A small business owner says he has been left in “shock” after plans to expand his bathroom retail business into a major shopping centre in the Melbourne suburb of Mentone were blocked by Bunnings.
Vince Luong, owner of Allure Bathrooms, planned to open a 1300 square metre store for his bathroom appliance business but was blocked at the last minute by the hardware giant because of trading restrictions outlined in a covenant on the site.
Another small business retail owner wanting to set up shop in the Mentone centre, former solider Rob Sonogan, has also been blocked by Bunnings.
Sonogan told Fairfax he has complained to the Australian Competition and Consumer Commission about Bunnings reportedly blocking his plans to open a STIHL-branded outdoor power equipment store.
Bunnings manager John Gillam told Fairfax provisions on both sites preventing other home improvement or hardware businesses from owning or renting space in the centre protect Bunnings’ commercial investment in the centre.
“We took a significant commercial risk spending nearly $50 million to buy the site and go through all the planning risks to build a new Bunnings store. It’s totally legal and fair and reasonable that we have some protection from the commercial risk we have taken and are able to not give a free kick to a competitor,” he told Fairfax.
Luong told SmartCompany this morning his plans to move into the Mentone shopping centre fell apart around three weeks ago, after about two months of planning.
“We were going to purchase the property to sell our bathroom products,” he says.
“I’d purchased stock; I thought we were going to get keys in two week time.”
Luong says after getting the contracts he sent them to his lawyers, who informed him of a covenant on the store preventing him from trading.
“Bunnings has got this covenant on it which doesn’t allow anyone that sells anything similar to trade there,” he says.
“On our end, we only knew because we were going to purchase it, if you were going to lease property, you wouldn’t even know.”
Luong started Allure Bathrooms four years ago, and currently has three small stores around Melbourne, with his business now turning over more than $1 million a year.
“I started this company from my garage four years ago, worked 100 hours a week to get it to where it is at now,” he says.
“The Mentone store was going to be the big one – to show Melbourne who Allure really is and what benefits we can give to the end user in terms of bathrooms.
“It’s been a really big shock to my business, morale has gone down.”
Luong says his expansion plans are now in limbo and he will have to “re-evaluate” plans to open a shop in Mentone.
“We’ve been cut out for a whole area of Mentone,” he says.
“What can a little guy do against a big guy like that?
“It would have been nice to be with all the other big brands… we’re trying to grow our business to become like that.
“But if we’re not allowed to be where we want to be because the big guys won’t allow us, what’s the point?”
In a statement issued to SmartCompany, an ACCC spokesperson said agreements between retail tenants and shopping centre operators that prevent competing businesses from operating in the shopping centre “may raise concerns” under the Competition and Consumer Act (2010).
“Anyone with information about anti-competitive conduct is encouraged to contact the ACCC,” the spokesperson said.
SmartCompany contacted Bunnings for further comment but the company declined to comment.