At least two retailers have been locked out of their stores in Westfield shopping centres as tense negotiations between tenants and landlords over commercial rents escalate.
Westfield-owner Scentre Group recently shut 129 stores operating under the banner of Mosaic Brands’ women’s fashion chains, as well as 38 Strandbags stores.
Mosaic has been among the retailers pushing the hardest for rent reductions, on the basis that foot traffic and physical retail sales in some parts of the country have all but dried up.
“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.
The decision impacts around 400 Mosaic staff members, who are being redeployed to stores that remain open.
Mosaic Brands, which operates a number of brands including Noni B, Millers, Rivers and Rockmans, recently stopped paying rent in stores shut down in Melbourne, and has been paying rent as a proportion of turnover in other states for some time.
Strandbags has also seen a number of its stores closed. Managing director Felicity McGahan told the AFR the closures are only in Westfield centres, and that the business had been working well with other landlords to get the best outcome for everyone.
“It’s very disappointing to be honest,” McGahan said.
Scentre Group told Inside Retail it doesn’t comment on commercial arrangements with retail partners.
The Shopping Centre Council of Australia also said it doesn’t comment on commercial matters between retailers and landlords, but that it stands by the rights of its members to have terms of tenancy honoured in good faith, while acting to protect their commercial, financial and stakeholder interests.
Chief executive of the National Retail Association Dominique Lamb told Inside Retail the organisation has not heard from members about similar experiences, suggesting Scentre Group may be making an example of Mosaic Brands and Strandbags.
“The way we all interact in difficult times is going to be remembered and unfortunately, situations like these are likely to be remembered and impact negotiations moving forward,” Lamb told Inside Retail.
Lamb called the situation a stalemate – with retailers needing financial support and landlords unable to provide it.
“We know the SCCA’s members have lost $1.6 billion in the last three months, and the Property Council is reporting a loss of over $4 billion,” Lamb said.
“No industry can sustain that level of losses, and given no other industry has been asked to shoulder a burden such as this, it needs to change.”
This stalemate could, in theory, be broken by the Federal Government, Lamb said.
According to Lamb, the Federal Government needs to do more in support of landlords before it’s too late, as the property industry is hurting just as much as retailers at the moment.
“It’s time to look at this issue in depth. It’s complex and needs to be revisited by both the federal and state governments.”
