Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria

 
Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria
Kaufland Mornington
Economic Impact Assessment

             November 2018

                     DRAFT
Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria
MacroPlan

MELBOURNE                                  SYDNEY
Level 16                                   Level 52
330 Collins Street                         19 Martin Place
Melbourne VIC 3000                         Sydney NSW 2000
(03) 9600 0500                             (02) 9221 5211
BRISBANE                                   GOLD COAST
Level 15                                   Level 2
111 Eagle Street                           89 - 91 Surf Parade
Brisbane QLD 4000                          Broadbeach QLD 4218
(07) 3221 8166                             (07) 3221 8166
PERTH
Level 1
89 St Georges Terrace
Perth WA 6000
(08) 9225 7200

Prepared for: Mornington Peninsula Shire Council

MacroPlan staff responsible for this report:

Brian Haratsis, Executive Chairman
Ellis Davies, Senior Manager – Retail
Adam Zhong, Consultant – Retail
Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria
Table of contents

Executive summary                                                          i

Introduction                                                              iii

Section 1:     Context                                                     1

      1.1    Kaufland – International                                      1
      1.2    Kaufland Australia                                            2
      1.3    Supermarket state of play                                     5
      1.4    Site context                                                  8
      1.5    Planning context                                             12

Section 2:     Trade area analysis                                        15

      2.1    Trade area definition                                        15
      2.2    Trade area population                                        18
      2.3    Socio-demographic profile                                    20
      2.4    Retail expenditure                                           23

Section 3:     Competition                                                28

Section 4:     Assessment of supermarket need                             34

      4.1    Supermarket need in walkable catchment                       34
      4.2    Supermarket need in trade area                               34
      4.3    Additional supermarket need to address population growth     36
      4.4    Activity centre hierarchy and out-of-centre considerations   37

Section 5:     Sales outlook and impacts                                  39

      5.1    Estimated sales potential                                    39
      5.2    Estimated impacts                                            41
      5.3    Potential community benefits                                 44
      5.4    Other considerations                                         45

Section 6:     Conclusion                                                 46

Appendix tables                                                           47

Appendix maps                                                             51
Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria
Executive summary

Kaufland has identified a site at 1158 Nepean Highway, Mornington as one of six potential
sites in metropolitan Melbourne for their entry into the Australian marketplace. The site is
current zoned Industrial 3, and Kaufland would require the land to be rezoned to be
permissible. The Mornington Peninsula Shire Council currently does not have a formal
position on the proposed Kaufland application and have engaged MacroPlan to assess need
for a Kaufland supermarket at the subject site, as well as to consider the potential impact it
may have on the primacy of the Mornington Activity Centre and more broadly on other
activity centres in the Mornington Peninsula. Based on our analysis, the following provides
our views on potential implications from the proposed development.

Our analysis indicates that the existing provision of supermarket floorspace in the Kaufland
Mornington main trade area is generally at, and will remain at or above, the average for
metropolitan Melbourne throughout the forecast period. Therefore, the existing provision of
supermarkets is considered to be already adequately serving the Mornington Peninsula
population, and there is no clear need for a large supermarket at the subject site.

The sales potential for Kaufland Mornington is estimated at between $42 - 46 million in FY21
(assumed to be the first full year of trade). Due to the scale, offer and likely destinational
attraction of the supermarket, it is likely to serve a large trade area encompassing some
240,000 residents at 2018. As the trading impacts are expected to spread across the
Mornington Peninsula, as a result of the broad destinational draw of Kaufland, modest
trading impacts are assessed at surrounding activity centres in the region. The most affected
retail facilities are assessed to be the Aldi supermarket at Peninsula Hub, as well as the
supermarket at the Mornington Major Activity Centre and the Mount Eliza and Bentons
Square Town Centres.

The subject site, together with the adjoining Peninsula Hub Homemaker centre, is zoned
Industrial 3 and sits outside of the Activity Centres hierarchy as detailed in the Mornington
Peninsula Activity Centre Strategy. In our view, the development of the Kaufland Mornington

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Executive summary

supermarket could affect the Activity Centres hierarchy, and therefore it could be concluded
that the development may undermine the Activity Centre policy, in that it will create a new
activity centre at the site. However, we do not expect that the Kaufland development will
affect the primacy of the Mornington Major Activity Centre.

Overall, the development of a Kaufland supermarket at the subject site is not expected to
have a significant impact on any one retail precinct in the surrounding area, and is not likely
to affect the viability of any retailer in the area. It is also not considered to impact on the
primacy of the Mornington MAC and will also will likely result in a number of community
benefits. However, there is not considered a need for a large scale supermarket in the local
area, and its development in an out-of-centre location is likely to have implications on the
Activity Centres hierarchy, as it will effectively result in the creation of a new Activity Centre.
The potential impact on the Activity Centres hierarchy arising from the out-of-centre
development needs to be considered against the potential benefits of the proposal.

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Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria
Introduction

German operator Kaufland are planning to enter the Australian supermarket sector, with an
initial proposal to open a network of six locations in metropolitan Melbourne.

This report presents an independent assessment of the potential for the proposed Kaufland
supermarket at 1158 Nepean Highway Mornington, 3 km east of the Mornington Major
Activity Centre. The report also examines the likely economic impacts on surrounding activity
centres arising from this proposed development.

This report is presented in six sections as follows:

 Section 1 presents an overview of Kaufland and the state of play of the supermarket
   sector in Australia. This section also details the site and planning context of the proposed
   Kaufland store in Mornington.

 Section 2 reviews the trade area likely to be served by a proposed Kaufland supermarket
   at the subject site, detailing current and projected population levels, as well as the socio-
   demographic profile and current and future retail expenditure capacity of the trade area
   population.

 Section 3 outlines the competitive retail context within which the Kaufland supermarket
   will operate, including proposed developments of relevance.

 Section 4 provides a needs assessment for a Kaufland supermarket at the subject site.

 Section 5 provides estimates of sales potential for the proposed Kaufland supermarket, as
   well as a review of the potential impacts the development may have on existing centres
   in the area, as well as an overview of possible community benefits.

 Section 6 presents our concluding remarks and preliminary views on the proposed
   Kaufland Mornington development.

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Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria
Section 1: Context

This section of the report presents an overview of Kaufland and the state of play of the
supermarket sector in Australia. The site and planning context of the proposed Kaufland
supermarket in Mornington are also detailed.

1.1   Kaufland – International

Kaufland is a German supermarket chain and is a subsidiary of the Schwarz Group, which is
the fourth largest retailer globally by revenue. The Schwarz Group is headquartered in
Germany and operates 11,730 stores in 28 European countries, employing a workforce of
approximately 400,000. The Group also operates the Lidl supermarket banner, a discount
supermarket operation which is a chief competitor to Aldi. For the year ending
February 2018, the Schwarz Group recorded revenue of AUD$153.3 billion (EUR 96.9 billion),
a growth of 7.4% from the previous year.

The Kaufland brand operates 1,250 stores in Germany, the Czech Republic (first opened in
1998), Slovakia (2000), Poland (2001), Croatia (2001), Romania (2005), Bulgaria (2006) and
Moldova (2018) and is now planning to open a network of stores across Australia. For the
year ending February 2018, the Kaufland banner recorded revenue of AUD$34.9 billion
(EUR 22.3 billion), a growth of 3.0% from the previous year, accounting for over a third of the
overall sales of the Schwarz Group.

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Section 1: Context

1.2   Kaufland Australia

The store format which Kaufland is planning to operate in Australia will be large in footprint
compared with traditional supermarkets, ranging in size of between 5,000 – 7,000 sq.m
(GLA). By way of comparison the average size of full-line supermarkets currently operated by
Coles and Woolworths is around 3,500 sq.m. The size of Kaufland would, however, be far
smaller than Costco Warehouses, which are generally between 12,000 – 14,000 sq.m in size.

Branded as a hypermarket, Kaufland stores are likely to encompass a full-line supermarket
offer, combined with elements typically found in discount department stores in Australia.
The large footprint will allow Kaufland stores to offer an extensive range of fresh food and
groceries, complemented by supporting non-food goods which are part of the staple
supermarket offer such as stationery, toys, household goods and personal hygiene goods.
Kaufland stores could also potentially include a range of discount department store type
non-food goods such as crockery, cutlery, cookware, small electrical appliances and other
homewares, as well as a small provision of apparel and bedding products. Each Kaufland
store is also planned to dedicate a small provision of ancillary floorspace to accommodate a
café as well as other complementary uses.

According to the Kaufland in Victoria – Consumer and Economic Impacts report prepared by
Dimasi & Co, some of the key facets of Kaufland’s operation is to include the following:

 Regional sourcing, with Kaufland stating the aim is to source some products from the

   surrounding region to shorten the supply chain and promote the freshness of its food
   products for customers.

 New products, with Kaufland planning to introduce a new range of international labels

   which are not currently available in Australia, as well as provide an extensive range of its
   own private label products.

Kaufland is likely to operate as a destinational shopping attraction. Analysis undertaken by
Morgan Stanley has indicated that Kaufland could generate up to $480 million in Australian
revenue by 2020. Morgan Stanley believes Kaufland will invest heavily in fresh food, which

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Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria
Section 1: Context

could further put pressure on the margins in those categories, prompting the likes of
Woolworths and Coles to further lower prices.

Kaufland are planning to open at six locations in Melbourne – Coolaroo, Chirnside Park,
Dandenong, Epping, Oakleigh and Mornington, which is the subject of this assessment.
Map 1.1 illustrates the locations of this proposed network, while Appendix Maps A1 – A10
illustrate the site and planning context of each identified site. The sites are mostly located
within or close to already well established Activity Centres and are zoned Commercial 1,
Commercial 2 or Activity Centre, except Oakleigh South and Mornington, as summarised
below:

   The Chirnside Park site is located within the Chirnside Park Major Activity Centre and is
    zoned Commercial 1.

   The Coolaroo site is located adjacent to the Roxburgh Park Major Activity Centre and is
    zoned Commercial 2.

   The Dandenong site is located approximately 1.5 km north of the Dandenong
    Metropolitan Activity Centre and is zoned Commercial 2.

   The Epping site is located within the Epping Metropolitan Activity Centre and is zoned
    Activity Centre – Schedule One.

   The Oakleigh South site (which is also planned to include the head office) is located
    1.7 km west of the Clayton Major Activity Centre and is zoned Industrial 1.

   The Mornington site is located 2.1 km (straight line) and 3 km (by road) east of the
    Mornington Major Activity Centre and is zoned Industrial 3.

Therefore, the Mornington site is one of two sites, along with Oakleigh South, which are on
Industrial zoned land, while three of the six sites (Chirnside Park, Coolaroo and Epping) are
situated within or adjacent to Major Activity Centres.

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Kaufland Mornington Economic Impact Assessment - DRAFT - Engage Victoria
Map 1.1: Kaufland Mornington
Regional context and location of other Kaufland sites
Section 1: Context

1.3     Supermarket state of play

This sub-section provides an overview of the supermarket sector in Australia.

The main full line supermarket operators, Woolworths and Coles, have traditionally
exercised an almost duopolistic control over the supermarket sector. Over the past decade,
Coles has substantially outperformed Woolworths, including a 7-year period ending
September 2016, where Coles outgrew its main rival on a comparable sales basis in 28
consecutive quarters. Coles has invested heavily in its brand, and now has the perception of
being cheaper and having better service on the back of the very successful ‘Down Down’ and
‘Everyday’ campaigns. Following the appointment of Brad Banducci as CEO, Woolworths has
seen a rebound in its performance, underpinned by heavy investment in product prices and
in store service, as well as the building of stronger relationships with core suppliers.
Woolworths easily outstripped Coles in FY17 and FY18, recording comparable sales growth of
3.6% and 4.3% respectively.

The majority of Woolworths and Coles supermarkets are full line, which are generally around
3,000 - 4,000 sq.m in size. Both retailers operate small format stores in CBD and inner-city
locations under the Woolworths Metro banner (300 - 800 sq.m), and Coles Central brands
(800 – 1,200 sq.m). Coles has also recently developed a small format store for inner and
middle ring locations under the Cole Local banner, which is akin to the failed more up-
market supermarket Thomas Dux.

Coles also operates larger supermarkets of around 5,500 sq.m, which are more comparable
in scale to the proposed Kaufland supermarket. These supermarkets, located at Eden Rise
and Stockland Traralgon in Melbourne, include a traditional full-line supermarket offer as
well as provisions of basic apparel, toys, stationery, homewares, entertainment, sporting
goods, leisure goods and outdoor furnishings.

The independent supermarket sector operates primarily under the IGA banner, particularly
for larger independent stores. There is also a small number of FoodWorks branded stores, as
well as some regional brands such as Foodlands and Drakes in South Australia and
Queensland. In total, there are around 1,350 independent supermarkets of over 500 sq.m in
size.

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Section 1: Context

Costco
Costco operates on a membership basis, with members paying an annual fee in order to
make bulk or large scale purchases at the stores. The offer is broad, incorporating food as
well as non-food items, from fresh food and grocery products to everyday apparel, electrical
appliances, automotive supplies, health and beauty products and general household items.

Costco, while being a bulk seller and different from traditional retailers, still competes within
the same retail market as the traditional retail operators such as supermarkets and discount
department stores, as well as specialty shops to a lesser degree.

The first Costco warehouse in Australia opened in August 2009, at Melbourne’s Docklands,
and proved to be a highly successful store, with an estimated 1.5 million visitors annually.
Costco currently operates ten stores across Australia – four in Melbourne; three in Sydney;
two in Brisbane and one each in Canberra and Adelaide.

Costco’s individual store performances are not readily available, however, based on industry
reports it is widely accepted that Costco is a very high volume retailer, with in excess of
$200 million in sales being achieved by some stores at present. On an average basis, sales
per store are broadly estimated to be in the order of $150-$180 million on average, at an
average productivity level of around $10,000-$12,000 per sq.m.

In addition to being a high sales generator, Costco has the ability to draw trade from a very
wide region. Costco stores have destinational appeal and serve very large trade areas,
typically between 500,000 to 1 million people. Costco, like the new flagship international
retailers, will only build a small number of stores, thus a locality which has a Costco store
becomes a major customer attractor.

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Section 1: Context

Aldi
Aldi opened its first Australian store in Sydney in 2001, and since then has expanded
aggressively, firstly across the eastern seaboard capital cities which at 2016, saw 396 Aldi
stores operating in NSW, Victoria, Queensland and the ACT. Since then, Aldi also pushed into
the SA and WA markets with the operator opening its 500th store in Australia in November
2017. At the start of 2018, research conducted by Roy Morgan estimated that Aldi had
captured over 13% of the $90.3 billion supermarket sector.

At the core of Aldi’s strategy is a range of approximately 1,500 product lines per store,
predominantly private labels. This is compared to the 25,000 - 30,000 product lines of an
average full-line Coles or Woolworths supermarket, with the smaller range allowing Aldi to
achieve comparative advantages in store footprint (between 1,300 - 1,700 sq.m which is half
the size of a full-line supermarket), warehousing infrastructure and supplier discounts. In
turn, a proportion of these savings are passed onto the consumer, gaining a competitive
racing edge over other operators in the sector.

The Aldi store format has seen a number of updates since its inception, including an
increased emphasis on fresh food (2016), while the latest store format updates places a
particular focus on the fit-out of its stores, set to feature clearer signage, redesigned
shelving, expanded wooden produce bays, energy efficient LED lighting and extended
chillers. Aldi’s new store format require around 1,700 sq.m, compared to older store
openings which were smaller at around 1,300 sq.m.

The aggressive expansion of Aldi, its price competitive edge and the overall value proposition
of its products and offer have attracted a wide-ranging demographic. Research conducted by
Nielsen, showed that in 2006, 38 per cent of Aldi shoppers were from low-income groups
and just 26 per cent were from high-income families. By 2014, the proportion of high-income
shoppers had risen to 50 per cent.

Research conducted by Roy Morgan has shown that Woolworths holds the dominant market
share in the $90.3 billion supermarket sector in FY17, capturing 35.7%, followed by Coles at
33.2%, Aldi at 13.2% and IGA/Metcash at 9.3%.

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Section 1: Context

1.4   Site context

The subject site for the proposed Kaufland supermarket is at 1158 Nepean Highway,
Mornington, a seaside suburb of Melbourne located approximately 57 km south-east of the
Melbourne CBD. The subject site is located approximately 3 km east, by road, of the
Mornington Major Activity Centre (refer Map 1.2) and is currently zoned Industrial 3 (refer
Map 1.3).

Nepean Highway is the primary traffic route connecting inner eastern Melbourne with the
outer south-eastern suburbs. The highway runs throughout the Mornington Peninsula Shire
linking Mornington to tourist hotspots such as Dromana, Rye, Portsea and Sorrento to the
south and south-west. The Nepean Highway, near Bungower Road, accommodates 29,000
average daily traffic movements in both directions in 2017 (VicRoads Traffic Data).

The proposed Kaufland Mornington site is located adjacent to the Peninsula Hub, a primarily
large format retail centre, which encompasses a number of national homemaker and
appliances tenants such as Harvey Norman, The Good Guys, Lincraft, Bedshed, Snooze, Early
Settlers and Officeworks. The centre also contains an Aldi supermarket, which opened in
April 2016, while a Bunnings Warehouse is located immediately south of the centre.

Figure 1.1 illustrates the indicative layout of the proposed Kaufland Mornington store. The
plans show that the supermarket Gross Leasable Area (GLA) is to be 5,691 sq.m (including
liquor, back of house, administration and services). The development is also planned to
include two smaller tenancies of 520 sq.m and 34 sq.m respectively, as well as internal mall
area of 376 sq.m.

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Map 1.2: Kaufland Mornington
Site location
Map 1.3: Mornington
Planning context
Figure 1.1
Section 1: Context

1.5   Planning context

The Mornington Peninsula Activity Centres Strategy, adopted by Council in April 2018, is a
review and update of the previous Activity Centres Strategy, adopted by Council in 2005. A
key element of the previous strategy is the identification of an activity centres hierarchy
where centres of different hierarchical levels perform different but complementary roles.
The 2018 Strategy continues to adopt the hierarchy approach towards guiding activity
centres development in the Mornington Peninsula (refer Figure 1.2). It envisions that the
centres will continue to be the focus for new retail development and key locations for
businesses, community activity and social interaction, and that future development will
respect and be appropriate to the character, role and function of each centre.

The key strategic objective and actions in the Mornington Peninsula Activity Centres Strategy
of relevance to the proposed Kaufland Mornington supermarket include:

 The continued support of the activity centres hierarchy…’as a beneficial planning tool to

   guide the location, type and volume of new and/or expanded retail…ensuring this
   hiearacyhy is reference when considering development applications (and) proposals for
   out-of-centre development’

 ‘To provide an effective and efficient activity centre hierarchy that provides high levels of

   service to residents, visitors and tourists’.

 To ‘re-affirm the primacy of Mornington Peninsula’s Major Activity Centre in the activity

   centres hierarchy and as the regional focus for a wide range of activities, including
   retail…reflecting this direction when developing future policies and action which are
   relevant to activity centres, and encourage development that consolidates the primacy of
   these centres’.

 ‘To support the growth of existing centres to meet increased demand’.

 ‘To accommodate large-format homemaker retailing and mixed-business use at Enterprise

   Area locations…These are areas located outside traditional activity centres which typically

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Section 1: Context

   comprise a broad mix of businesses including homemaker retail, showrooms, trade
   supplies, light industry, and other businesses and community facilities...’

 ‘To closely monitor out-of-centre development. Ensure that commercial development

   occurring away from activity centres identified in the hierarchy contributes to the
   achievement of a net community benefit and does not undermine activity centre policy’.

The Activity Centres Strategy outlines that the Peninsula Hub Homemaker Centre, which
adjoins the subject site, sits outside of the Activity Centres hierarchy. The out-of-centre
homemaker centre contains an estimated 15,000 sq.m of large format retail floorspace, as
well as an Aldi supermarket of approximately 1,500 sq.m.

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Section 1: Context

Figure 1.2: Activity Centre Hierarchy
Source: Mornington Peninsula Activity Centres Strategy, May 2018

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Section 2: Trade area analysis

This section of the report reviews the trade area likely to be served by a proposed Kaufland
supermarket at the subject site, detailing current and projected population levels, as well as
the socio-demographic profile and current and future retail expenditure capacity of the trade
area population.

2.1   Trade area definition

The extent of the trade area or catchment that is served by any shopping centre or retail
facility is shaped by the interplay of a number of critical factors. These factors include:

 The relative attraction of the centre, in comparison with alternative competitive retail

   facilities. The factors that determine the strength and attraction of any particular centre
   are primarily its scale and composition (in particular the major trader or traders that
   anchor the centre); its layout and ambience; and carparking, including access and ease of
   use.

 The proximity and attractiveness of competitive retail centres. The locations,

   compositions, quality and scale of competitive retail facilities all serve to define the
   extent of the trade area which a shopping centre is effectively able to serve.

 The available road network and public transport infrastructure, which determine the ease

   (or difficulty) with which customers are able to access a shopping centre.

 Significant physical barriers which are difficult to negotiate, and can act as delineating

   boundaries to the trade area served by an individual shopping centre.

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Section 2: Trade area analysis

The trade area defined for the Kaufland Mornington supermarket primarily reflects the
following considerations:

   The high profile location of the subject site on a major highway which is exposed to
    29,000 average daily vehicular movements.

   The proposed scale and offer of Kaufland, with is a hypermarket that combines a full-line
    supermarket offer as well as a range of non-food items.

   The network of competitive retail facilities in the surrounding region with particular
    regard for supermarket and discount department store anchors.

Map 2.1 illustrates the main trade area defined for the proposed Kaufland Mornington store,
which encompasses the Mornington Peninsula Shire as well as part of the City of Frankston.
The trade area is defined to contain a primary sector, four secondary sectors and a tertiary
sector, described as follows:

 The primary sector encompasses the suburbs of Mornington, Mount Eliza and Mount

    Martha, as well as parts of Moorooduc;

 The secondary north sector covers the of Frankston, Frankston South and Langwarrin

    South, as well as parts of Langwarrin and Pearcedale;

 The secondary east sector contains the suburbs of Somerville, Tyabb and Baxter, as well

    as the remaining parts of Moorooduc;

 The secondary south-east sector encompasses Hastings, Crib Point and Bittern, as well as

    the adjoining localities such as Tuerong and Balnarring.

 The secondary south sector contains the suburbs of Rosebud, Rosebud West, McCrae,

    Dromana, Safety Beach, Arthurs Seat and Red Hill.

 The tertiary south sector encompasses the remaining southern parts of the Mornington

    Peninsula Shire and includes tourist hotspots such as Rye, Portsea and Sorrento.

In combination the primary and secondary sectors form the main trade area, while the
total trade area also includes the tertiary sector.

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Map 2.1: Kaufland Mornington
Trade area and competition
Section 2: Trade area analysis

2.2   Trade area population

Table 2.1 details the estimated current and future population levels within the Kaufland
Mornington total trade area. This information has been collected from a range of sources
including the following:

 Australian Bureau of Statistics (ABS) Census of Population and Housing (2011, 2016);

 ABS Dwellings Approvals and Estimated Residential Population Data (2011 – 2016);

 Population projections prepared by forecast.id for the Mornington Peninsula Shire

   (updated in November 2017) and the City of Frankston (updated September 2018);

 Victoria in Future (2016) population projections prepared by the Victorian Government;

   and

 Other investigations of future residential developments.

The Kaufland total trade area population is estimated at close to 240,000 at mid-2018,
including 218,000 in the main trade area and 64,000 in the primary sector. Over the most
recent intercensal period (2011 to 2016), the total trade area population increased by 1.3%
or almost 3,000 residents per annum.

Over the forecast period to 2031, the Kaufland total trade area population is projected to
grow at a modest rate of 0.7% to reach 263,000, including 240,000 in the main trade area. All
sectors within the Kaufland Mornington trade area are forecast to exhibit similar rates of
population growth (i.e. below 1%), including the primary sector, which is projected to reach
a population of 70,500 at 2031, reflecting an average annual growth rate of 0.7%.

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Section 2: Trade area analysis

                                                        Table 2.1
                             Kaufland Mornington trade area population, 2011-2031*

                                    Estimated population                                   Forecast population
Trade area sector              2011            2016              2018              2021          2026            2031

Primary                      58,710          62,960            63,960             65,460        67,960        70,460

Secondary sectors
• North                      72,080          75,320            76,420             78,070        80,820        83,320
• East                       16,620          17,380            17,680             18,130        18,630        19,130
• Sth-east                   22,060          24,040            24,640             25,390        26,640        27,640
• South                      31,060          34,520            35,320             36,220        37,720        39,220

Total secondary             141,820         151,260          154,060          157,810         163,810        169,310

Main trade area             200,530         214,220          218,020          223,270         231,770        239,770

Tertiary sectors
• South                      19,840          20,960            21,360             21,810        22,560        23,310

Total trade area            220,370         235,180          239,380          245,080         254,330        263,080

                                                                Average annual growth (no.)
Trade area sector                           2011-16          2016-18          2018-21         2021-26        2026-31

Primary                                          850              500               500            500            500

Secondary sectors
• North                                          648              550               550            550            500
• East                                           152              150               150            100            100
• Sth-east                                       396              300               250            250            200
• South                                          692              400               300            300            300

Total secondary                                1,888            1,400              1,250         1,200           1,100

Main trade area                                2,738            1,900              1,750         1,700           1,600

Tertiary sectors
• South                                          224              200               150            150            150

Total trade area                               2,962            2,100              1,900         1,850           1,750

                                                                 Average annual growth (%)
Trade area sector                           2011-16          2016-18          2018-21         2021-26        2026-31

Primary                                        1.4%              0.8%              0.8%          0.8%            0.7%

Secondary sectors
• North                                        0.9%              0.7%              0.7%          0.7%            0.6%
• East                                         0.9%              0.9%              0.8%          0.5%            0.5%
• Sth-east                                     1.7%              1.2%              1.0%          1.0%            0.7%
• South                                        2.1%              1.2%              0.8%          0.8%            0.8%

Total secondary                                1.3%              0.9%              0.8%          0.7%            0.7%

Main trade area                                1.3%              0.9%              0.8%          0.8%            0.7%

Tertiary sectors
• South                                        1.1%              0.9%              0.7%          0.7%            0.7%

Total trade area                               1.3%              0.9%              0.8%          0.7%            0.7%

*As at June
Source: ABS Census 2016; Victoria In Future 2016; Forecast.id; MacroPlan Dimasi

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Section 2: Trade area analysis

2.3   Socio-demographic profile

Table 2.2 and Chart 2.1 detail the socio-demographic profile of the Kaufland Mornington
trade area population, sourced from the 2016 ABS Census of Population and Housing. The
profile is compared with benchmarks for metropolitan Melbourne and Australia, with the
key points to note including the following:

 Main trade area residents earn incomes which are 10% below the metropolitan

   Melbourne benchmark on both a per capita and household basis. The only sector to
   record above average earnings capacity is the primary sector population, with residents in
   this key sector earning incomes 5.6% above the metropolitan Melbourne benchmark.

 The trade area has an older age profile compared to the metropolitan Melbourne

   average, driven by a below average proportion of adults aged 20-39 years, as well as an
   above average representation of residents aged 50 years and over.

 The home ownership level of households in the main trade area, at 74.1%, is above the

   metropolitan Melbourne, underpinned by households who own their homes outright.
   This is particularly evident in the primary and secondary south sectors, where outright
   home ownership is estimated at 41.1% and 43% respectively, compared with the
   metropolitan Melbourne benchmark of 31.4%.

 Residents in the Kaufland Mornington main trade area are predominantly Australia born,

   accounting for almost 80% of residents.

 Traditional families (i.e. households comprising couples with dependent children) account

   for at 41.3% of all households in the main trade area, which is below the metropolitan
   Melbourne average of 47.8%. All sectors exhibit a below average representation of
   traditional families, except the primary sector, which is on par with the respective
   benchmark. The next most prevalent household types within the Kaufland Mornington
   main trade area are couples without children (24.3%) and lone person households
   (12.4%), both of which are above the metropolitan Melbourne benchmark and reflect the
   older age profile of the region.

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Section 2: Trade area analysis

                                                                           Table 2.2
                                   Kaufland Mornington main trade area - socio-demographic profile, 2016

                                Primary                     Secondary sectors                      Main      Tertiary    Melb Metro    Aust.
Census item                     sector         North         East            Sth-east    South      TA        South         avg.       avg.

Per capita income                $43,701      $35,211        $36,140           $34,332   $32,422   $37,233    $39,087      $41,365     $39,800
Var. from Melb Metro bmark           5.6%       -14.9%        -12.6%            -17.0%    -21.6%    -10.0%      -5.5%

Avg. household income           $110,276      $85,225        $96,415           $83,498   $70,094   $90,181    $86,478     $108,488    $101,610
Var. from Melb Metro bmark           1.6%       -21.4%        -11.1%            -23.0%    -35.4%    -16.9%     -20.3%

Avg. household size                   2.5           2.4              2.7           2.4       2.2       2.4         2.2         2.6         2.6

Age distribution (% of population)
Aged 0-14                         19.2%         17.9%          17.8%            18.3%     14.5%     17.8%      15.0%        18.3%       18.7%
Aged 15-19                           6.3%         6.2%          7.0%             6.6%      4.6%      6.1%        4.4%         6.0%       6.1%
Aged 20-29                           7.4%       12.9%          13.0%            12.5%      8.3%     10.5%        7.0%       15.5%       13.8%
Aged 30-39                           9.4%       12.9%          11.0%            10.7%      8.7%     10.8%        8.6%       15.5%       14.0%
Aged 40-49                        15.1%         13.8%          13.4%            12.7%     11.9%     13.7%      12.4%        13.9%       13.5%
Aged 50-59                        12.9%         13.4%          15.4%            13.6%     13.0%     13.4%      13.9%        12.0%       12.7%
Aged 60+                          29.7%         22.8%          22.4%            25.6%     38.9%     27.7%      38.7%        18.8%       21.1%
Average age                          42.8         39.6           39.6             40.3      47.8      42.0       47.3         37.6        38.6

Housing status (% of households)
Owner (total)                     81.6%         68.7%          81.3%            71.9%     71.3%     74.1%      78.3%        68.5%       67.4%
• Owner (outright)                41.1%         29.7%          32.2%            35.4%     43.0%     36.2%      47.8%        31.4%       31.9%
• Owner (with mortgage)           40.4%         39.0%          49.1%            36.5%     28.3%     37.9%      30.5%        37.1%       35.5%
Renter                            17.2%         29.8%          17.1%            27.5%     26.4%     24.5%      21.1%        30.9%       31.8%

Birthplace (% of population)
Australian born                   77.3%         78.1%          84.4%            84.8%     82.0%     79.8%      84.6%        63.9%       71.9%
Overseas born                     22.7%         21.9%          15.6%            15.2%     18.0%     20.2%      15.4%        36.1%       28.1%
• Asia                               1.8%         3.9%          1.1%             1.5%      1.4%      2.4%        0.8%       17.3%       11.2%
• Europe                          16.8%         13.3%          11.6%            11.1%     13.5%     14.0%      11.6%        11.0%        9.6%
• Other                              4.1%         4.8%          2.8%             2.6%      3.2%      3.9%        3.0%         7.8%       7.4%

Family type (% of population)
Couple with dep't child.          47.8%         40.9%          43.6%            40.0%     31.5%     41.3%      34.2%        47.8%       44.8%
Couple with non-dep't child.         7.3%         8.5%         10.9%             8.1%      7.1%      8.0%        7.0%         8.3%       7.7%
Couple without child.             24.2%         21.4%          22.5%            24.8%     30.6%     24.3%      32.1%        20.7%       22.8%
One parent with dep't child.         6.8%       10.4%           9.1%            10.2%      8.8%      9.0%        7.6%         7.8%       8.8%
One parent w non-dep't child.        3.1%         5.0%          4.2%             3.9%      4.6%      4.2%        3.5%         3.9%       3.7%
Lone person                       10.3%         12.7%           9.0%            12.2%     16.6%     12.4%      15.2%        10.2%       11.0%

Car ownership
% 0 Cars                             3.5%         6.6%          2.9%             4.7%      5.8%      5.1%        3.6%         9.0%       7.7%
% 1 Car                           31.8%         36.3%          26.1%            34.6%     40.0%     34.8%      35.5%        35.9%       36.1%
% 2 Cars                          44.6%         38.5%          40.7%            39.3%     39.3%     40.6%      43.4%        37.8%       37.5%
% 3 Cars                          13.6%         11.9%          17.1%            13.3%     10.6%     12.7%      12.3%        11.4%       12.2%
% 4 plus Cars                        6.5%         6.7%         13.2%             8.1%      4.3%      6.9%        5.3%         5.9%       6.5%
Source: ABS Census of Population & Housing, 2016; MacroPlan Dimasi

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Section 2: Trade area analysis

    Kaufland Mornington
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Section 2: Trade area analysis

2.4   Retail expenditure

The estimated retail expenditure capacity of the main trade area population is sourced from
MarketInfo, which is developed by Market Data Systems (MDS) and utilises a detailed micro
simulation model of household expenditure behaviour for all residents of Australia. The
model takes into account information from a wide variety of sources including the regular
ABS Household Expenditure Surveys, national accounts data, Census data and other
information. The MarketInfo estimates for spending behaviour prepared independently
by MDS are used by a majority of retail/property consultants.

Chart 2.2 details the estimated retail spending levels of the main trade area population on a
per capita basis in 2017/18. Retail spending per person within the Kaufland Mornington main
trade area is estimated at $14,510, which is 1.2% above the average per capita retail
expenditure of metropolitan Melbourne of $14,336.

Retail spending per capita within the Kaufland Mornington primary sector is estimated at
$15,493, which is 8.1% above the respective benchmark. All spending figures presented in
this report are expressed constant at 2017/18 dollars and include GST.

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Section 2: Trade area analysis

    Kaufland Mornington
                                 24
Economic Impact Assessment
Section 2: Trade area analysis

Table 2.3 details the estimated retail spending capacity of the total trade area population
over the forecast period of 2018 – 2031. The total retail expenditure capacity of the main
trade area population is estimated at $3,471 million in 2018, including $987 million in the
primary sector. The retail expenditure capacity of the total trade area population is projected
to increase to $4,292 million by 2031, including $1,222 million in the primary sector.

                                                        Table 2.3
                       Kaufland Mornington trade area - retail expenditure ($M), 2018-2031*

                                              Forecast retail spend ($M)              Avg. ann. growth
  Trade area                       2018          2021         2026         2031        ($M)            (%)

  Primary                           987         1,038         1,127        1,222         18          1.7%

  Secondary sectors
  • North                         1,080         1,134         1,228        1,326         19          1.6%
  • East                            253           266          287          308           4          1.5%
  • Sth-east                        344           365          401          435           7          1.8%
  • South                           485           512          558          608           9          1.7%

  Total secondary                 2,163         2,277         2,474        2,677         40          1.7%

  Main trade area                 3,150         3,315         3,601        3,900         58          1.7%

  Tertiary south                    321           337          365          394           6          1.6%

  Total trade area                3,471         3,652         3,966        4,294         63          1.7%
  *Constant 2017/18 dollars & including GST
  Source: MarketInfo; MacroPlan Dimasi

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                                                                                   Economic Impact Assessment
Section 2: Trade area analysis

Table 2.4 presents the retail spending capacity of the total trade area population across key
retail categories, as well as the category definitions. FLG expenditure (food, liquor and
groceries), which is the main expenditure category for supermarkets, is estimated at
$1,555 million in 2018 and is forecast to increase to $1,947 million by 2031, reflecting
average annual growth of 1.7%. Table 2.5 provides the same information for the
main trade area.

                                                       Table 2.4
            Kaufland Mornington total trade area - retail expenditure by category ($M), 2018-2031*

 Year ending        FLG           Food       Apparel   Household   Leisure   General      Retail       Total
 June                           catering                 goods                retail     services      retail

 2018               1,555           412        342         630       156       273          103          3,471
 2019               1,584           422        347         640       158       277          105          3,531
 2020               1,612           432        351         649       160       280          107          3,591
 2021               1,641           442        356         659       162       284          109          3,652
 2022               1,670           452        360         669       164       288          110          3,713
 2023               1,700           462        365         680       166       291          112          3,775
 2024               1,729           472        369         690       168       295          114          3,838
 2025               1,760           483        374         700       170       299          116          3,901
 2026               1,790           494        379         711       172       302          118          3,966
 2027               1,821           505        383         721       174       306          120          4,030
 2028               1,852           516        388         731       176       310          122          4,095
 2029               1,883           527        392         742       178       313          125          4,160
 2030               1,915           539        397         752       180       317          127          4,227
 2031               1,947           550        402         763       183       321          129          4,294

 Average annual growth ($M)
 2018-2031           30.2          10.6         4.6        10.3       2.1       3.7         2.0           63.4

 Average annual growth (%)
 2018-2031          1.7%          2.2%        1.2%        1.5%      1.2%      1.2%        1.7%           1.7%
 *Constant 2017/18 dollars & including GST
 Source: MarketInfo; MacroPlan Dimasi

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                                                                                  Economic Impact Assessment
Section 2: Trade area analysis

                                                      Table 2.5
           Kaufland Mornington main trade area - retail expenditure by category ($M), 2018-2031*

Year ending        FLG           Food       Apparel   Household   Leisure   General       Retail       Total
June                           catering                 goods                 retail    services       retail

2018               1,411           375        312         570       141        248             93        3,150
2019               1,437           384        317         579       143        251             95        3,205
2020               1,463           392        321         588       145        255             97        3,260
2021               1,489           401        325         597       146        258             98        3,315
2022               1,516           411        329         606       148        261          100          3,371
2023               1,543           420        333         615       150        265          102          3,427
2024               1,570           429        337         624       152        268          104          3,485
2025               1,597           439        342         634       154        271          105          3,542
2026               1,625           449        346         643       156        275          107          3,601
2027               1,653           459        350         653       158        278          109          3,660
2028               1,681           469        354         662       160        281          111          3,719
2029               1,710           479        358         672       162        285          113          3,778
2030               1,739           490        363         681       163        288          115          3,839
2031               1,768           501        367         691       165        291          117          3,900

Average annual growth ($M)
2018-2031           27.5           9.7         4.2         9.3       1.9        3.3            1.8        57.7

Average annual growth (%)
2018-2031          1.7%          2.3%        1.2%        1.5%      1.2%       1.2%        1.7%           1.7%
*Constant 2017/18 dollars & including GST
Source: MarketInfo; MacroPlan Dimasi

Retail expenditure category definitions:

 FLG: take-home food and groceries, as well as packaged liquor.

 Food catering: expenditure at cafes, take-away food outlets and restaurants.

 Apparel: clothing, footwear, fashion accessories and jewellery.

 Household goods: giftware, electrical, computers, furniture, homewares and hardware goods.

 Leisure: sporting goods, music, DVDs, computer games, books, newspapers & magazines, stationery and
     photography equipment.

 General retail: pharmaceutical goods, cosmetics, toys, florists, mobile phones and pets.

 Retail services: hair & beauty, optical goods, dry cleaning, key cutting and shoe repairs.

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                                                                                   Economic Impact Assessment
Section 3: Competition

This section of the report outlines the competitive retail context within which the Kaufland
will operate, including proposed developments of relevance.

Table 3.1 details the provision of retail facilities within the surrounding region, with the
previous Map 2.1 illustrating the locations of these activity centres.

                                                                   Table 3.1
                                  Kaufland Mornington - schedule of major retail facilities

                                            Retail                                                          Dist. by road from
  Centre                                    GLA             Major traders                                  Kaufland Mornington
                                           (sq.m)                                                                 (km)

  Primary sector
  Mornington MAC                            47,300                                                                  3.0
  • Mornington Central                      11,500          Target, Coles
  • Mornington Village SC                     7,600         Woolworths, Aldi
  • Other                                   28,200
  Peninsula Home                            15,500          Aldi                                                    -
  Mornington - Masters site                   6,000         Coles (p)                                               3.4
  Bentons Square                              8,800         Woolworths                                              9.0
  Mount Eliza Town Centre                   12,400                                                                  4.4
  • Eliza Square SC                           3,400         Woolworths
  • Ritchies Village SC                       4,800         Ritchies IGA
  • Other                                     4,200
  Mount Martha Town Centre                    3,300         Supa IGA                                              12.0
  Secondary North sector
  Frankston MAC
  • Bayside SC                              76,000          Myer, Kmart, Target, Woolworths, Coles, Aldi          10.3
  • Other
  Karingal MAC                                                                                                    13.9
  • Karingal Hub                            43,800          Big W, Woolworths X2
  Karringal Village                           3,500         Coles                                                 14.9
  Frankston Supa IGA Towerhill                3,300         Supa IGA                                              11.3
  Frankston Supa IGA - Beach Street4,000                    Supa IGA                                              12.2
  Pearcedale Village SC                       2,000         IGA                                                   18.4
  Source: Property Council of Australia; MacroPlan Dimasi

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Section 3: Competition

                                                           Table 3.1 (cont.)
                                Kaufland Mornington - schedule of major retail facilities

                                          Retail                                                       Dist. by road from
Centre                                    GLA             Major traders                               Kaufland Mornington
                                         (sq.m)                                                               (km)

Secondary East sector
Somerville Town Centre                    25,000                                                              12.2
• Somerville Central                      13,300          Tagret, Coles
• Somerville Plaza                          6,800         Woolworths
• Other                                     4,900         Ritchies IGA, Aldi
Baxter Local Centre                        5,500                                                              12.1
• Woolworths Baxter                         4,200         Woolworths
• Other                                     1,300
Secondary South-East sector
Hastings MAC                              25,000                                                              22.8
• Hastings Central                          7,200         Kmart, Aldi
• Coastal Village SC                        3,000         Ritchies IGA
• Other                                   14,800          Woolworths, Coles
Balnarring Small Township                   3,500         Ritchies IGA                                        23.7
Secondary South sector
Aldi Dromana                                1,600         Aldi
Dromana Town Centre                       10,000                                                              23.0
• Dromana Hub SC                           5,000          Ritchies Supa IGA
• Other                                     5,000
Rosebud MAC                               44,000                                                              31.6
• Rosebud Plaza SC                        25,500          Kmart, Target, Woolworths, Coles, Aldi
• Rosebud Central                           4,000         Woolworths
• Other                                   14,500
McCrae Local Centre                         3,200         Coles                                               27.5
Tertiary South sector
Rye Town Centre                           11,000          Woolworths                                          36.5
Sorrento Town Centre                      11,000          Rithcies IGA                                        45.8
Source: Property Council of Australia; MacroPlan Dimasi

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Section 3: Competition

Primary sector

The Mornington Major Activity Centre is located on Main Street and is the largest Activity
Centre in the Shire, and plays a regional role, acting as a hub for retail, commercial and civic
activity. The Activity Centre contains two enclosed shopping centres. The sub-regional
Mornington Central is anchored by Target and Coles, and has a focus on apparel retailing
with a number of national fashion retailers (Just Jeans, Millers, Jeans West, Dotti, Rockmans,
Strandbags). Mornington Village SC is a neighbourhood centre anchored by Woolworths and
Aldi supermarkets and contains more convenience-based retail tenancies. Mornington
Village SC is slated for a small expansion of 2,700 sq.m, which is planned to be completed
in 2021.

The Activity Centre also contains a sizable strip retail component including a large provision
of food catering outlets including numerous cafes and quality restaurants; a wide selection
of women’s apparel stores, gift shops and homewares outlets; a number of services including
banks, real estate agents and convenience-oriented retail. Due to the scale and mix of the
Mornington Major Activity Centre, it serves a wide-ranging catchment across the Peninsula.

Located adjacent to the subject site is the Peninsula Home large-format retail centre. The
centre contains a number of prominent national furniture (Provincial Home Living, Early
Settlers, Fantastic Furniture), bedding (Snooze, Forty Winks, BedShed, Sheridan), homewares
(Harris Scarfe), fabric (Lincraft), sporting goods (Rebel) and appliances (Harvey Norman,
Good Guys, Godfreys) retailers. Other major large format operators trading at the centre
include Officeworks, PetStock and Repco. An Aldi opened at the centre in April 2016, and is
joined by a BWS and a discount chemist. A freestanding Bunnings Warehouse is situated
immediately south of Peninsula Home.

Located 4.1 km north-east of the subject site, the Mount Eliza Town Centre is anchored by a
Woolworths supermarket of 2,700 sq.m (having recently undergone a small expansion, while
refurbishment works continue) and a Ritchies IGA of around 1,500 sq.m. The predominantly
street-based retail plays an important function in serving the residents in the local area, with
the supermarket anchors supported by range of fresh food shops, cafés, take-away food

                                                                           Kaufland Mornington
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                                                                      Economic Impact Assessment
Section 3: Competition

stores, restaurants and independent womenswear retailers. A number of commercial and
non-retail uses are located on Mount Eliza Way and Ranelagh Drive.

Situated 9 km south-west of the subject site, Bentons Square SC is the main retail
component of the Bentons Large Township Centre and is anchored by a large full-line
Woolworths supermarket of around 4,200 sq.m.          The centre also encompasses a Dan
Murphy’s large format liquor outlet, a number of take-away food operators, and
convenience-oriented non-food specialties (newsagency, discount pharmacy optometrist,
hairdressers, beauty salons, dry-cleaners and clothing alterations). The key function of the
centre is to serve the weekly food, grocery and convenience oriented retail needs of
residents in the surrounding area.

The Mount Martha Town Centre is located further to the south and is situated on the coast.
The centre is anchored by an IGA supermarket and contains a range of specialty shops
including a number of restaurants, fresh food shops, several cafes and other convenience
retail outlets.

In terms of future competitive development, a 3,700 sq.m Coles supermarket is to be
developed at the former Masters Mornington building, approximately 3.4 km south of the
subject site. The centre is also planned to include other uses such as a Liquorland outlet, a
Goodlife Health Club and a Super Cheap Auto outlet.

Secondary north sector

Bayside SC in Frankston is the southernmost regional centre in Melbourne’s south-east and
benefits from a large catchment encompassing most of the Mornington Peninsula. The
centre is anchored by a Myer department store, Target and Kmart discount department
stores, and Coles, Safeway and Aldi supermarkets. Bayside SC includes a wide range of retail
specialty store floorspace particularly in the general retail and household goods categories.
There is a relative underprovision of apparel specialty floorspace, however, is largely offset
by the number of large apparel mini-majors at Bayside SC (TK Maxx, Best & Less, Ozmosis
and Country Road).

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Section 3: Competition

Karingal Hub is a sub-regional centre located 3.8 km south-east of Bayside SC, anchored by a
Big W discount department store and two Woolworths supermarkets. The centre comprises
28,600 sq.m of retail floorspace and contains a five screen Village Cinema. In the past, there
were approved plans to expand Karingal Hub to include an Aldi supermarket, though it is
unknown if the development will proceed as planned.

Karingal Village is a small supermarket based centre located at the intersection of Karingal
Drive and Ashleigh Avenue. The centre is 3,500 sq.m in size and is anchored by a Coles
supermarket.

Secondary east sector
The Somerville Town Centre is anchored by four supermarkets, with Coles co-locating with
Target at Somerville Central and Woolworths situated adjacent at Somerville Plaza, on the
western side of the Stony Point railway line and Frankston-Flinders Road. A Ritchies IGA and
Aldi supermarkets are located on the eastern side of the Stony Point railway line and
Frankston-Flinders Road, with the physical divide resulting in poor integration of the Activity
Centre.

Also located in the secondary east sector is the Baxter Local Centre, with the Woolworths
anchored Baxter Shopping Centre forming the main retail component, which is supported by
six specialty tenants. There is small provision of strip retail adjoining the shopping centre on
Baxter-Tooradin Road.

Secondary south- east sector
The main function of the Hastings Major Activity Centre is to serve the residents in the
eastern parts of the Mornington Peninsula Shire. The Kmart and Aldi anchored Hastings
Central is situated in the southern parts of the Activity Centre, with a freestanding
Woolworths supermarket situated adjacent, with both facilities accessed by Victoria Street.
A full-line Coles is situated in the northern parts of the Activity Centre and can be accessed
by Victoria Street and King Street. Strip retailing is predominantly provided on High Street,
including an Ritchies IGA situated at the eastern boundary of the Activity Centre, while also
encompassing an ad hoc provision of mainly dated take-away food, general retail and service
tenants.

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                                                                       Economic Impact Assessment
Section 3: Competition

Secondary south sector

The primary function of the Rosebud Major Activity Centre is to serve the weekly grocery
and high-order needs of residents in the southern parts of the Peninsula. The Activity Centre
extends approximately 2 km along Point Nepean Road/Nepean Highway, opposite the
Rosebud foreshore.

Rosebud Plaza SC is the key retail component of the Activity Centre and is anchored by dual
discount department stores, Kmart and Target, as well as full line Woolworths and Coles
supermarkets. A freestanding Aldi supermarket is situated some 200 metres east of
Rosebud Plaza fronting Point Nepean Road. Rosebud Central, located approximately 1.5 km
to the east, is anchored by a full-line Woolworths supermarket, while the Activity Centre
previously also accommodated a Ritchies Supa IGA of 2,400 sq.m, with a Dimmeys outlet
locating to the tenancy after the closure of the supermarket. The Activity Centre provides an
extensive range of retail specialties, which serve two key customer segments, residents in
the surrounding area, as well as visitors to the area.

Other key retail facilities in the secondary south sector include McCrae Plaza, which is
anchored by a small Coles supermarket of 1,800 sq.m (formerly Bi-Lo) and is located 3.2 km
east of Rosebud Plaza. Dromana Hub SC, the main retail component of the Dromana large
Township, and is anchored by a Ritchies Supa IGA supermarket of 2,650 sq.m.

                                                                        Kaufland Mornington
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                                                                    Economic Impact Assessment
Section 4: Assessment of supermarket need

This section provides a needs assessment for a Kaufland supermarket at the subject site.

4.1   Supermarket need in walkable catchment

Within a walkable catchment i.e. around 400 metres, there are an estimated 400 residents
surrounding the subject site. Given the limited population and the presence of an adjoining
Aldi supermarket, there is not considered a need for a supermarket in the localised
catchment. Furthermore, the Nepean Highway acts as a significant natural barrier, and it is
considered unlikely that any residents in the area would walk to the proposed store,
particularly those residing on the western side of the highway.

4.2   Supermarket need in trade area

To assess the potential need for additional supermarket floorspace in the trade area, this
sub-section provides an analysis of the quantum of supermarket floorspace in the area. Table
A1 in the Appendix presents the supermarket floorspace per 1,000 residents within the
primary sector and main trade area defined for Kaufland Mornington, and compares this
metric to the metropolitan Melbourne benchmark.

The main points to note regarding this analysis are outlined as follows:

 Nationally, the supermarket floorspace provision is estimated at around 340 sq.m -

   350 sq.m per 1,000 residents. In mainland state capital cities, though, average provision
   decreases to around 306 sq.m per 1,000 residents. In Australia’s two largest population
   centres (Sydney and Melbourne), which account for around 35-40% of Australia’s total
   population, the rate of provision is below average, at 250 sq.m per 1,000 residents for
   Sydney and 312 sq.m per 1,000 residents for Melbourne.

 Within the primary sector, there is currently 292 sq.m of supermarket floorspace per

   1,000 residents, which is slightly below the metropolitan Melbourne benchmark of
   312 sq.m. However, the provision of supermarket floorspace in the primary sector is

                                                                           Kaufland Mornington
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                                                                      Economic Impact Assessment
Section 4: Assessment of supermarket need

   projected to increase to 342 sq.m per 1,000 residents at 2021, once a Coles supermarket
   is developed at the former Masters site in Mornington in the short term.

 If a 5,500 sq.m Kaufland hypermarket were also to be developed in the short term,

   supermarket floorspace per 1,000 residents in the primary sector would rise to a very
   high 429 sq.m per at 2021.

 Supermarket floorspace per 1,000 residents is estimated to be well above the

   metropolitan Melbourne average throughout the forecast period, peaking at 397 sq.m
   per 1,000 residents in 2021, assuming a Kaufland hypermarket is not developed at the
   subject site. This indicates that the main trade area population is already adequately
   served in terms of supermarket floorspace.

 If a Kaufland hypermarket were to be developed in the short term, this is projected to

   increase the overprovision of supermarket floorspace in the main trade area. The
   addition of a 5,500 sq.m Kaufland is forecast to heighten supermarket floorspace to
   423 sq.m in 2021 per 1,000 residents.

The supermarket floorspace provision within the Kaufland Mornington main trade area is
expected to be above average, given that the peninsula accommodates a large non-
permanent resident and tourist population, particularly during the peak holiday season.
According to the Mornington Peninsula Activity Centres Strategy, non-permanent residents
and tourists contributed $250 million or 14% of total retail sales on the Mornington
Peninsula to the local economy. However, the addition of a Kaufland supermarket as well as
the Coles Mornington supermarket will push the supermarket provision to be well above
average, which may have implications for the existing supermarkets in the area.

This analysis indicates that the existing provision of supermarkets in the Kaufland
Mornington main trade area is already serving the needs of the local community and visitors
to the area. Even after taking into account future population growth, there is no clear
indication that the local area requires another large supermarket, particularly as a new Coles
supermarket is to be developed at the former Master site in Mornington.

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                                                                                                     35
                                                                      Economic Impact Assessment
Section 4: Assessment of supermarket need

4.3     Additional supermarket need to address population growth

Table 4.1 presents the locations of the proposed Kaufland stores in metroplitan Melbourne,
and details the poppulation growth within the LGA of the respective stores. Epping and
Coolaroo form part of the northern growth corridor of Melbourne, with significant greenfield
population growth planned for those areas, with average annual growth rates of 2.9% and
2.8% respectively to 2031. Therefore, the proposed Kaufland stores at these locations will
serve radiply growing areas of Melbourne.

The outer metropolitan location of Dandenong (1.5%) is forecast to record solid population
growth, while the more established areas of Monash and the Yarra Ranges, like Mornington,
are projected to record modest growth of over the period to 2031. Based on this analysis,
the planned Kaufland stores at Epping, Coolaroo and Dandenong would be well placed to
serve the growing needs of the respective catchments, while the proposed stores at
Mornington, Oakleigh and Chirnside Park would serve catchments that are not projected to
accommodate substantial amount of population growth over the forecast period.

                                                           Table 4.1
                               Kaufland Mornington trade area population, 2011-2031*

                                                                             Population                      Avg. annual
  Proposed store           LGA                            2016            2021         2026         2031     growth (%)

  Mornington               Mornington Peninsula           160,862         168,134     172,036      176,230        0.6%
  Epping                   Whittlesea                     207,881         246,904     285,275      320,622        2.9%
  Oakleigh South           Monash                         192,850         199,343     204,737      209,923        0.6%
  Coolaroo                 Hume City                      207,830         248,915     284,307      316,694        2.8%
  Chirnside Park           Yarra Ranges                   155,300         161,325     167,469      174,087        0.8%
  Dandenong                Greater Dandenong              155,773         169,656     181,260      193,592        1.5%
  Source: ABS Census 2016; Victoria In Future 2016; forecast .id; MacroPlan Dimasi

Overall, the rate of population growth projected to occur in the Mornington catchment does
not clearly warrant the development of an additional large supermarket in the short term.
The development of the approved new Coles supermarket and the expansion of existing
supermarkets is considered adequate to serve the needs of future residents moving into the
area in the medium term.

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                                                                                              Economic Impact Assessment
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