Shopping Centre Council says mandatory store fit-outs necessary to protect bricks and mortar from online

"Successful retailers say you have to be prepared to spend money to inspire customers to engage in the bricks and mortar experience," the SCC, which represents shopping centre owners and managers, says.

"Australian franchisors want regulated limits on how much they have to spend."

The SCC is responding to the FCA's plans for a voluntary code of conduct for landlords and tenants, designed to stem disputes between the two.

The FCA, which represents franchisors and franchisees, says the code is designed to address "extreme behaviour" such as "excessive" rent increases and "unreasonable and costly requirements in relation to shop fit-out and signage".

FCA executive director Steve Wright told SmartCompany last week the ball is rolling on the code of conduct.

But the SCC says that successful international retailers "stress the need for store fit-outs and store-fronts to be exciting, modern and seductive for customers."

"They also stressed the need for shopping centre environments to be constantly refreshed so they remain an ongoing magnet for customers."

According to the SCC, shopping centre owners have no incentive to make unreasonable fit-out demands of their tenants.

"Shopping centre owners fully understand that fit-out requirements are a delicate balance: on one hand, there is the need for shops to be exciting, fresh and seductive to customers; on the other, the amount spent can't be so much that it jeopardises the retailer's business plan and they can't afford to pay the rent," the SCC says.

"After all, the money spent on fit-outs does not end up in the owner's pocket."

But the Franchise Council of Australia says shopping centre fit-out requirements are expensive, too frequent and an unfair imposition on tenants who have leases for as short as five years.

"The problem is, the shopping centre management or owner is trying to turn the thing in to an art gallery instead of a retail precinct," the FCA says.

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written by Mabuzi.com, December 12, 2011

Here lies the main issue with retail in Australia at the current period of time.

Some Retailers and all landlords are still using the same business model even though the consumer behaviour has changed. Landlords will tell you that foot traffic is up yet the sales are at a 80 year low. Consumers are buying on-line.

Shop to try but buy on-line consumerism.

How does increasing the BAM costs help competing against discounted on-line retail when the cost is the main change in behaviour? A small fit out is $80 000 (large is $120 000) over 5 years, to be redone every 5 years?

I see a major retail revolt or the disappearance of the independent retailer as chains get discounted rents through collective bargaining.

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written by photoman001, December 12, 2011

Yes that initial fit out is a killer and that would be a very 'basic' fit out for $80,000. Ours exceeded $140,000 both times and I know neighbours that spent over $180,000 as the point of the article is basic is not good enough anymore. Add the that the 3 month 'rent hold' guarantee and any bond that applies and it's no wonder businesses are broke before they open the doors. Especially when the landlord promises a rebate on the fit-out that never comes or takes over 12 months to get. We are still waiting 2 and 3 yrs on for ours.

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written by samplecentral, December 12, 2011

Stupidity beyond believe - retail is dying and the SCC want to accelerate its demise - well bring on the fight! As a global franchisor we actively promote to our partners to stay away from Malls/Centres for exactly these types of reasons...and we get upwards of 700 unique consumer through each of our stores every single day - something to think about SCC! Time to get our of the dark ages and get some people on your 'council' who understand the opportunities of the new age and digital world.