved and conserved(3,4). There is clear and indisputable evidence that the location of large players away from the retail core and, if designed inappropriately, within the retail core substantially damages the social and cultural fabric of communities(3). The role of retail development is not merely one of competition between businesses but it is an integral part of community identity and life(3,4). This is particularly the case within smaller communities with their higher propensity for local ownership of businesses. In addition, the small business sector often provides substantial support for sporting, cultural and other activities together with maintaining a higher degree of retained wealth with local ownership and control(3,4).

In the overseas literature and the case studies reviewed, the approval of fringe urban or out of core CBD stand-alone shopping facilities is seen as likely to have a substantial deleterious economic effect on the performance of the CBD of the host town. Councils often have valid planning grounds for rejecting these developments on the grounds of their economic impact particularly where this extends well beyond what might be described as mere commercial competition. Many councils lack, however, the strategic planning, economic framework and development control systems required to adequately address the challenges posed by these developments. Both overseas and in Australia, reform at both state and federal levels is also necessary if the challenges posed by these developments are to be adequately addressed(5).

How Planning Works

To understand the often complex dynamics surrounding supermarkets attempts to enter rural communities requires some knowledge of the planning process. It is this process which sets the "rules of engagement". Planning consists of two basic parts - strategic planning, which sets in place the goals and objectives that are to be achieved, together with development control, where specific applications are decided on the basis of compliance with standards, and achievement of the strategic goals and objectives.

It is within this broader context that the proposed entry of major supermarkets into rural communities needs to be considered. When a specific application comes before Council it must pass two basic tests before approval: "Is it legal?" (can it be done) and "Is it a good idea?" (should it be done). In forming a view about the first, Council needs to take into account any state policies, local controls, and court precedents. In forming a view about the second, this is a question of judgement. Whilst Councils will receive advice from their officers on whether an application is a good idea or not (based on such matters as impact on neighbouring uses, adequacy of carparking, design of the building and the like), Councillors also need to take into account other factors in making a decision. These include attitudes of the public and their own views. Ultimately a decision as to whether something should go ahead is a question of judgement - with the Councillors in the position of making that judgement unless the application is being dealt with by staff under delegation. It is also important that Councillors not allow their judgement to be influenced by potential threats of legal action, or the like. The decision needs to be made, and only made, on the planning merits of the case.

The Case Studies

Coffs Harbour(6)

Coffs Harbour is a coastal community of some 60,000 people on the lower north coast of NSW. It is roughly equidistant from Sydney and Brisbane, and is a popular tourist destination. It has relatively high growth, and is a major retirement area. Historically recent councils have supported virtually any form of development in view of the area’s high unemployment rate. Coffs Harbour performs a regional service centre role for both government and private sector services.

Background and Context

The background to the Coffs Harbour study involves the approval of a large, multi-tenant stand alone retailing centre at the north of the urban area (most growth is occurring in the south). Park Beach Plaza now contains over 30,000m2 of floorspace including specialty shopping, supermarkets, medical, banks, furniture and hardware. The development was recently complemented by the construction of a major so-called bulky goods retail centre (the Gateway development) of similar size in an adjacent location. Coffs Harbour now has a CBD with over 30 vacancies, a high petty crime rate and a number of major developments returning modest, if any, real profit. The new Coffs Harbour Council is now trying to address this situation. (The existing CBD is shown hatched whilst the new developments are shown with an asterisk).

The strategic context for retail planning in Coffs Harbour is set by several key documents. The North Coast Regional Environmental Plan is a quite old document, however it’s key clause is still quite appropriate:

Strong multi-functional town centres should be maintained to focus the drawing power of individual businesses and maintain the integrity of the main business area by only zoning land for further commercial or retail development where that develandopment adjoins or is adjacent to the existing town centre;

The rezoning of the Gateway site and, indeed the Park Beach Plaza site appear inconsistent with this policy. The Gateway development was initiated under the provisions of Coffs Harbour Local Environmental Plan 1988. Under this plan, the 3B special business zone (which covered the development) contained objectives quite typical of bulky goods retailing zones elsewhere within New South Wales. The zone objectives have been well tested in the courts on the basis of similar objectives in other planning instruments throughout the state. It needs to be understood, however, that reliance on zone objectives is a difficult matter in terms of providing an adequate basis for decisions on particular applications. Zone objectives are easiest to defend when they clearly placed within a well-researched strategic context. In terms of the 1988 plan, it is considered that the objectives were dangerously broad as they would potentially permit the large scale development of office uses away from the CBD and, in addition, potentially open the uses of the land to broad scale general retailing if such could be considered supportive, for example, of Park Beach Plaza.

The shortcomings of the previous planning regime were, to a degree, recognised in the new planning scheme. Local Environmental Plan 1999 contained objectives for the commercial zone, which whilst obviously targeted at improving the ability of Council to defend itself against inappropriate development, may not be adequate for that task. In particular, a number of the objectives again are dangerously broad, with their precise intent, at times, unclear. This contrasts strongly with the Castlemaine case study, where the planning scheme has solid, clear objectives.

A further difficulty in the Coffs Harbour situation is the use of a development control plan to manage the Gateway site. This basically repeats the major conditions of consent attached to the Gateway development application. It purports to restrict both office and retail floor space in the new development. A Development Control Plan is not, however, the best place for these restrictions. They should either have been included on the original development consent or in the new planning scheme. As a non-statutory guideline document a Development Control Plan provides relatively weak assistance to Council in defending itself against applications which do not comply with a numeric standard.

Current Initiatives

So what is happing now in Coffs Harbour to recover the situation? Firstly, there is an increased emphasis on strategic planning, a process that is strongly supported in the international literature(3,7). Strategic planning for the CBD involves two processes: Firstly the local environmental study accompanying the draft Local Environmental Plan, 1999 and secondly, the recently commissioned urban design study and master plan. The recently formed development of the City Centre Strategic Planning Group is seeking draw these two initiatives together – one city wide, the other more CBD focused - to ensure that a proper strategic response to the needs of the CBD is developed.

The strategic planning directions currently being undertaken will assist Council to develop the level of strategic documentation necessary to adequately defend decisions relating to land uses, particularly in the Park Beach Plaza/Gateway area. It should be noted, however, that an essential component of the strategic planning initiative which appears not to have been commissioned at this stage is the carrying out of a thorough economic impact analysis of the effects of potential land use developments outside the core CBD that may impact on its performance and viability. It is clear from court evidence that such analysis must be particular thorough and competent with court giving weight to comprehensive economic studies including those with validated modelling.

Core issues

The core issue emerging from the review of the Coffs Harbour situation is the strong connection between comprehensive strategic planning (which also incorporates proper economic appraisal) and the ability of Council to make defensible decisions regarding specific development applications in the various business zones. In addition, there are a number of non-land use planning tools that are available to Council to assist in balancing overall commercial hierarchies within the city.

Castlemaine (8)

Context and background

Mount Alexander Shire is located in the historic goldfields of central Victoria approximately 110 kilometres north of Melbourne. It has a population of some 20,000 people of which some 7,000 live in the town of Castlemaine, which is emerging as an alternative lifestyle centre. Like many towns of its size it has an ageing population. The nearest major centre is Bendigo, some 40km to the North, which provides the main retail competition. Other major centres linked to Castlemaine include Ballarat and Maryborough although Ballarat, is sufficiently distant to have relatively minor effects on the Castlemaine area in terms of primary retailing.

The proposal in Castlemaine was for a major, stand-alone supermarket approximately one block removed from the retail core. A planning scheme amendment would be required. The planning scheme provides the context for both consideration of any Planning Scheme Amendment (rezoning) or Planning Permit application (development application). Careful analysis is critical in determining whether the achievement of the scheme, including both State and Local objectives, would be well–served by proceeding with the proposed development. (The existing CBD is shown hatched whilst the new development site is shown with an asterisk).

A review of the retail structure suggested that up to 18 speciality shops are potentially at risk from a new supermarket entrant, as they have as their primary use food and grocery retailing, or other retail uses such as stationary and retail pharmacy lines (as compared to prescriptions) which are now being targeted by the supermarket chains.

A particular point of concern is that there were some 25 vacant shops in the central retail core (a similar number to Inverell). This level suggests recent expansion in retail capacity has yet to be taken up by the market. In the context of the relatively slow growth of the Shire, this may take some time to occur, and suggests that substantial additional capacity is not warranted at this time. In particular, it suggests that existing traders are likely to be particularly vulnerable to quite modest shifts in expenditure (even 5-10%) towards the supermarket sector.

State and Local Objectives

Planning schemes in Victoria must seek to achieve the objectives of the Planning and Environment Act including providing for the fair, orderly, economic sustainable use and development of land and the conservation and enhancement of those buildings areas or other places which are of … Architectural of Historical Interest or otherwise of special Cultural value.

From these objectives are derived key principles of land use and development planning, which appear in the scheme as state policies. The key state policy is outlined below:

Planning is to contribute to the economic wellbeing of communities … so that each district may build on its strengths.

Within this overall objective, specific clauses place considerable emphasis on the concentration of major retail, commercial, administrative and cultural developments into activity centres including strip shopping centres. In terms of implementation, activity centres in addition to being readily accessible to the community need to incorporate a variety of land uses and provide good accessibility by all modes of transport so as to encourage multipurpose trip making to such centres. This, in the context of regional Victoria, requires compact town centres where the majority of trips can be undertaken by walking within the town centre. Ease of pedestrian movement is given high priority as is minimising the effects of commercial development on the amenity of parkland areas. In the context of Castlemaine implementation of these policies reinforces the importance of consolidating the commercial centre within the current functional boundaries and discouraging its spread.

These themes are strongly supported by the local objectives in the plan. The local objectives identify compactness of the commercial area as a major strength (although it is the view of the author that the commercial core is currently slightly over-extended with respect to demand). In particular the municipal strategic statement seeks to have future commercial development occur within a clearly defined core. The proposed location of the new supermarket entrant on an out-of-core site was directly contrary to this policy and would, if proceeded with, destroy its effectiveness.

A further critical objective identified as a state policy is that developments should only be encouraged which provide a net community benefit in relationship to the aggregation and sustainability of commercial facilities. This is critical when considering the economic impact of a major supermarket entrant into a small town such as Castlemaine which is already comparatively well served for retail facilities. This confirms that the economic impacts and the potential shifts in the character of the small business sector and impacts on existing traders are legitimate concerns in considering a planning scheme amendment for a new entrant. In particular, the benefits of cheaper goods occasioned by competition needs to be considered in the context of changes to the overall retail structure and to employment patterns.

Whilst state policy requires that development proposals in excess of 4000 sq metres of floor space must include an assessment of net community benefits and costs of the developments it is strongly considered that any development of over 1000 sq metres should provide such an assessment in the context of a town such as Castlemaine. Economic evaluation is required in the European context from site sizes ranging from 1500 sq m up to 5000 sq m (2,3). Given the small size of many Australian towns, assessment at the smaller end of the size range would seem appropriate. This state policy also calls up the Office and Retail Development Guidelines (October 1989). These guidelines are very similar to the Irish 1998 policy framework which demonstrates the relevance of overseas experience(3). Of particular relevance to this case study is that the applicant must provide evidence that the proposed development complies with an approved structure plan or land use strategy. In the absence of same the applicant must demonstrate how the development will enhance the functions, operations and amenity of the activity centre or area and surrounding land uses.

State polices also require that land use and development planning must support the development and maintenance of communities with adequate and safe physical and social environments for their residents, through the appropriate location of uses and developments and quality of the design. A sense of place and community is critical to the ongoing social wellbeing of the wider community of Castlemaine. To a large extent that will be defined by the town centre; the way it appears and functions. Relevant considerations include the location of land uses to encourage and reinforce social interaction and a sense of community, and the way in which the town responds to the challenges of maintaining it’s heritage. Heritage is also a critical aspect in defining a sense of place and community in rural towns.

State policy confirms this view by identifying that conservation of places with historical and social significance is considered critical as a means of understanding the past as well as maintaining and enhancing Victoria’s image and contributing to economic and cultural growth. In terms of implementation, planning authorities are to preserve and protect places of cultural value from inappropriate development such places including not only buildings and structures but towns and landscapes. Particular emphasis is placed on the preservation of places associated with gold mining such as the town of Castlemaine.

In terms of local policy, and indeed within the planning scheme generally, considerable attention is given to the preservation of individual buildings, and also the maintenance of the heritage integrity of the commercial streetscapes. In dealing with built and natural heritage, the municipal strategic statement refers to preservation of heritage buildings places and landscapes, but also emphasises protection and support of those localities threatened by development or neglect.

The implication in the case of Castlemaine is that location of a major retail activity outside the current retail core will encourage a migration of small business uses to surround and support the new supermarket development. This will drag the centre of focus of the commercial area to the south and, has been seen within other towns elsewhere within NSW and Victoria, potentially place a substantial proportion of the commercial heritage at risk through low return rates and high vacancies.

Where rental returns are insufficient to fund the maintenance of buildings and the provision of services to them, the phenomenon of Urban Blight develops. Boarded up, unmaintained buildings destroy the ambience of the area, discouraging pedestrian traffic, and further weakening the trading viability of remaining businesses. Over time, additional businesses close, often to relocate to the new focus of pedestrian activity associated with the large supermarkets or, if one is available, into a stand-alone regional shopping complex (4,5).

State policy both in Victoria and in many overseas countries gives considerable attention to design and built form (4). Supermarkets as a built form are large, bulky buildings generally at odds with the existing urban streetscape in regional and rural centres. In the case of Castlemaine, the existing supermarket development, by locating behind existing structures, has preserved streetscape in the main shopping strip and, for this style of development, is relatively low impact.

Given the historical context of Castlemaine, the construction of a substantial stand-alone facility outside the retail core is unlikely to meet the objectives of this clause in achieving high quality urban design outcomes reflecting the particular characteristics, aspirations and cultural identity of the community. Stress is also placed in the state policy on promoting attractiveness of towns and cities. Development, rather than merely being “not at odds” with the existing character is instead to achieve architectural and urban design outcomes that contribute positively to local urban character. This is a critical statement, as urban design outcomes extend beyond the architectural treatment of the building per se (important though that is) and instead look to its role and function within the overall urban environment.

In addition state policy states that the public realm, which includes parks, should be protected and enhanced. It is also noted that there is an emphasis on the quality of pedestrian spaces in particular examining the relationship between buildings, footpaths and other pedestrian spaces. This suggests that the standard supermarket box is not going to achieve the objectives of this state policy. In particular, enhancing the visual and social experience of the observer requires a relationship between the retail use and the streetscape which supermarkets generally do not provide. Moving away from the “one big box” approach is also a consideration in terms of new development contributing to the complexity of the built environment.

Permit Requirements

It should be noted that should the planning scheme amendment proceed, a permit is likely to only be required for the structure. In terms of the current controls within the Mt Alexander planning scheme, no planning permit is required for the use. This is a critical factor as it means that the planning scheme amendment provides the only route for the full and thorough appraisal of the impacts of the use on the Castlemaine environment.

This being noted, both the retail guidelines and Council’s own planning scheme require that such a comprehensive appraisal be undertaken. This also raises, however, the failure of the planning scheme to include at schedule 1 to the business zone notional floor space limits above which planning permits are to be required for commercial development. In the context of Castlemaine, a threshold of 1000 to 1500 sq metres is considered appropriate. This would ensure that, in the future, any additional large scale proposals that might come forward within the existing business zoning received appropriate scrutiny in view of the potential impacts of such proposals on Castlemaine as outlined in this paper.

The Municipal Strategic Statement

The municipal strategic statement places considerable emphasis on the ageing of the community, the relatively modest growth rates, and the potential impacts of realignment of the Calder Highway. The rich basis of heritage in the Shire is given considerable prominence, particularly the Castlemaine central area. This needs to be considered in conjunction with the perceived major advantage of the relatively consolidated existing central business area in Castlemaine.

The ageing of the population as identified in the census review and in the municipal statement is also critical. Diffusion of the commercial centre and the proposed location of the new supermarket, which, by it’s nature, tends to be car dominated, acts against the interests of the elderly in accessing the full range of commercial retail and civic support services required. Consolidation of new uses into a compact multipurpose activity centre is considered the most desirable way to support and enhance the operation of the commercial area for an increasingly ageing population.

The Shire appears to be undergoing modest growth however little of this appears to be occurring in Castlemaine. Such growth should, however, in the longer term permit the retail and commercial environment to absorb new entrants. The location of those entrants in terms of ensuring the long term prosperity of the overall retail environment and good choice for consumers is critical. Modern retail planning utilizes the concept of “anchors”. At the present time the IGA Supermarket provides an effective anchor on the south end of the active retail core. Any new supermarket entrant should be locating towards the northern end of the retail core so as to provide a “dual anchor”. This will encourage and facilitate pedestrian activity which is critical to the ongoing survival of the small business sector.

When considering commercial development it should be clearly noted that the municipal strategic statement states that “the re-zoning of land for business purposes involving substantial retail activities outside the existing commercial area will not be considered”. Further, that the redevelopment of land within the existing retail area will be encouraged. This is a critical policy objective as the current proposal is quite clearly completely contrary to that objective. This is supported by the Castlemaine township structure plan which clearly identifies the proposed site as on the periphery of the area identified for consolidation of the commercial centre.

With this in mind, it clearly falls to the local authority to ensure both that local planning controls are adequate and that Victorian State policy is fully implemented. The high quality of Victorian policy framework is placed at risk where local authorities are not prepared to consider individual developments within the strategic framework provided.

Inverell (9)

The context

Inverell is a service centre of some 10,000 people servicing a rural shire. It is the central urban area within the Shire which does, however, have a number of smaller villages. Inverell has extensive areas of commercial zoning. The functional area of the central business district, however, is considerably smaller. The retail core effectively consists of a “strip shopping” centre with a right-angle bend in it. (The existing CBD is shown hatched whilst the new developments are shown with an asterisk).

Inverell currently has three supermarkets, two Independents located at the north eastern end of the retail core, in Byron St and the third, Coles, located at the south-western end of Byron St. The current location of supermarkets effectively provide for two “anchors” either end of Byron St – a desirable retail planning principle. The retail mix in Otho St, adjacent to the Byron St area, is however, undergoing transition. In particular, the loss of several key anchors towards the southern end of the retail core in Otho St have resulted in both the loss of a number of traders in Otho St and a steady shift towards what might be considered peripheral CBD uses.

The Inverell CBD currently has 19 vacant shops most of which comprise smaller retail premises. Vacancies are generally evenly spread throughout the CBD and are generally indicative of pressure on the general retail operating environment. Information from landowners in the CBD also suggests that a number of traders are currently in a marginal position.

In terms of Inverell’s position as a town, it, like many other medium sized regional/sub-regional centres is undergoing significant pressure, despite some “bounce back” after the recent drought. Long term difficulties with the agricultural sector accompanied by lessened dependence on on-site labour have weakened the economic base of the region. In addition, the substantial withdrawal of government, social and community services with the attendant loss of government jobs has removed another major economic underpinning of the town. These processes, operating together, are largely responsible for the static and/or generally declining population being experienced by Inverell and other centres in the New England including Armidale, Guyra and Glen Innes. Even major regional centres such as Tamworth are not exempt from these effects.

In this economic climate it is easy, and at times seductive, to see new out of retail core developments as representing growth and therefore “good for the town”. It was in this context that developments for two additional supermarkets were considered by the Council. One of the supermarkets was to be located to the west of existing retail core on land previously owned by the Council. The second was to be located in a surplus government owned building at the opposite end of the commercially zoned area.

Factors to Consider

In practice, given a static or declining trade catchment, additional major entrants into the retail sector will be merely “rearranging the deckchairs”. In other words, the trade that they attract will be at the cost of existing traders(10). In the Inverell situation, there is little or no potential to attract additional trade from outside the main trade area into the town. In addition, the construction benefits, whilst fairly substantial in the short run are a “one-off”. These aspects must be balanced against the fact that major out-of-town commercial interests extract their profits from the town and return a much smaller percentage of those profits to the local community than locally owned and operated businesses do (4).

A further major factor to consider is that these particular risks are made worse when new retail entrants are not located as an integral part of the retail core(10). There is clear evidence from Armidale that Woolworths’ initial attempts to locate outside the core retail area were driven by a desire to secure a semi-monopoly for themselves in the supermarket retail sector. The clear intent was to provide a major market challenge to existing CBD operators. In Inverell, as with Castlemaine, this “zero sum game” is likely to cause substantial damage to the existing CBD and, in fact, encourage a migration of businesses towards the new development. This would consume scarce investment capital producing new buildings and structures which are unnecessary to serve the retail needs of the city and district populations. Thus it is not only the impact of additional floorspace that must be considered in assessing the impact of these developments but also the location of that floorspace in terms of its impact on the functioning of the CBD.

Another element to examine their developments are located outside the retail core is consumer behaviour. One of the reasons why a location out of the core CBD is so damaging is the very limited distance people are prepared to walk. Evidence from work carried out by Dr Robert Baker in Armidale and Inverell suggests 130-200 metres represents a reasonable “walking radius”. This reinforces the importance of having a compact CBD to maximise opportunities for the greatest number of businesses to be exposed to passing trade. In terms of these distances the Inverell CBD is already dangerously overextended, with the proposed developments simply exacerbating the situation.

Inverell, has a relatively closed market, based on local survey work, with little escape expenditure except for incidental expenditure associated with another trip purpose. Based on this scenario, predictions in Inverell regarding the impacts of additional supermarket entrants showed a significant swing of expenditure away from small business towards the supermarket sector, and a substantial reduction in turnover for existing operators. Predicted impacts on the small business sector were in the order of 11 small businesses for a single new entrant with roughly 3000 sq metres of floorspace. Accompanying the shift of expenditure away from the small business sector is a net loss in employment. In the case of Inverell potentially up to 45 full time equivalent jobs could be lost. There is clear evidence that the small business sector employs far more staff than the supermarket sector for the same volume of turnover. Thus a shift in turnover towards supermarkets, without a corresponding capture of escape expenditure or new trade will produce a net employment loss. A further issue is that that nature of employment will also change, with a larger emphasis on part time and casual positions rather than full-time jobs (10).


The potential social and economic effects of these changes are significant, and extend beyond mere questions of commercial competition into the realm of town planning. It is clear from state and local policy (although in New South Wales this is considerably weaker than in Victoria) that they are legitimate planning issues in the context of the planning scheme amendment as proposed. Notwithstanding the evidence of potential impacts, one of the two supermarkets was, in fact, approved. Although it was the one closest to the existing retail core (on land previously owned by Council) it is likely that significant changes to retail structure will occur. This will provide an opportunity to examine the impacts over the next two to three years and to test the results of modelling against the actual circumstances on the ground.

Overall Conclusions

There are major structural changes to business generally within Australian society, including high levels of market concentration in the retail sector. These changes suggest that the role of government in general and local government in particular is to ensure quality social outcomes for communities (4). As part of this, governments at all level need to take a positive approach to the question of regulation. At the Federal level, the management of competition so as to ensure “fair” rather than “free” competition is vital. At the State level, both regional scale planning and clear policy direction for local government are critical. Finally, local government needs to actively implement appropriate state policy and ensure that adequate and sufficient evaluations are undertaken of individual proposals within a clear context developed through sound strategic planning (5,7). More specifically, the following roles and understandings of government need review:

Local Government

There are a number of key understandings which local government requires if it is to adequately manage the impacts of new supermarket entrants.

Firstly, the conclusions of this paper should not be taken to indicate that no change is possible or desirable within the retail sector in rural and regional communities. Indeed the progressive and ongoing refurbishment of retail space to meet current consumer demands is an important exercise. Provision of modern, up to date retail facilities can equally validly be provided through refurbishment as through the addition of new floorspace. In addition, if towns do wish to consolidate their position within their primary trade regions it is essential that close attention be given to the functioning of the CBD as a whole. In this regard any further shift in floorspace from small trader to supermarket style shopping should occur within the retail core area of the town.

Planning Tools

Zoning remains the key planning tool for the location of development. It is important that zone configurations draw a clear distinction between core retail areas and peripheral commercial areas required to support the central core. It would be strongly in most rural and regional community’s long term interests, it is suggested, to redefine the primary retail zoning into two zones - a primary core retail zone and a fringe commercial zone. Additional large scale convenience shopping should be prohibited in the fringe zone and required to take place in the core. A careful examination of opportunities within most communities suggests that there is the possibility of assembling an adequate land parcel to provide reconfigured and improved quality retail floorspace directly adjacent to the functional retail core area. The major challenge is overcoming tensions within the local business community which make assembly of larger parcels difficult. Whilst these tensions are understandable, as new entrants are perceived as a threat, the greater threat is if they relocate outside the retail core.

Economic Evaluation

In terms of economic benefits, the construction benefits are transitory and short term. It is the long term economic impacts of the development which must be given major consideration. Thus when considering the additional employment, previous discussions regarding the net overall reduction in employment as jobs are transferred from more intensive retail forms are relevant. In a basically closed primary trade area, increased competitive pressure is also likely to produce sharp downward numbers of staff employed at other supermarkets. On the evidence available, a negative multiplier may well operate in the circumstances(10). Competent, independent survey analysis based on local data is essential to allow the potential impacts of a new entrant to be properly evaluated in terms of the objectives of the planning legislation and the state and local policy framework together with ongoing monitoring and research (7).

Managing the Town Centre

Another important role of local government is to facilitate the active management of traditional shopping areas. Large stand-alone centres have an active management regime which seeks to develop an appropriate tenant mix and to ensure careful location of the anchor tenants. These principles can and should be applied to the management of more traditional shopping areas to allow them to compete more effectively. Although is noted that the control through leasing able to be exercised by management in the stand-alone shopping centres cannot always be achieved in the traditional centre, the use of existing structures such a small business associations and chambers of commerce can assist to improve overall commercial core performance.

State Government

Inappropriate approvals particularly in terms of the location of development tend to be associated with the sale of Council owned land. This is not necessarily to suggest that improper practices are occurring, however where land has been sold from the public realm and that public authority is an approval authority there is a degree of moral pressure to support subsequent development applications. In this situation it is considered appropriate that state governments legislate to prevent councils being the consent authority for land currently within their ownership where commercial developments of this nature are proposed.

In the case of Victoria, adequate strategic planning frameworks exist and are mandated by legislation. It is important that the state government monitor the impacts of new developments and the degree to which the strategic planning frameworks are being supported by the decisions of local government. The Victorian state government should revisit the Office and Retail Planning Guidelines to reappraised the floorspace threshold for economic and social impact evaluation, and also revisit the degree to which local planning schemes can permit major retail developments to occur without planning permit requirements.

In the case of New South Wales, strategic planning should be mandated as part of the current review of the plan making processes of the Act. In addition, retail policy should be developed to ensure that adequate independent social and economic evaluations are undertaken where major supermarket developments a proposed in rural and regional areas. Given the substantial body of international experience, this should be relatively straightforward task. It may be appropriate to develop a state policy which, in particular, addresses the issue of the need to reinforce the retail core of towns in the context where these are not aligned with the current commercial zone boundaries.

Federal Government

It is primarily the role of Federal government to manage the overall climate within which competition takes place. In particular, the strength of market dominance evident within retailing in Australia suggests that the ACCC needs to give close attention to the way in which these players operate in rural and regional markets, particularly in terms of vertical integration and supply chain linkages.

A Complementary Approach

Action is required from all spheres of government to ensure good management of the commercial and social environment within the town centres of smaller Australian communities. Policies need to be complimentary, and needed to recognise the economic and political dynamics of the functioning of the retail market within these communities. Policy needs to be evaluated, monitored and reviewed to ensure that the intended outcomes are achieved. This is an obligation on all spheres of government.

At the end of the day, the intent of government should be to structure the marketplace so as to ensure that maximum net economic and social benefit is attributable to the host communities for major commercial ventures. Only then, can the current imbalance in the distribution of costs and benefits associated with major changes to retailing be addressed.


1. Special Challenges for Commerce – The Retail and Wholesale Trades June, 2000.

2. Anon. Public Policy in the UK Independent Food Retail Sector

3. Department of Environment, Republic of Ireland. “Local Government (Planning and Development) General Policy Directive (Shopping)”. June, 2000.

4. Guy, Clifford M “Controlling New Retail Spaces: The Impact of Planning Policies in Western Europe.” Urban Studies May 1998 v35 n5-6 pp953-980.

5. Shils, E. B. “Measuring the Economic and Sociological Impact of the Mega-Retail Discount Chains on Small Enterprise in Urban, Suburban and Rural Communities”. Wharton Entrepreneurial Center, The Wharton School, University of Pennsylvania February 7, 1997 June, 2000.

6. Material in this section is drawn from: Witherby, A (2000) “Analysis of Potential Measures to Reinforce the Coffs Harbour Central Business District” unpublished consulting report, Wakefield Planning.

7. HMSO (1998) “Planning Policy Guidance Note No 6 – Town Centres and Retail Development.”

8. Material in this section is drawn from: Witherby, A (2000) “Commercial Impacts of an Additional Supermarket Entrant, Castlemaine Victoria” unpublished consulting report, Wakefield Planning.

9. Material in this section is drawn from various submissions to Inverell Council on development applications relating to the Woolworths and Franklin’s proposals during the period 1999 to 2000. The submissions were prepared by Angus Witherby of Wakefield Planning on behalf of a range of private clients.

10. Rovell, Andrew “The Wal-Martians have Landed” The Ecologist Aug/Sept 99 v29:5 pp306-310

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