Westfield's Scentre counters SumoSalad shopping centre lease claim

Westfield shopping centre manager Scentre Group has rejected SumoSalad's claim that increase in other food outlets at its centres was hitting its sales, saying sales growth has in fact outpaced the increase in retailers.

Retail space allotted to "food catering" has grown by 4.5 percent since 2008, but sales for food catering rose by 6.8 percent, Scentre chief executive Peter Allen told The Australian Financial Review in an escalation of the landlord-tenant battle.

Fast food chain SumoSalad put two of the 20 companies in the group into after trying to negotiate cuts in leasing charges over six months with Westfield. The move was aimed to force Westfield to the negotiating table. 

SumoSalad CEO and co-founder Luke Baylis said the dispute arose after the shopping centres decided to dramatically expand the number of food outlets within shopping centres.

But Allen was of a different view.

"What we are seeing is that our productivity, our sales per square metre is increasing. So even though we are increasing [food catering] space, retail is doing better," Allen said at the Australia-Israel Chamber of Commerce retail briefing in Sydney.

"We have got to be very careful we don't mix up what we are trying to do in terms of having a competitive environment with the business performance of retailers."

Scentre and SumoSalad were still negotiating, he added.

"SumoSalad, that's a franchisee model. How good is the model, we don't know," he said.

Allen said each mix of retailers has been curated carefully, and an increase in outlets was a means of wooing more shoppers.

Westfield’s focus on ensuring that retailers were profitable by having a profit formula shared by both parties is part of its strategy to counter the threat from online shopping.

"We have a a population which is growing and we are taking a bigger share of that catchment. We are not taking from other retailers in the centre," Allen said.

He received support from Harris Farms Markets co-founder Catherine Harris, who was also on the panel on Thursday.

Harris said landlords had changed and were collaborating with tenants rather than working against them.

"I find that centres want to genuinely help retailers. That's a huge change from 10 years ago when landlords say they are the boss," she told the AFR.

If smaller retailers were not able to make it work in "larger centres", smaller neighbourhood ones or going independent were options, but only if the brand was strong enough, she said. 

"You can go to a neighbourhood centre, but you need the brand to bring in shoppers. And big centres do that for you," Harris said.

Harris Farm have recently snapped up a commercial strata space that they occupy at 24-30 Springfield Avenue, Potts Point for $11.75 million. 

Eric Lundberg and William Shen of TGC handled the sale which represents $11,900 per square metre.

It was sold returning $1.046 million nett PA.

TGC noted "Woolworths recently signed up for a second store in the area and Aldi were also keen to open a supermarket in the area but are finding it difficult to secure a 1500 sqm box."