Politicians urged to act after small town IGA supermarket claims Woolworths forced it to close

ACCC urges small business to use food and grocery code to keep supermarket giants in check

Politicians are being urged to come into bat for the owners of an IGA Supermarket in the small Victorian town of Seville, who say they have been forced out of business after a Woolworths store opened nearby two years ago.

Jos de Bruin, chief executive of MGA Independent Retailers, told SmartCompany this morning he has contacted several politicians in a bid to try to take action ahead of the store’s closure at the end of July, labelling the situation as “gross”.

“I talked to Nick Xenophon who was very angry, and the Victorian Shadow Minister for Small Business Neale Burgess will be raising it in Parliament,” de Bruin says.

“These people invested everything after getting council and community support, and today they have nothing.”

As reported by Fairfax, the owners of Entwistles IGA, Barry and Jenny Entwistle, have been serving the residents of Seville for over 16 years, having purchased the 1000sqm supermarket site in 2000.

In 2006 the town fended off an application from Coles to build a supermarket in the town, with the Yarra Ranges Council reportedly fearing that nearby smaller businesses wouldn’t be able to compete. Worried by the threat from the supermarket duopoly, the Entwistles decided to expand their store.

The Entwistles invested $5 million into expanding their business, re-mortgaging their house and investing their life’s savings. The couple’s son also contributed to the expansion.

According to a MGA document, seen by SmartCompany, the supermarket recorded $14 million in sales in 2011, a year after the expansion of their business finished. The store employs over 100 local residents in a town that is home to 2,370 residents, according to the 2011 Census.

But despite previously knocking back Coles’ plans to open a supermarket in the town, the local council approved a development proposed by Lascorp to build a Woolworths and 18 other shops on a site on the Warbuton highway in 2012. The Entwistles reportedly collected 2000 signatures from town residents against the expansion, but it went ahead.

The Woolworths supermarket opened in 2014 and Barry Entwistle told Fairfax their store’s sales dropped by 18%, followed by another 18% the following year.

“We just couldn’t survive, our sales got to the point where the business became unviable,” he told Fairfax.

“I just don’t understand why would they allow a big shopping centre to come into such a small community.

“I can understand the big guys have got to continue to grow, but I don’t understand why they’ve got to do it at the expense of an independent who has invested everything he’s got into his store.”

Entwistle said if Woolworths had offered to purchase his store he would have been happy with that outcome, as it would have allowed him to recover his investments in the supermarket.

The Entwistles say they have been forced to sell their home and are now currently living with relatives, relying on the pension to live. “Now we’re telling ourselves we’ve got no money, but at least we’ve got our health,” Entwistle said.

According to Fairfax, German supermarket chain Aldi is set to move into the IGA site in the coming months.

De Bruin believes that a development the size of the Woolworths store in Seville is totally unnecessary, calling it a “one supermarket town”.

“Small supermarkets want to and will compete, but you can’t put a supermarket that big against one so small,” de Bruin says.

“Entwistles’s catchment from five kilometres around their store was only $450,000, why would Woolworths be interested in that? They’re here because they can outlast their competitors.”

Public outcry against the development is prominent, but had no effect on the plans going through, and de Bruin believes the council should listen more to its community.

“The council has made a massive error of judgement here, the public voice is absolutely not being heard,” he says.

“When it comes to sensible developments that create a competitive environment, bring it on. The council needs to look out for its community.”

SmartCompany contacted Lascorp but the company declined to comment.

SmartCompany contacted the Entswistles and Woolworths but did not receive a response prior to publication.

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helma Parkin
helma Parkin
4 years ago

It’s happened in quite a few small towns in NSW to but if the town folk don’t shop at Woolworth it will be them that crash but off course some of the town folk must have jobs there and of course get the discount card that Woolies have so it becomes a catch 20 unless the IGA can do the same..

womensnetwork
womensnetwork
4 years ago

You can’t legislate for care factor, ethics or common sense. The local residents had the power as to where they spent their grocery dollars. They could have boycotted the new player and supported the Entwistles. They didn’t – which has sent yet another small business broke. Conscious consumerism is amiss it seems.

Michael.J.2289
Michael.J.2289
4 years ago

Damn supermarkets just want to take over every bit of retail in Australia. And sadly it’s us consumers that are to blame as we continue to flock to the 2 or 3 big players. Unfortunately I can’t see it stopping.

Colin Spencer
Colin Spencer
4 years ago

That’s ironic, about a year ago in Whittlesea, IGA opened a huge supermarket across the road from a family owned FoodWorks. Virtually wiped the Foodworks out in a couple of months. Talk about the pot calling the kettle black. This one takes the cake.

Jan Deane
Jan Deane
4 years ago

People have to vote with their feet in these cases. I am not sure it is anything to do with politicians – it’s a free market, after all and it’s up to the local council to listen to their ratepayers and act accordingly.

Clem Clarke
Clem Clarke
4 years ago

A similar thing happened in Bermagui, NSW last year. Not only did the local Foodworks close down in just a few short months, but the next town’s supermarket in Cobargo closed fairly shortly afterwards too.

The council in Bega just overrode everyone’s express wishes, and approved it.

Clem Clarke
Clem Clarke
4 years ago

What the most DESTRUCTIVE law on the planet?
=======================================
[ I sent this to all our Candidates a few weeks ago. Please note that WOOLWORTHS is about 30% owned by HSBC, CityCorp and JP Morgans]

The Shareholder Primacy or equivalent means the people and the environment HAVE to come off second best because it is the legal duty of those who run businesses to maximise the wealth of shareholders. We people lose to the money god, again!

Money is a man made concept and these days it is made from “thin air” through so called Quantitative Easing.

We depend on Nature, and we can’t eat man made money.

Let’s make a clean Earth the priority. American lawyer Bob Hinkley wrote in 2002 that Corporate Law regarding mandatory shareholder profit could be changed to include “… but not at the expense of the environment, human rights, the public safety, the communities in which the corporation operates or the dignity of its employees.”

————
Mathew 6 .2: “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.”

Serving God also means looking after God’s creations, such as planet Earth, and ourselves, of course. The man made profit money system is destroying our home, planet earth and us with it. We need clean air, clean water, clean unadulterated food, and a proper money system that works for all – or no money at all.

————-

My will is that Corporation’s Primary Duty is to make the planet as beautiful as possible, and support human life and the environment above everything else – certainly above the demands of a man made enslaving profit money system. Our children depend on it.

Dennis Hall
Dennis Hall
4 years ago
Reply to  Clem Clarke

Council approval is only one side of the story here – if so many of the local population signed a petition against the development how did Woolworths get any customers? The only way local communities can protect themselves from these sorts of situations is to stick together & not spend any money with the new entrant

coloursoft
coloursoft
4 years ago

de Bruin says “Small supermarkets want to and will compete, but you can’t put a supermarket that big against one so small” – you know that isn’t true Jos. If they truly wanted to compete, they can. Their margins would be unsustainable, because their cost price from Metcash is unsustainable. They know how much the competitors are selling products for and price their stock at competitor + whatever %. Sometimes up to 10% or more above competitor.
Don’t put pressure on politicians to entrench an anti-competitive landscape, as locals simply end up paying more than they have to. Put pressure on Metcash to get their house in order enabling product to be sold at a wholesale price that enables independents to be competitive with the gorillas. Good luck with that.
This is nothing more than astro turfing.

Robert Latchford
Robert Latchford
4 years ago

Lets see if Woolworth’s now crank up their margins now the ‘small fella’ has been put to bed. Get an Aldi or Lidl into the region to keep the big players honest.

Marcus
Marcus
4 years ago

It is time for legislation to be introduced to require an economic impact study to be done before approval can be granted to the establishments of enterprises above a certain size.