Retailers plead case to stay open as centres aid suffering tenants

Calls for relief packages are growing as retailers say they need to stay open during lockdowns.

Scentre chief executive Peter Allen will offer rent relief for small retailers. Picture: Aaron Francis

Retailers are hanging on for financial relief as they are hit by the stricter Sydney lockdowns but are seeking to avoid store closures as the NSW government attempts to bring the coronavirus outbreak under control.

Major landlords have indicated they will defer rents for smaller tenants that are struggling to keep afloat as lockdown is extended for an indefinite period, but major chains could face little respite and are urging governments to allow them to stay open.

Their moves come as more exposure sites are listed in shopping centres with retailers defending their actions in staying open despite low vaccination rates.

Wesfarmers chief executive Rob Scott resisted suggestions that the company’s Bunnings, Kmart, Target and Officeworks stores should close their doors in Sydney to help limit the spread of the city’s Covid-19 outbreak.

Mr Scott said it was not necessary to restrict operating hours to only essential customers, such as tradespeople, to help ensure Sydneysiders stayed put at home and were not tempted to browse the aisles of Bunnings or Target.

Mr Scott said the only way to end repeat lockdowns was ensuring as much of the population was vaccinated against Covid-19 as possible.

“In Sydney we’re seeing customers overwhelmingly do the right thing,” he said. “Customers have been told not to browse and they’re not browsing. They’re coming in to get what they need.

“It’s also important to note that a lot of our retail stores are used as online fulfilment hubs. So they are used for click and collect, kerbside click and collect, and also for click and deliver. So we need to have stores in order to deliver on the needs of the community through online.”

Mr Scott also said the large store footprint along with the company’s Covid-19 safe measures lessened the risk of further community transmission.

“We’re also very guided by the government health advice. It’s pretty clear that the big risk in the community are not in very large format retail stores that have really strong Covid safe practices, and a high level of control over customer numbers,” he said.

Wesfarmers CEO Rob Scott. Picture: Colin Murty

Mr Scott said lockdowns were only a “short-term tactical solution” in dealing with coronavirus outbreaks and did not substitute widespread community vaccination. “The only long-term solution to dealing with Covid is rapidly accelerating vaccination across the community,” he said.

Veteran retailer Gerry Harvey also believed his stores should remain open, arguing it was essential if someone needed to get their fridge or washing machine fixed or replaced.

He said there had been various restrictions in the eight countries where Harvey Norman operated and when they had stayed open or been forced to close it “doesn’t seem to make any difference” in limiting the spread of Covid-19.

“Because our stores are so big, with so few people – you might have one person in it for every 10 or 20 in a supermarket … so when you’re sparsely populated I don’t see that being open or closed makes much difference,” Mr Harvey said.

“If you’re going to close anyone, you’ve got to close the ones with multiple lots of people, crowded together and that’s ­mostly a supermarket. It’s very hard to close a supermarket because that provides food. So what do you do?

“The other thing is that if your fridge or washing machine breaks down or something, you could argue that it’s a necessity. I mean you could always go out and buy food by the hour if you don’t have a fridge.”

Mr Harvey also advocated more Australians being vaccinated against coronavirus, despite growing resistance among those aged 50 and 60-plus.

“I’ve had it and I’m very happy to have had it, I can’t see that it’s a problem,” Mr Harvey, 81, said.

“People talk about the AstraZeneca vaccine and when you work out what the chances of getting a blood clot are, I’m happy to take that chance.”

As cases jumped by 112 on Monday, NSW Premier Gladys Berejiklian has conceded it will be impossible for the city to come out of lockdown as scheduled on Friday. But she rebuffed calls to close down non-essential retail.

“I don’t think it is helpful talking about scenarios at this stage, but what I have said very clearly is given where the numbers are it is not likely, in fact, almost impossible for us to get out of lockdown on Friday,” Ms Berejiklian said.

Big landlords are making adjustments as the lockdown bites.

Westfield shopping centre in central Sydney. Big landlords are making adjustments as lockdown bites. Picture: AFP

Scentre Group, which controls the local Westfield empire, flagged rent relief for tenants in Sydney centres, with CEO Peter Allen citing the impact of ongoing restrictions and uncertainty.

“It’s especially tough for our SME retail partners or ‘mum and dad’ retailers in Greater Sydney. Many have temporarily closed as a result of the health orders while others have decided to close because of the additional limits on movement,” Mr Allen wrote.

Mr Allen indicated rent deferrals would again be used, as in earlier lockdowns. “We are com­mitted to working with SME retailers (aggregate annual turnover less than $5m) to mitigate the short-term cashflow impact on their business during this time through appropriate rent deferral,” he said.

Scentre will focus on this smaller end of its tenant base with big chains to be dealt with separately. Retailers such as supermarkets may benefit from lockdowns in the short term, as customers stock up.

Mr Allen is offering Westfield centres to federal and state medical authorities for use as temporary vaccination hubs. In Victoria, it had drive-through testing clinics in some centre carparks and this could be a model for the hubs.

Stockland CEO, commercial property, Louise Mason said the group encouraged retailers experiencing a reduction in trade to discuss support measures.

“We are particularly conscious of the impact on retailers with a turnover of less than $5m and remain open to discussing appropriate rent deferral arrangements for the impacted periods,” Mr Mason said.

GPT said it was also working with affected SME retailers and would “look to assist any short-term cashflow impacts with appropriate rental deferrals”.

But industrial landlords accommodating e-commerce tenants are expanding on the back of the switch to buying online.

Goodman CEO Greg Goodman said the surge in e-commerce and the operation of delivery companies during the pandemic had created a huge demand for new warehouses and other building infrastructure.