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ACCC rules on pop up amendments

 

And a leading retail-industry body says pop up shops aren’t fair…

It seems that after a “long campaign” by industry associations to have the Australian Competition and Consumer Commission (ACCC) re-authorize (ie. amend) the Casual Mall Licensing Code of Practice… some of the changes requested have indeed been endorsed*

One of the more-contentious issues raised by the Australian Retailers Association (ARA) – with support from the Australian Sporting Goods Association, Franchise Council of Australia and Pharmacy Guild of Australia – was “the unfair introduction of external competitors to shopping centres across the country, especially at peak periods, which is hurting retailers and disrupting their businesses” by “unscrupulous landlords”*.

Ouch, I think they’re talking about pop up shops !

Russell Zimmermann, ARA executive director has been quoted on the Toy & Hobby Retailer website, saying “the news (announced on 20th December 2017) 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”. He went on to say “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. The ARA will continue to seek fairness across the tenancy space for retailers and will ask the ACCC for regulatory intervention if the current issues are not addressed”.

Ouch, again.

I have great respect for the ARA – it is certainly an effective champion for change and recognition within the Australian retail environment. Russell Zimmermann is very well-connected across the industry, and enjoys a high media profile (he’s usually the spokesperson for ARA announcements). But I am disappointed with his emotive comments on the impact of pop-up shops within shopping centres. I hope he’s not attacking the concept of pop up retailing per se. If changes to the Code of Practice are indeed implemented – let’s hope they are consistent across all retail genres, including the emerging pop up industry. In case the ARA hasn’t noticed… pop up retailing is very popular with brands and customers alike – and it is here to stay…

Mr. Zimmermann is correct in saying that pop up shops often do seek the busier periods in shopping centres… but that makes quite good business sense to me. Those temporary traders are likely to see many more customers, hopefully seeking their range of products, around certain retail festivals (…think Valentine’s Day, Easter, Mother’s Day, Father’s Day… and Christmas). If a pop up business carries stock with appeal at limited times of year – doesn’t it make sense to only trade around those times ? The alternative might be to force them into 7 day / 52 weeks of trading… (very costly in terms of rent / fit outs / staffing etc) – which may just kill off a good concept. The larger retailers (anchored in shopping centres) can afford to ride the times between effective sales periods, but a little guy can’t. Pop ups do enjoy an edge by choosing when and where they choose to trade (which the permanents must surely envy…) – but that adaptability is part of contemporary changes in retail. The need for flexible trading opportunities won’t go away just because a few heavy-weights force through restrictive Codes of Practice.

Pop up is in fact casual leasing, just under a different name (some major landlords have actually re-labelled their casual leasing departments / offers to “pop up leasing”, keeping abreast of the retail trend…). The reality is that most shopping centres have offered “casual leasing” sites for many years – allocated spaces in the middle of their busy malls. Have the ARA and cohorts always been adverse to those temporary traders ? I would’ve thought the additional traffic brought in by the pop up customers, some of whom might then step into an adjacent / permanent store to browse… might actually be quite welcome. When a major centre hosts a major pop up event (new product launches, celebrity appearances, masses of media coverage…) – do the permanent guys really see that as a bad thing for their own business ? Or are they just trying to keep the little guy little – using their significant leverage with landlords and the retail associations to edge out any competition ? The ARA should be careful not to discourage those popular events, as they seek to enforce a Code of “fairness” in the smaller shopping centres.

Casual leasing spaces are usually offered at set sizes, rates and conditions… but exceptions can be made (perhaps a major brand is teasing the landlord to take a significant tenancy, “but let’s just test the waters with a pop up first…” – or at peak retail times, when demand far exceeds available spaces). At the busiest times, those simple pop up spaces are often booked well in advance, and leased at significantly higher rents than the rest of the year. Isn’t that the landlord doing good business – “selling” his premium space at a premium rate ? Maybe that is being greedy (“unscrupulous” Mr. Zimmermann ?) – but if higher premiums aren’t collected when they are achievable… wouldn’t the permanent retailers just end up paying a little more throughout the year ? (ie. those peak periods / inflated pop up rents may indeed help to fund shopping centre costs for the rest of the year – and the other tenancies’ share)

There are many conditions a short-term / pop up retailer has to meet – they are not just given the space and allowed to do whatever they wish ! Most shopping centres (from the mega-malls to your local suburban centre) will have strict rules for the pop ups, same as and in addition to, the permanent guys… such as appearing amongst similar / complimentary retailers, enforced trading hours, restrictions on access and times for set up and deliveries, placement and content of signage, design and safety of shop fittings, protocols for spruikers etc. One of the main criteria for a pop up fitout is the “line of sight” rule – the overall height of all fixtures in an open mall must usually be less than 1.4mtrs off the floor – so that passing customers will still see over (and past…) a temporary installation, into the neighbouring stores. Some exceptions can be made, for signage poles or design features of the display – but subject to a landlord’s review.

At instant retail we’ve had a couple of projects when our pop up fittings were installed in shopping centre malls – and swiftly rejected by Centre Management ! On both occasions we had advised our customers (the pop up businesses) that they should seek formal approval from their landlord prior to booking stock with us, especially if they were hiring change rooms (2.0mtrs tall). The first time our customer was a bit vague beforehand… but it soon became obvious the ‘centre had seen no request and had not issued approval to install our bulky change room, in the middle of their main thoroughfare. Venue security stopped us before we’d even finished the installation… we packed up that ‘room and returned it to our warehouse ! The second time (a different customer in a different ‘centre) we were more insistent with the formal approval beforehand, and our customer assured us (in writing) that the change room had been approved for her location. No one was around when the ‘room was installed (after trading hours, not even our customer…) – and our ‘phone started ringing before 9am the next morning. That room was also removed at the insistence of Centre Management – as it did indeed block the lines of sight for neighbouring tenancies. I imagine both those pop up traders had hoped no-one would notice the appearance of a black monolith outside their door overnight – but of course they did ! (see image below – the instant retail change room)

There is often common ground for the design / fitout of pop up tenancies – which a reasonable landlord will consider when allowing (or refusing) applications. It is, after all, in the shopping centres’ interests to bring in more customers, entice them to stay longer and spend more money. All retailers (pop up and permanent) surely benefit from increasing / improving the precinct’s offer…

But not if an amended Casual Mall Licensing Code of Practice, driven by industry heavy-weights – places too many restrictions (and new “regulatory intervention”…) on the role of pop up in retail environments. Wouldn’t it be more insightful (and forward-thinking) to work with the burgeoning pop up industry, instead of against it ?

 

*source :   toyhobbyretailer.com.au – ACCC approves ARA amendments to pop up code

 

change room in casual leasing location

Toy & Hobby Retailer - pop up code         

 

images :      instant retail change room for casual leasing, Toy & Hobby Retailer pop up code

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