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Focus: Changes to bulky goods retailing in Victoria

27 January 2012

In brief: Recent amendments to Victorian Planning Schemes expand opportunities for those involved in the retailing of bulky goods and create potential for greater retail competition. Special Counsel Meg Lee (view CV) and Lawyer Katherine Kirby report.

How does it affect you?

  • Bulky goods retailers should be aware of the expanded definitions and removal of floor space thresholds to ensure opportunities for growth through smaller stores and a broader range of goods are not overlooked.
  • Small bulky goods retailers should note that they can now set up shop in bulky goods centres and take advantage of cheaper rents.

Background

On 17 January 2012, Planning Minister Matthew Guy announced reforms to Victorian Planning Provisions (VPPs) relating to the retail sector, intended to encourage job growth.1 On 20 January 2012, Planning Scheme Amendment VC88 came into effect, amending the VPP definition of 'restricted retail premises' and removing associated floor space thresholds in the zone controls.

What is a Restricted Retail Premises?

Planning Scheme Amendment VC88 changes the definition of restricted retail premises in all Victorian Planning Schemes. Restricted retail premises is an 'as of right' land use in Business 4 Zone and is also permissible if a permit is obtained in Business 3, Industrial 1 or Industrial 3 Zones.

Prior to Planning Scheme Amendment VC88, a restricted retail premises could be used to sell automotive parts and accessories; camping equipment; electric light fittings; equestrian supplies; floor and window coverings; furniture, bedding, furnishings, fabric and manchester; household appliances, household electrical goods and home entertainment goods; party supplies; swimming pools or office equipment and supplies. These types of retailers are usually referred to as bulky goods retailers.

Over the years, bulky goods retailers have kept a close watch on each other's stock in order to monitor the 'creep' into selling 'unauthorised' goods beyond the scope of the definition2 and to preserve the retail hierarchy.

What does Amendment VC88 do?

Planning Scheme Amendment VC88 broadens the definition of restricted retail premises in clause 74 to also include:

  • 'outdoor and recreation goods' in addition to camping equipment;
  • all 'animal supplies' (ie not just equestrian goods and including pet supplies);
  • baby and children's goods, children's play equipment and accessories; and
  • sporting, cycling, leisure, fitness goods and accessories.

Additionally, the new definition includes two broad categories for other goods:

  • those 'requir[ing] a large area for handling, display and storage of goods'; or
  • those '[r]equir[ing] direct vehicle access to the building by customers for the purpose of loading or unloading goods into or from their vehicles after purchase or hire'.

These categories could potentially include a very broad range of large or physically bulky goods. The new definition of restricted retail premises also clarifies that, unless it is merely ancillary to another permissible use, it does not include the sale of food, clothing or footwear.

The amendment also removes floor space restrictions associated with restricted retail premises in the table of uses in clauses 33.01 (Industrial 1 Zone), 33.03 (Industrial 3 Zone), 34.03 (Business 3 Zone) and 34.04 (Business 4 Zone) of the VPPs. These restrictions required a minimum leasable floor area in one occupation of 1000sqm. The removal of the limits mean that smaller restricted retail tenancies will now be permissible in these zones.

Notably, Amendment VC88 does not implement the 'proposed response' from the former Government's 2008 Retail Policy Review Discussion Paper3 to prohibit bulky goods retailing in industrial zones.4 Further, the changes to broaden the definition of 'Restricted Retail Premises' go against the Discussion Paper's proposal to maintain the existing definition and limit future changes that would broaden the range of goods to be sold at restricted retail premises.5

What changes are likely in the market?

The new bulky goods definition will more readily enable large-scale retailers such as baby goods retailers and pet supply stores to locate in areas that are typically subject to lower rents. Indeed, many of these types of stores are already located in areas outside of strip and big box retail centres, whether by permit or otherwise, so Amendment VC88 in some ways formalises what has already occurred in the marketplace.

According to the Executive Director of the Bulky Goods Retailers Association, Phillipa Kelly, 'over 20% of Australian retail sales are of "bulky goods", making it second only to the food sector in the retail economy'.6 This means that these amendments could have a significant effect on the retail sector in Victoria. The opportunities to diversify the range of goods on sale and the ability to open smaller premises are likely to result in increased competition,7 particularly with smaller retailers. However, there may be flow-on effects for 'in-centre' shopping facilities, as rental will be more competitive in the bulky goods centres.

The amendments also obviously provide the opportunity for existing retailers in restricted retail premises to lawfully stock a wider range of products.

Notably, Planning Scheme Amendment VC88 does not impact on the requirement to obtain a planning permit where one is currently required to sell bulky goods. Where a planning permit was previously required, it will continue to be required. This means that councils will still need to review the merits of each permit application for a restricted retail premises in the relevant zones.

Retail policy has been in somewhat of a vacuum since the failure to implement the recommendations of the 2008 Retail Policy Review Discussion Paper8. At the same time, retailing formats have continued to evolve and it is perhaps time for further reform in the area beyond tinkering with definitions and floor space limitations. It may be that the Victorian Planning System Ministerial Advisory Committee (the Underwood Committee) will recommend further changes to retail planning controls although it remains to be seen whether any such recommendations will ultimately be implemented. 

Footnotes
  1. The Hon Matthew Guy MLC, Retail zone reforms to grow Victorian jobs, media release, 17 January 2012.
  2. See for example – Woolworths Ltd v Warrnambool CC [2005] VCAT 2211; Bevendale Pty Ltd v Whittlesea CC [2001] VCAT 2273.
  3. Department of Community Development and Planning, October 2008.
  4. See Retail Policy Review Discussion Paper, October 2008, proposed response 9.
  5. Ibid., proposed response 8.
  6. Bulky Goods Retailers Association, media release, 17 January 2012.
  7. Victoria Planning Provisions Amendment VC88, Explanatory Report.
  8. Department of Community Development and Planning, October 2008.

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