A major player has emerged in the next chapter of the Masters saga, with the Spotlight Retail Group claiming 19 of the failed hardware retailer’s development sites.
Fairfax reports that Spotlight Retail Group (SRG) owners Zac Fried and Morry Fraid have taken control of 19 of the 21 total development sites made available in August. If cleared by December 11 (the designated end date for the Master’s business), this acquisition could boost the size of SRG’s portfolio by 50%.
SRG is part of the Home Consortium, a group of wealthy business owners and private families who claimed the 61 Masters stores and 21 development sites as part of an $830 million deal with Woolworths.
Other members of Home Consortium include Chemist Warehouse owners Mario Verrochi and Jack Gance, and UBS banker David Di Pilla.
The Consortium is hoping to turn the sites into massive homemakers centres, but many were critical about the location of the sites, as competitor Bunnings dominated popular locations. Retail expert Brian Walker told SmartCompany in October that critics had said the locations “were not that great”.
“Each Masters site has to be evaluated on its own merits,” Walker said
However, SRG owner Zac Fried told Fairfax that Masters had bought the sites “extremely well”.
“Each site is on average around 45,000 to 60,000 square metres. They are generally on high-profile corners and main roads. There’s nothing wrong with what they’ve done,” Fried said.
“I’ve been waiting for some of this land for a long time.”
LZR Partners director David Gordon told SmartCompany that SRG’s move was not a retail play, but a property play.
“It’s a property play with a plan to convert some of the sites into retail sites. The sites will be a combination of Spotlight and Anaconda, and it’ll almost certainly be a multi store centre,” Gordon says.
“With Spotlight and Anaconda, there’s two retail formats that will most likely be able to fit within the property, so I think they’ll do a multi-store sites.”
SRG already has significant retail share, and Gordon believes the primary motivation is not because the retailers need additional store locations, but buying up more property remains an attractive proposition.
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In combination with the already existing Masters stores that SRG has a stake in, Fried predicts the company will roll out an additional 20 stores in 2017.
“We’ll start doing stuff hopefully by May next year if it all goes to plan. There’s a number of sites we want to start building on straight away in Sydney and Queensland, some of the larger sites,” Fried told Fairfax.
Opportunities for smaller players
If a number of the sites are developed as retail centres, Gordon believes that there will be ample opportunity for smaller retailers to benefit.
“It will create additional space and additional destinations, which could impact retailers in a positive or negative way depending on their position,” Gordon says.
“Customers often go to these sites with a specific purpose in mind, so it could attract business for smaller homeware and manchester retailers.”
Gordon also believes it will open doors for retailers looking for different places to locate to.
“If you’re a furniture store you now have a whole new suite of site opportunities,” he says.
The losers from this deal will be other “big box” retailers such as Harvey Norman, says Gordon, because these stores will be face additional competition.
“This will provide consumers with additional choices and locations, which will automatically take market share and shoppers away from those established big box players,” Gordon says.
SmartCompany contacted SRG but did not receive a response prior to publication.