Kilmore supermarket development
Economic Impact Assessment
August 2018
Tony Dimasi [email protected]
Prepared for Lascorp Development Group (Aust) Pty Ltd
Table of contents
Executive summary 1
Introduction 4
Section 1: Site context and planning framework 5
1.1 Regional context and site location 5
1.2 Planning framework 8
1.3 Peri-urban towns of Melbourne 12
1.4 Proposed development 13
Section 2: Trade area analysis 15
2.1 Trade area definition 15
2.2 Trade area population 18
2.3 Socio-demographic profile 21
2.4 Trade area retail spending 23
Section 3: Competition 27
3.1 Competitive context 27
3.2 Other vacant sites within the Kilmore Town Centre 29
3.3 Supermarket floorspace provision 31
Section 4: Centre retail sales potential 33
Section 5: Economic impact findings 38
5.1 Economic and social benefits 38
5.2 Employment stimulus 40
5.3 Consideration of trading impacts 41
5.4 Summary and net community benefit 44
Executive summary
• Kilmore is situated some 75 km north of Melbourne on the Northern Highway, the main north-south carriageway through this region of Victoria. The subject site, which is proposed to accommodate a supermarket-based development, is located on the north-western corner of Sydney Street (Northern Highway) and Clarke Street.
• The Kilmore Structure Plan 2016 was adopted by Council on 15 August 2016 and was placed on formal public exhibition as part of Planning Scheme Amendment C123 in October/November 2017. Amendment C123 and the Kilmore Structure Plan were subsequently considered by a Planning Panel in May 2018 and the Panel report was issued in June 2018. Among the Panel findings and recommendations is the designation of the subject site as sitting within the Sydney Street Town Centre boundary and being a “potential supermarket and associated specialty retail site”.
• The extent of the trade area expected to be served by the proposed supermarket development reflects the strategic location of the site on the Northern Highway; the surrounding competitive context; and the proposed composition of the project within the context of the broader Kilmore Town Centre, of which it will form part. The trade area for the proposed development is defined to include a primary and three secondary sectors. The main trade area population is estimated at almost 25,000 at 2018, including 15,600 residents within the primary sector. Over the forecast period, the main trade area population is projected to increase by around 440 residents per year, and is estimated to reach 28,346 at mid-2026.
• The closest supermarkets and foodstores within the trade area include Coles and Aldi supermarkets as well as a small Friendly Grocer foodstore in the Kilmore Town Centre. IGA supermarkets are located in the surrounding towns of Broadford, Heathcote, Wandong and Lancefield. Beyond the trade area, the most relevant retail facilities are located at Wallan, to the south, and Seymour, to the north.
• The proposed supermarket at the subject site would locate almost adjacent to the existing Coles store, forming a natural extension of the town centre. The Sydney Street strip is well established and there are no available sites, other than the subject site, which would be suitable to accommodate the development of a full range supermarket together with supporting specialty stores, as proposed on the subject
Kilmore supermarket development 1 Economic Impact Assessment Executive summary
site. The desirable site attributes for such development include adequate size for the store and associated carparking; easy accessibility; and strong connections with the existing retail offer.
• The total retail sales potential of the proposed development is estimated at $37.4 million at 2020/21, expressed in constant 2016/17 dollars. This estimate of sales potential reflects the location of the site on a major traffic route, the available population within the defined main trade area, and the limited provision of major supermarkets in the surrounding area.
• The proposed supermarket development is likely to result in a range of economic impacts, with the key positive benefits including:
- addressing an existing shortfall of supermarket floorspace within the trade area;
- catering for the projected increase in population within the trade area;
- improving shopping choice, convenience and amenity for local residents;
- increasing competition;
- strengthening the role of Kilmore as a retail centre;
- attracting people to live in Kilmore; and
- creating additional employment opportunities.
• Furthermore, the proposed development would meet a number of the key objectives outlined in the Kilmore Structure Plan, in particular:
- providing an additional supermarket within the Kilmore Town Centre;
- supporting the establishment of township gateways which mark the arrival into the Kilmore Town Centre;
- promoting high quality built form outcomes along the Northern Highway interface having regard to its role at the northern gateway:
- discouraging car parking along the Northern Highway frontage and encouraging access from Clarke Street; and
- promoting finer grain built form outcomes fronting the Northern Highway.
Kilmore supermarket development 2 Economic Impact Assessment Executive summary
• Against these benefits, some impacts are projected on existing retail facilities in the surrounding area, though focussed primarily on the various chain supermarkets. The potential trading impacts arising from the proposed new supermarket would be dispersed across a range of retail centres, and those impacts would not threaten the ongoing viability of any existing retail centre or retail shop. Therefore, it can be concluded that a net community benefit will result from the proposed development, particularly as the development will provide increased shopping choice and convenience for residents while also creating job opportunities for the local community.
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Introduction
This report presents an independent assessment of the need and demand for a supermarket-based development proposed by Lascorp Development Group at Kilmore, as well as examining the economic impacts arising from the proposed development. The report is structured as follows:
• Section 1 provides an overview of the regional and local context of the site, reviews the proposed development, discusses the relevant planning framework and also Kilmore’s peri-urban status.
• Section 2 examines the trade area available to the proposed development, including estimates and projections of population and retail expenditure levels in the trade area, as well as detailing the socio-demographic profile of the trade area population.
• Section 3 reviews the competitive environment of the surrounding area, as well as exploring the existing vacant sites within the Kilmore Town Centre.
• Section 4 assesses the likely sales potential and market shares of retail expenditure for the proposed supermarket development.
• Section 5 outlines the anticipated economic benefits, likely/possible impacts and net community benefit that can be anticipated following the project’s development.
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Section 1: Site context and planning framework
1.1 Regional context and site location
Kilmore is a peri-urban town located approximately 75 km north of Melbourne on the Northern Highway, and is situated within Mitchell Shire (refer Map 1.1). Being located within one hour of Melbourne, and offering excellent lifestyle opportunity, amenity and affordability, Kilmore is poised to grow very substantially in the foreseeable future.
The subject site is located at the northern edge of the Kilmore Town Centre, at the intersection of Clarke Street and Sydney Street (Northern Highway), the main arterial road in Kilmore (refer Map 1.2). The site enjoys high visibility and easy accessibility.
Immediately south of the site is a supermarket based development which contains both Coles and Aldi supermarkets.
The Kilmore Town Centre has a linear layout which extends approximately 1 km along Sydney Street from Bourke Street in the south to Clarke Street in the north. Retail stores are dispersed along the strip centre and include a range of food and non-food specialty stores, as well as other commercial facilities. A number of vacancies are also evident throughout the strip.
The other main towns within Mitchell Shire are Wallan, Seymour and Broadford, and the Shire will experience very substantial growth in population, with its 2018 population of 44,882 projected to more than double, to 91,830, by 2036.
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Map 1.1: Kilmore
Regional context
Map 1.2: Kilmore supermarket development Site location
Section 1: Site context and planning framework
1.2 Planning framework
Plan Melbourne Plan Melbourne 2017, replacing the previous Plan Melbourne 2014 and Plan Melbourne Refresh (2015), presents the overarching strategic planning vision for Melbourne. Victoria’s population is projected to grow by some 3 million over the period to 2041, and Plan Melbourne 2017 emphasises the requirement for growth to be accommodated in regional locations and Melbourne’s peri-urban areas.
Peri-urban areas are defined as the land immediately bordering an urban area, or in the case of Melbourne, the hinterland beyond the Melbourne metropolitan boundary. These areas will form an important part of Melbourne’s development into the future. With a stated intent to enforce the Urban Growth Boundary, the State Government intends to accommodate a higher level of population growth in designated peri-urban towns and regional cities.
The challenge identified by Plan Melbourne 2017 is how to manage growth in housing and employment, without compromising the productive agricultural land, heritage, tourism and biodiversity values of peri-urban areas.
Within this context, Kilmore has been identified as one of the peri-urban towns in Plan Melbourne 2017. The town is located 12 km north of the Urban Growth Boundary (UGB) of Melbourne, which extends north to Wallan (refer Map 1.1). Kilmore enjoys good transport connections, with both road and rail links to Melbourne. Kilmore East train station, on the Albury/Shepparton line, is located less than 4 km from the Kilmore Town Centre, enabling convenient access for commuters to the city. The Northern Highway also links to major transport corridor the Hume Highway, providing direct access to Melbourne.
Kilmore Structure Plan and Town Centre Plan
The Kilmore Structure Plan 2016 was adopted by Council on 15 August 2016 and was placed on formal public exhibition as part of Planning Scheme Amendment C123 in October/November 2017. In relation to the Kilmore Town Centre in particular, Amendment C123 sought to implement the findings of the Kilmore Structure Plan by
Kilmore supermarket development 8 Economic Impact Assessment Section 1: Site context and planning framework
proposing a series of change to the Municipal Strategic Statement (MSS), the application of a Design and Development Overlay Schedule 4 (DDO4) to parts of the Town Centre (including the subject site proposed for rezoning as part of this combined amendment/application) and including the Structure Plan as a reference document.
Amendment C123 and the Kilmore Structure Plan were subsequently considered by a Planning Panel in May 2018 and the Panel report was issued in June 2018. The Panel recommended approval of Amendment C123 subject to various changes as outlined in the Panel Report.
In relation to Kilmore, the Panel Report specifically discusses the Kilmore Town Centre at Section 3.1 and addresses, in particular, how the need for a second supermarket should be addressed in the Kilmore Structure Plan and how the Sydney Street activity centre should be defined.
In relation to the these issues the Panel concluded that:
• the Lascorp Development Group land is part of the Sydney Street Town Centre and the development of the land for a retail use should not be the subject of an out-of- centre assessment;
• the proposed changes to Clause 21.11-3 (Document 21) are appropriate (refer to Appendix C).
Included at Appendix C of the Panel Report is an amended version of Clause 21.11-3 which the Panel supported. Of relevance to this current proposal to rezone the subject site, Amended Clause 21.11-3 does the following :
• designates the subject site as sitting within the Sydney Street Town Centre boundary as shown on the ‘Kilmore Town Centre Framework Plan’;
• includes an annotation on that Plan identifying the subject site as ‘potential supermarket and associated speciality retail site’; and
• supports an additional full line supermarket within the Sydney Street Town Centre.
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At a Council meeting on 20 August 2018 Council adopted Amendment C123 with changes as recommended by the Panel. Amendment C123, including an updated version of the Structure Plan to reflect the recommendations of the Panel, has now been sent to the Minister for Planning for final approval.
The most relevant element of the updated Structure Plan in relation to the current rezoning proposal is Section 3.6 ‘Activity Centres’. Relevant issues/considerations identified in this section include: • the need to consolidate the Sydney Street Town Centre as the primary focus for activity in Kilmore;
• the lack of clear gateways to the Sydney Street Town Centre;
• the lack of integration of the Kilmore Creek corridor and Sydney Street;
• the lack of large unconstrained sites suitable for a major retail anchor in the Town Centre.
Consistent with Clause 21.11-3 of the MSS, Figure 42 ‘Activity Centres’ includes the subject site within the boundary of the primary commercial centre, shows it as a ‘key gateway site’ and includes the following annotation:
‘Potential full line supermarket site subject to an economic impact assessment, high quality urban design outcomes with interface to Sydney Street/Northern Highway and the Kilmore Creek and other strategies set out within the Structure Plan’.
Relevant strategies at Section 3.6 include the following.
• Activity Centre (AC) 1.1 - Consolidate Sydney Street Town Centre by prioritising all retail and other activity-generating uses within the existing town centre area as defined in Figure 42.
• AC 1.4 Provide for enhanced gateways which mark the arrival at the northern and southern approaches into the town centre as provided in Chapter 4.9.
• AC 1.17 - Support an additional full line supermarket or other large anchor retail tenant within the established town centre or immediately adjacent provided the requirements for AC1.18 and Figure 42 are met where relevant.
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AC1.18 only relates to development immediately adjacent to the town centre therefore is not applicable to the subject site which sits within the town centre. Accordingly, the key requirements that apply to the subject site are those outlined on Figure 42 – preparation of an EIA and high-quality urban design outcomes addressing the surrounding streets and the Kilmore Creek. This report addresses the requirement for an EIA.
At Section 4.8 of the KSP, Precinct 4 – North Growth + Employment Precinct, the subject site is identified as a Key Gateway site, while Section 4.9.2 Design/Development Objectives, states as follows:
“Encourage design and development of the nominated Key Gateway Site which:
• Recognises the site’s strategic role as contributing to both the Kilmore township gateway and the Kilmore Town Centre Gateway experience.
• Has regard to the preferred character of the Northern Highway.
• Addresses the Kilmore Creek and enhances its natural features and role as part of the primary linear open space corridor.
• Discourages extensive car parking and promotes finer grain built form along the Northern Highway frontage.
• Provides for high quality architectural built form outcomes and use of materials and colours to reflect its strategic location.
• Promote site access via Clarke Street.
• Enhances landscaping opportunities within the site, particularly along the Kilmore Creek and road frontages.
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1.3 Peri-urban towns of Melbourne
Table 1.1 shows a number of peri-urban towns that are broadly comparable to Kilmore, and details for each the population of the urban centre at 2016 as well as the major supermarkets located within the town. At 2016, the Kilmore urban centre contained an estimated resident population of 7,000 people, and Kilmore contains two supermarkets - Coles and Aldi. A previously existing Foodworks store has closed in recent times.
Seymour and Wonthaggi have estimated urban centre populations of 5,900 and 7,900 respectively. Both towns contain Coles, Woolworths and Aldi supermarkets.
Retail facilities in Seymour are provided around the Seymour Railway Station along Station Street, Wallis Street, and Anzac Avenue/Tallarook Street. Seymour Central is anchored by Coles and Target Country and is located within this precinct. Both Woolworths and Aldi are street-based centres located in close proximity to Seymour Central.
The retail core of Wonthaggi is bound by Korumburra Road to the north, the Bass Highway in the east, Watt Street in the south and Wonthaggi Plaza in the west. The town centre is anchored by Coles, Woolworths and Aldi supermarkets, as well as Target and Big W discount department stores. The major retailers are all clustered to the north of town with large car parks between them. Specialty retail is generally provided along Graham Street and McBride Avenue.
The presence of all three supermarkets at Seymour in particular, highlights the different shopping trends between those located in metropolitan areas and those outside of metropolitan Melbourne. Generally, people located in rural or peri-urban areas spend a greater percentage of their total food and liquor expenditure at supermarkets, which results in higher supportable supermarket floorspace.
This analysis demonstrates that a number of peri-urban towns in Melbourne, of a similar scale to Kilmore, contain both Woolworths and Coles supermarkets, as well as an Aldi supermarket.
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Table 1.1 Kilmore - Peri urban towns of Melbourne
Est. population Peri urban town (2016)* Supermarkets
Kilmore 7,000 Coles, Aldi, Woolworths (p) Seymour 5,900 Coles, Aldi, Woolworths Wonthaggi 7,900 Coles, Aldi, Woolworths Gisborne 9,800 Coles, Supa IGA, Foodworks (large), Aldi (p)
*Urban centre population Source: ABS Census 2016
1.4 Proposed development
The subject site is located at 109 Northern Highway (Sydney Street) immediately north of its intersection with Clarke Street. The development will be anchored by a supermarket and include a number of supporting specialty shops and services. Table 1.2 details the proposed composition of the development, with the supermarket anchor to occupy 3,600 sq.m., plus a bottleshop premises of 200 sq.m. Figure 1.1 illustrates the development plan for the site.
Table 1.2 Kilmore - Proposed supermarket development
GLA Category (sq.m)
Supermarket (inc. liquor)* 3,800
Retail specialties 904
Total retail 4,704
Medical centre 300
Other non-retail shopfront 250
Total non-retail 550
Total development 5,254
*Bottleshop included in supermarket GLA
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p
Figure 1.1
Section 2: Trade area analysis
This section of the report analyses the trade area available to the proposed supermarket centre at the subject site in Kilmore, including current and projected population levels, the socio-demographic profile of the population, and the estimated current and future retail expenditure capacity of trade area residents.
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:
i. The relative attraction of the retail facility or 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 car-parking, including access and ease of use.
ii. The proximity and attractiveness of competitive retail tenants, or 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 or retail facility is effectively able to serve.
iii. The available road network and public transport infrastructure, which determine the ease (or difficulty) with which customers are able to access a shopping centre, or retail facility.
iv. Significant physical barriers which are difficult to negotiate, and can act as delineating boundaries to the trade area served by an individual shopping centre, or retail facility.
Kilmore supermarket development 15 Economic Impact Assessment Section 2: Trade area analysis
The key determinants of the trade area expected to be served by the proposed Kilmore Supermarket Centre include the following:
• The high profile location of the site fronting Sydney Street (Northern Highway), which is the main north-south traffic route through Kilmore.
• The surrounding competitive context, which includes a Coles supermarket, plus Aldi and a Friendly Grocer in Kilmore, as well as IGA supermarkets at Broadford, Heathcote, Wandong and Lancefield.
• The composition of the proposed development, which is to include a full range supermarket together with a range of supporting specialty shops and services, as well as the broader Kilmore Town Centre, of which it will form part.
Map 2.1 illustrates the trade area defined for the proposed centre, which includes a primary sector and three secondary sectors, described as follows:
• The primary sector encompasses the town of Kilmore and immediately surrounding areas, as well as the towns of Broadford and Pyalong to the north.
• The secondary north sector extends north to include the town of Heathcote and surrounds.
• The secondary south sector includes the town of Wandong.
• The secondary west sector encompasses the town of Lancefield and surrounds.
In combination, the above sectors form the main trade area for the proposed development. The most important trade area sector is clearly the primary sector, while of the three secondary sectors, the secondary west, encompassing Lancefield, is considered to be the most important.
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Map 2.1: Kilmore supermarket centre
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 Kilmore 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 and 2016);
• Population projections prepared by forecast.id for Mitchell Shire Council (updated November 2017), Macedon Ranges Shire (updated November 2017) and City of Greater Bendigo (updated November 2017).
The main trade area population was estimated 23,926 people at Census date in 2016, including 14,870 residents within the primary sector. Over the most recent intercensal period (2011 to 2016), the main trade area population increased by an average of 580 annually, with the primary sector population alone growing by 452 people per annum.
As previously detailed, Plan Melbourne identifies Kilmore as a peri-urban town with excellent growth potential. The Kilmore Structure Plan identifies extensive potential future residential growth areas to the north-east, west and south of the town centre. Figure 9 from the Kilmore Structure Plan, attached, shows the areas identified for future residential growth.
Over the forecast period to 2026, the main trade area population is projected to increase by around 440 residents per year and is estimated to reach 28,346 by 2026, including 18,420 residents in the primary sector at that date. These estimates might well prove to be conservative, given the general growth outlook for Kilmore, and its desirability as a residential destination. The KSP, for example, has identified sufficient land in Kilmore to accommodate a long-term population of over 20,000 – bearing in mind that the current urban centre population is 7,000.
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Table 2.1 Kilmore - trade area population, 2011-2026*
Estimated population Forecast population Trade area sector 2011 2016 2018 2021 2026
Primary 12,610 14,870 15,620 16,670 18,420
Secondary sectors • North 3,480 3,670 3,730 3,790 3,890 • South 2,160 2,280 2,320 2,380 2,480 • West 2,770 3,106 3,206 3,356 3,556
Total secondary 8,410 9,056 9,256 9,526 9,926
Main trade area 21,020 23,926 24,876 26,196 28,346
Average annual growth (no.) Trade area sector 2011-16 2016-18 2018-21 2021-26
Primary 452 375 350 350
Secondary sectors • North 38 30 20 20 • South 24 20 20 20 • West 67 50 50 40
Total secondary 129 100 90 80
Main trade area 581 475 440 430
Average annual growth (%) Trade area sector 2011-16 2016-18 2018-21 2021-26
Primary 3.4% 2.5% 2.2% 2.0%
Secondary sectors • North 1.1% 0.8% 0.5% 0.5% • South 1.1% 0.9% 0.9% 0.8% • West 2.3% 1.6% 1.5% 1.2%
Total secondary 1.5% 1.1% 1.0% 0.8%
Main trade area 2.6% 2.0% 1.7% 1.6%
*As at June Source: ABS Census 2016; Victoria in Future 2016; Forecast.id.
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Figure 2.1
Section 2: Trade area analysis
2.3 Socio-demographic profile
Table 2.2 details the socio-demographic profile of the Kilmore trade area population, sourced from the 2016 ABS Census of Population and Housing. The profile is compared with benchmarks for non-metropolitan Victoria, with the key points to note including the following:
• Main trade area residents earn slightly higher average per capita income levels compared with the benchmark for non-metropolitan Victoria, while average household income levels are 9.2% higher than the benchmark for non-metropolitan Victoria.
• The trade area has an age profile which is generally comparable to non- metropolitan Victoria, with slightly higher proportions of children as well as those aged 45-54, and a lower proportion of people aged 60 years and over.
• The proportion of homeowners in the main trade area (78.5%) is higher than the non- metropolitan Victoria benchmark (71%) with 35% of main trade area homeowners owning their homes outright.
• The proportion of Australian born residents in the main trade area is comparable with the non-metropolitan Victoria benchmark, both being well above the national average.
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Table 2.2 Kilmore main trade area - socio-demographic profile, 2016
Primary Secondary sectors Main Non-metro Aust. Census item sector North South West TA Vic. avg. avg.
Per capita income $33,738 $29,313 $37,123 $37,788 $33,924 $33,310 $39,670
Var. from Non-metro Vic bmark 1.3% -12.0% 11.4% 13.4% 1.8% Avg. household income $88,281 $62,338 $112,997 $97,368 $86,764 $79,444 $102,944
Var. from Non-metro Vic bmark 11.1% -21.5% 42.2% 22.6% 9.2% Avg. household size 2.62 2.13 3.04 2.58 2.56 2.39 2.60
Age distribution (% of population) Aged 0-14 20.4% 13.1% 20.9% 19.7% 19.2% 18.2% 18.7% Aged 15-24 13.4% 7.5% 13.8% 10.6% 12.1% 11.6% 12.8% Aged 25-34 10.9% 6.2% 10.5% 8.9% 9.8% 10.9% 14.4% Aged 35-44 11.8% 9.7% 14.3% 12.7% 11.8% 11.5% 13.4% Aged 45-54 14.5% 12.9% 14.9% 15.3% 14.4% 13.4% 13.3% Aged 55-64 12.3% 20.2% 14.1% 16.4% 14.2% 13.9% 11.8% Aged 65+ 16.7% 30.5% 11.6% 16.3% 18.3% 20.4% 15.7% Average age 39.4 49.6 37.6 40.9 41.0 41.2 38.7
Housing status (% of households) Owner (total) 75.9% 77.3% 88.7% 86.0% 78.5% 71.0% 66.0% • Owner (outright) 32.2% 45.1% 29.3% 37.3% 35.0% 37.8% 31.2% • Owner (with mortgage) 43.7% 32.2% 59.4% 48.8% 43.6% 33.2% 34.8% Renter 20.8% 16.5% 7.7% 12.1% 17.8% 25.1% 30.6% Other 3.2% 6.1% 3.6% 1.9% 3.6% 3.9% 3.4%
Birthplace (% of population) Australian born 82.7% 75.5% 84.2% 81.5% 81.5% 80.7% 67.8% Overseas born 17.3% 24.5% 15.8% 18.5% 18.5% 19.3% 32.2%
Source: ABS Census of Population & Housing, 2016
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2.4 Trade area retail spending
The estimated retail expenditure capacity of the main trade area population is sourced from MarketInfo, an independent and widely used data set 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.
Chart 2.2 details the estimated retail spending levels of the main trade area population on a per capita basis at 2016/17. Retail spending per person across the main trade area is estimated at $13,842 on average, marginally above the non-metro Victoria average. All spending figures presented in this report are expressed inclusive of GST.
Chart 2.1 Kilmore main trade area - retail expenditure per person, FY2017*
Total retail $16,000 13,727 13,842 13,726 13,928 $14,000 Primary sector Main trade area Non-metro Vic. Australia $12,000 $10,000 7,955 8,019 7,961 7,891 $8,000 5,772 5,824 5,765 6,037 $6,000 $4,000 $2,000 $0 Total Food Total Non-food Total Retail
Food 5,656 5,705 5,659 $6,000 5,429 Primary sector Main trade area Non-metro Vic. Australia $5,000
$4,000
$3,000
$2,000 1,565 1,564 1,582 1,765 734 750 721 $1,000 697
$0 Food & Groceries Packaged Liquor Food Catering
Non-food $3,000 2,441 2,492 2,4262,524 $2,500 Primary sector Main trade area Non-metro Vic. Australia
$2,000 1,275 1,368 $1,500 1,264 1,268 1,011 1,018 998 1,037 $1,000 574 572 584 584 472 478 490 524 $500
$0 Apparel Household Goods Leisure General Retail Retail Services
*Including GST Source: MarketInfo; Dimasi & Co.
Kilmore supermarket development 23 Economic Impact Assessment Section 2: Trade area analysis
Table 2.3 presents projections of the estimated retail spending capacity of the main trade area population over the forecast period 2017 – 2026. Total retail expenditure by the main trade area population is estimated at $334.4 million at 2017, including $206.7 million generated by the primary sector population. The retail expenditure capacity of the main trade area population is projected to increase to $422.2 million by 2026, presented in constant 2016/17 dollars (i.e. excluding retail inflation).
Table 2.3 Kilmore main trade area - retail expenditure ($M), 2017-2026*
Year ending Primary Secondary sectors Total Main June sector North South West Secondary TA
2017 206.7 50.7 32.0 45.1 127.8 334.4 2018 218.7 51.9 32.8 47.0 131.7 350.4 2019 225.6 52.7 33.4 48.1 134.2 359.7 2020 232.6 53.4 34.0 49.3 136.7 369.3 2021 239.9 54.2 34.6 50.5 139.3 379.2 2022 241.8 54.7 34.9 50.9 140.5 382.3 2023 249.0 55.5 35.5 51.9 142.9 391.9 2024 256.3 56.3 36.2 53.0 145.4 401.8 2025 263.9 57.1 36.8 54.1 148.0 411.9 2026 271.7 57.9 37.4 55.3 150.6 422.2
Average annual growth ($M) 2017-2026 7.2 0.8 0.6 1.1 2.5 9.8
Average annual growth (%) 2017-2026 3.1% 1.5% 1.8% 2.3% 1.8% 2.6%
*Constant 2016/17 dollars & including GST Source: MarketInfo; Dimasi & Co.
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Table 2.4 presents the retail spending capacity of the main trade area population across key retail categories, as well as the category definitions. Take-home food, groceries and packaged liquor (FLG) expenditure by main trade area residents, which is the key segment of the retail market relevant to supermarkets, is estimated to increase from $155.9 million at 2017 to $198.3 million at 2026 (presented in 2016/17 constant dollars). Table 2.5 provides the same information for the primary sector population, showing growth in FLG spending from $96.2 million at 2017 to $127.4 million at 2026.
Table 2.4 Kilmore main trade area - retail expenditure by category ($M), 2017-2026*
Year ending FLG Food Apparel Household Leisure General Retail Total June catering goods retail services retail
2017 155.9 37.8 30.5 60.2 13.8 24.6 11.5 334.4 2018 163.5 39.8 31.9 63.0 14.4 25.7 12.1 350.4 2019 168.0 41.1 32.6 64.5 14.8 26.2 12.4 359.7 2020 172.6 42.5 33.3 66.2 15.1 26.8 12.8 369.3 2021 177.4 43.9 34.1 67.8 15.4 27.4 13.1 379.2 2022 179.0 44.5 34.2 68.3 15.5 27.6 13.3 382.3 2023 183.7 45.9 35.0 69.9 15.8 28.1 13.6 391.9 2024 188.4 47.3 35.7 71.5 16.1 28.7 14.0 401.8 2025 193.3 48.8 36.5 73.2 16.5 29.3 14.3 411.9 2026 198.3 50.3 37.2 74.9 16.8 29.9 14.7 422.2
Average annual growth ($M) 2017-2026 4.7 1.4 0.7 1.6 0.3 0.6 0.3 9.8
Average annual growth (%) 2017-2026 2.7% 3.2% 2.2% 2.5% 2.2% 2.2% 2.7% 2.6%
*Constant 2016/17 dollars & including GST Source: MarketInfo; Dimasi & Co.
Retail expenditure category definitions:
• FLG: take-home food and groceries, as well as packaged liquor. • Food catering: expenditure at cafes, take-away food outlets and restaurants. • Apparel: clothing, footwear, fashion accessories and jewellery.
• Household goods: giftware, electrical, computers, furniture, homewares and hardware goods.
• Leisure: sporting goods, music, DVDs, computer games, books, newspapers & magazines,
stationery and photography equipment.
• General retail: pharmaceutical goods, cosmetics, toys, florists, mobile phones and pets.
• Retail services: hair & beauty, optical goods, dry cleaning, key cutting and shoe repairs.
Kilmore supermarket development 25 Economic Impact Assessment Section 2: Trade area analysis
Table 2.5 Kilmore primary trade area - retail expenditure by category ($M), 2017-2026*
Year ending FLG Food Apparel Household Leisure General Retail Total June catering goods retail services retail
2017 96.2 23.6 19.2 36.7 8.6 15.2 7.1 207 2018 101.9 25.1 20.2 38.8 9.1 16.0 7.5 219 2019 105.2 26.0 20.8 40.0 9.4 16.5 7.8 226 2020 108.6 27.0 21.3 41.2 9.6 16.9 8.0 233 2021 112.1 28.0 21.9 42.4 9.9 17.4 8.3 240 2022 113.1 28.4 22.0 42.7 9.9 17.4 8.3 242 2023 116.5 29.4 22.6 43.8 10.2 17.9 8.6 249 2024 120.0 30.4 23.1 45.1 10.4 18.3 8.9 256 2025 123.7 31.5 23.7 46.3 10.7 18.8 9.1 264 2026 127.4 32.6 24.3 47.6 11.0 19.3 9.4 272
Average annual growth ($M) 2017-2026 3.5 1.0 0.6 1.2 0.3 0.5 0.3 7.2
Average annual growth (%) 2017-2026 3.2% 3.7% 2.7% 2.9% 2.7% 2.7% 3.2% 3.1%
*Constant 2016/17 dollars & including GST Source: MarketInfo; Dimasi & Co.
Kilmore supermarket development 26 Economic Impact Assessment
Section 3: Competition
This section provides an overview of the competitive context of the surrounding area, details the vacant sites within the Kilmore Town Centre, and reviews the existing and future supermarket floorspace provision within the main trade area.
3.1 Competitive context
Table 3.1 details the provision of retail facilities within the main trade area, as well as major retail centres located beyond the trade area. The previous Map 2.1 illustrates the locations of these centres.
Table 3.1 Kilmore - schedule of competing retail facilities
Retail Dist. by road from Centre GLA Major traders Kilmore (sq.m) (km)
Within trade area Kilmore 15,000 Coles, Aldi - Wandong 1,600 IGA 13 Broadford 3,900 IGA 13 Lancefield 2,800 IGA 23 Heathcote 4,400 Supa IGA 48
Beyond trade area Wallan 15,000 Coles, Woolworths, Aldi 15
Future retail facilities Heathcote 1,000 Supa IGA (exp u/c) 48
The key retail centre with the main trade area is the Kilmore Town Centre, which is anchored by adjoining Coles and Aldi supermarkets, located at the northern edge of the town centre. The subject site is located immediately to the north of these two stores. The Kilmore Town Centre has approximately 20,000 sq.m of shopfront floorspace, some 15,000 sq.m of which is estimated to be occupied retail floorspace. The town centre includes a range of food and non-food retail specialty stores, as well as a small Friendly Grocer foodstore. The town centre also contains a range of supporting non-retail
Kilmore supermarket development 27 Economic Impact Assessment Section 3: Competition
tenancies including a number of pubs, banks, medical centres, and real estate agents. A number of shopfronts in the town centre are currently vacant.
Other retail facilities located within the defined main trade area include the following:
• Broadford is a small town located 13 km north-east of Kilmore to the west of the Hume Freeway. Broadford is a strip centre located on Broadford-Kilmore Road (High Street) which is anchored by a small IGA supermarket (approx. 500 sq.m.) and supported by a limited number of local retail stores and services.
• Wandong is a small town located 13 km south-east of Kilmore to the east of the Hume Freeway. The retail offer in Wandong is anchored by an IGA supermarket (approx. 800 sq.m.) and supported by a small selection of retail stores and services spread along Epping Kilmore Road.
• Heathcote is a regional town located within the City of Greater Bendigo in the secondary north sector. Heathcote is anchored by Champions Supa IGA at the northern edge of the town centre (approx. 950 sq.m., but in the process of being extended to around double its current size) on the Northern Highway. To the south is a selection of cellar doors, food catering tenancies, specialty retailers and retail services.
Lancefield has a very limited retail offer, anchored by an IGA foodstore of only some 320 square metres. With a drivetime to Kilmore of only 20 minutes along an uncongested pleasant country road, and no significant retail facilities available any closer, Lancefield residents are likely to direct much of their food and groceries expenditure to Kilmore, especially when all three major supermarket brands are available in the town.
The most significant, and most relevant, retail facilities located beyond the main trade area are at Wallan, 15 km south of Kilmore. Wallan is served by Coles, Woolworths and Aldi supermarkets, which are all located to the west of the Northern Highway. Woolworths is located within the Wellington Square Shopping Centre, while Coles is situated immediately south of Woolworths, and Aldi is the southernmost supermarket, located opposite Wallan Secondary College.
Kilmore supermarket development 28 Economic Impact Assessment Section 3: Competition
3.2 Other vacant sites within the Kilmore Town Centre
Kilmore Town Centre extends along Sydney Street for 1 km between Kilmore-Lancefield Road and Clarke Street, with retail dispersed along its length and a Coles supermarket anchoring the northern edge of the centre. There are a number of vacant tenancies with a frontage to Sydney Street and a small number of vacant lots within the current C1 zone, the extent of which is shown on Map 3.1.
The Kilmore Motel is located to the south of the Coles and Aldi supermarkets, while the site immediately south of the Motel has been cleared and is planned to be developed as a car wash with associated facilities, which makes any potential consolidation of these sites very challenging.
A number of small contiguous vacant/underutilised sites, including one which is occupied by a residential house, are situated to the south of the above sites, also on the western side of Sydney Street. The combined size of these various properties – putting aside for the moment the difficulties that would be associated with acquiring all of them - totals in the order of 0.7 hectares.
As a comparison, the subject site is 1.8 hectares in size – more than double. Therefore, the combined area of all the properties would not be large enough to accommodate the proposed supermarket based centre and associated car parking, even if the sites were to be acquirable.
It can be reasonably concluded that there is no other site within the Kilmore Town Centre which can realistically accommodate a financially viable supermarket-based development, as proposed on the subject site.
Kilmore supermarket development 29 Economic Impact Assessment Section 3: Competition
Map 3.1: Town Centre Precinct - Vacant Sites
Kilmore supermarket development 30 Economic Impact Assessment Section 3: Competition
3.3 Supermarket floorspace provision
Table 3.2 presents an analysis of supermarket floorspace demand for the defined Kilmore main trade area at 2016/17 and also projected to 2020/21.
Table 3.2 Kilmore - Est. supportable supermarket floorspace, 2017 - 2021
Factor 2017 2021
MTA population 24,160 26,424 MTA FLG expenditure ($m) 155.9 177.4 Est. % MTA FLG expenditure directed to supermarkets (%) 80% 80% FLG expenditure available to supermarkets ($m) 124.7 141.9
Est. % of FLG expenditure retained by MTA smkts (%) 80% 80% FLG expenditure retained by MTA smkts ($m) 99.8 113.5
Est. % of sales drawn from beyond MTA 10.0% 10.0% Sales from beyond MTA ($m) 11.1 12.6 Total FLG expenditure available to MTA smkts ($m) 110.9 126.1
Est. % general merchandise sales (additional) (%) 6.0% 6.0% Est. general merchandise sales (additional) ($m) 6.7 7.6 Total available expenditure to MTA smkts ($m) 117.5 133.7
Est. average trading levels ($/sq.m)* 9,500 9,691 Est. supportable floorspace (sq.m) 12,372 13,796 Existing/approved smkt. Floorspace (sq.m)** 7,200 8,200
Est. smkt floorspace shortfall(-)/surplus (+) (sq.m) -5,172 -5,596
*Reflects $9,500 per sq.m at 2017 grown forward at an average growth rate of 0.5% p.a. ** Includes Coles and Aldi at Kilmore: Supa IGA at Heathcote; IGA at Broadford, Wandong and Lancefield. NB: Expenditure estimates are presented as $2016/17 and including GST
For the purposes of this assessment, supermarkets are defined as food and grocery stores of more than 500 sq.m GLA (gross leasable area). There are currently five such supermarkets within the Kilmore main trade area. The largest by far is the Coles store at Kilmore, and there are five other much smaller stores provided in Kilmore (Aldi) and throughout the other towns within the trade area (Broadford, Wandong and Heathcote). Overall, the total supermarket floorspace supply within the main trade area is estimated at 6,900 sq.m at present, but for the purpose of this assessment the very small IGA foodstore at Lancefield (320 sq.m.) has also been included in the supply figure, taking it to 7,200 sq.m.
Kilmore supermarket development 31 Economic Impact Assessment Section 3: Competition
Based on the main trade area population of 24,160 at 2017, it is estimated that the supportable supermarket floorspace demand by main trade area residents is in the order of 12,370 sq.m. This demand is some 5,170 sq.m. greater than the existing supply of 7,200 sq.m., even allowing for the inclusion of the very small Lancefield IGA store as a “supermarket”. By 2020/21, after allowing for the expansion of IGA at Heathcote, the estimated shortfall will be some 5,600 sq.m.
As discussed previously, Kilmore is a strongly growing peri-urban area, and the demand for additional supermarket floorspace will continue to increase over time as the population of the town grows.
Quite apart from the numerical analysis outlined above, what is also apparent from this review is that there is only one full size modern supermarket within this main trade area – the Coles store at Kilmore. A number of the other stores (e.g. IGA Lancefield and even IGA Broadford) barely qualify as supermarkets, being more accurately described as smaller foodstores.
This analysis demonstrates the underprovision of supermarket floorspace in the trade area, requiring local residents to travel beyond the local area to access supermarket facilities (i.e. to Wallan and Seymour).
A second substantial, modern supermarket, to be operated by Woolworths, would clearly add significantly to the level of competition for food and groceries within this trade area, and particularly within Kilmore, and would provide increased amenity for Kilmore and surrounding areas.
Importantly, a demand/supply analysis for just the primary and secondary west trade area sectors – i.e. the two sectors from which supermarkets located at Kilmore would expect to attract almost all available FLG spending – shows that the supermarket floorspace shortfall at present is in the order of 3,900 sq.m. By 2021, that shortfall will have increased to 4,800 sq.m.
Kilmore supermarket development 32 Economic Impact Assessment
Section 4: Centre retail sales potential
In order to be able to consider the question of potential economic benefits and impacts that might arise from the proposed Kilmore Supermarket Centre, the first step is to quantify the level of sales which the proposed centre can reasonably expect to achieve.
The sales performance of any particular retail facility, be it an individual store or a collection of stores provided in a shopping centre or precinct, is determined by a combination of the following factors:
• The quality of the facility, with particular regard to the major trader/traders which anchor the centre; the strength of the tenancy mix relative to the needs of the catchment which it seeks to serve; the physical layout and ease of use; the level of accessibility and ease of parking; and the atmosphere/ambience of the centre;
• The size of the available catchment which the centre seeks to serve. This factor sets the upper limit of the sales potential able to be achieved by the centre or store; and
• The location and strengths of competitive retail facilities and the degree to which those alternative facilities are able to effectively serve the needs of the population within the relevant trade area.
The key considerations for the proposed Kilmore Supermarket Centre are as follows:
• The site is well located on the Northern Highway, the main north-south traffic route through Kilmore. The proposed centre would therefore enjoy excellent exposure to passing traffic and would be easily accessible for residents;
• The available population within the main trade area defined for the Kilmore Supermarket Centre is estimated at 26,196 by 2021, likely to be the first full year of trade by any new store built, with 16,670 residents within the primary sector at that date. The population of the primary sector is estimated to grow solidly over the forecast period and reach over 18,400 residents by 2026; and
Kilmore supermarket development 33 Economic Impact Assessment Section 4: Centre retail sales potential
• There is only one full range supermarket within the trade area, namely the Coles supermarket within the Kilmore Town Centre.
Supermarket The key points taken into consideration when assessing the sales potential for a supermarket on the subject site are as follows:
• Supermarkets generate almost all of their sales from the take-home food, grocery and packaged liquor (FLG) retail expenditure category, as detailed in Section 2 of this report. The primary sector population will provide the majority of the sales for the proposed supermarket at the subject site. The available FLG spending generated by the primary trade area sector population is estimated at $96.2 million at 2017, and is expected to increase, in real terms, to $127.4 million by 2026.
• Typically, Australians direct between 65% – 80% of food and grocery spending to supermarkets and major foodstores (i.e. grocery stores greater than 500 sq.m). This ratio can vary from location to location and is dependent upon the provision of supermarkets and foodstores within the particular area or region, as well as the socio-demographic profile of the population. Assuming an appropriate provision of floorspace, with all 3 major chains represented in the town, the share directed to supermarkets is expected to be at the top of this range for the Kilmore trade area. Such an outcome is typical in regional towns and rural locations where there is a lower than average provision of alternative fresh food shopping options, such as food markets and grocery stores, and where shoppers tend to be more price conscious.
The estimation of sales potential for the proposed supermarket firstly considers the appropriate expenditure category, which is the take-home food and packaged liquor (FLG) market. The typical proportion of this expenditure directed to supermarkets is then assessed. Finally, the market shares of this retail expenditure market are estimated for each sector of the main trade area, while there is an allowance for some business to be captured from beyond the trade area.
The sales potential for a 3,800 sq.m supermarket (including a 200 sq.m liquor outlet) at the proposed Kilmore development at 2020/21 is estimated at $32.3 million (constant 2016/17 dollars and including GST).
Kilmore supermarket development 34 Economic Impact Assessment Section 4: Centre retail sales potential
Specialty floorspace In addition to the supermarket and associated liquor store, the plan for the proposed Kilmore development has a provision for a further 1,154 sq.m of shopfront floorspace, including pad sites, though not all of that space is likely/expected to be occupied by retail uses. The types of stores considered supportable at the proposed development, by retail category, are as follows:
• Fresh food – a number of fresh food stores, with the most likely including a bakery, fresh produce store, health food store, butcher and/or poultry shop.
• Food catering – three or four food catering outlets, including two take-away food stores, as well as one or two cafes/casual restaurants.
• General retail – a pharmacy is considered to be supportable in this category.
• Retail services – a beauty salon/hairdresser is considered to be supportable.
In addition to retail specialty stores, a number of non-retail tenants are also usually provided at supermarket based centres. A development of the nature and scale proposed at Kilmore could support a number of non-retail outlets, such as a medical centre which is planned to be included, and a real estate agent.
Total centre retail sales potential and market shares
Table 4.1 provides the total retail sales potential estimated for the proposed Kilmore Supermarket Centre. The total retail sales potential of the centre is estimated at $37.4 million at 2020/21 (expressed in constant 2016/17 dollars).
Kilmore supermarket development 35 Economic Impact Assessment Section 4: Centre retail sales potential
Table 4.1 Kilmore - Potential mix and centre sales by retail category, 2018/19*
GLA Est. sales potential Category (sq.m) ($000) ($/sq.m)
Major tenants Supermarket (inc. liquor) 3,800 32,300 8,500 Retail specialties (indicative mix) Take-home food 200 1,400 7,000 Food catering 150 975 6,500 General 100 500 5,000 Retail services 119 595 5,000 Pad retail sites 335 1,675 5,000 Total retail specialties 904 5,145 5,691 Total retail space 4,704 37,445 7,960 Non-retail shopfront 250 n.a. n.a. Medical centre 300 n.a. n.a. Total property 5,254
*Constant 2016/17 and including GST
Table 4.2 presents the estimated centre market shares of available retail expenditure at 2020/21. The estimated market shares of available food and non-food retail spending are calculated based on the following key points:
i. The total estimated sales potential of each component of the proposed centre as detailed previously (supermarket and specialty stores) is split into food and non-food sales, taking account of the typical sales distribution for each retailer type.
ii. The total sales that are expected to be generated by the centre from each trade area sector are then estimated, taking into account the likely shopping patterns of trade area residents.
iii. The total available retail expenditure within each trade area sector is calculated, based on the MarketInfo estimates (refer Section 2).
iv. The estimated market shares expected to be achieved by the new centre, of both food and non-food expenditure in each trade area sector, are then
Kilmore supermarket development 36 Economic Impact Assessment Section 4: Centre retail sales potential
calculated by dividing the estimated centre sales from each sector by the projected retail expenditure available in each sector.
The proposed Kilmore Supermarket Centre is estimated to potentially achieve a 9.4% market share of total retail spending of the main trade area population, comprising a 14.8% share of food spending and a 1.8% share of non-food spending. The majority of centre sales would be drawn from the primary sector ($28.1 million), with $5.6 million estimated to come from the secondary sectors. In addition, the proposed centre is estimated to capture $3.7 million of retail spending from people residing beyond the main trade area.
Table 4.2 Kilmore - Est. market shares, 2020/21
Retail expenditure ($m) Est. retail sales ($m) Est. market share (%) Factor Food Non-food Total Food Non-food Total Food Non-food Total
Primary 131 94 226 25.8 2.3 28.1 19.7% 2.4% 12.5% Secondary 78 56 134 5.2 0.5 5.6 6.6% 0.8% 4.2%
Main Trade Area 209 151 360 31.0 2.7 33.7 14.8% 1.8% 9.4% Sales from beyond MTA 3.4 0.3 3.7 Total centre sales 34.4 3.0 37.4
*Constant 2016/17 and including GST
Kilmore supermarket development 37 Economic Impact Assessment
Section 5: Economic impact findings
This section outlines the potential economic benefits, impacts and net community benefit that can be anticipated following the development of the proposed Kilmore Supermarket Centre.
5.1 Economic and social benefits
The proposed Kilmore Supermarket Centre is likely to result in a range of economic impacts. From a trading point of view, impacts may be experienced by some competitive facilities located in the surrounding region, and the likely extent of these trading impacts is considered further later in the report. On the other side of the equation, the proposed development will result in a range of economic benefits, particularly for residents of the main trade area. The key positive impacts will include the following:
1. Catering to the increased population in the trade area The main trade area population is in excess of 24,000 at 2017, and is projected to increase to more than 28,000 by 2026. There is currently only one full line supermarket in the main trade area, namely the Coles store at Kilmore, together with Aldi and a few smaller IGA stores. A population of this scale can easily support three full line supermarkets, as well as a number of smaller foodstores.
2. Substantially improving shopping choice and convenience for local residents A new full line supermarket at Kilmore would greatly improve shopping choice and convenience for residents, by providing a wider range of shopping alternatives for food and grocery shopping. A new supermarket would also reduce the amount of retail expenditure escaping from the main trade area to other supermarkets in metropolitan Melbourne.
3. Increasing competition A new supermarket in Kilmore would be well placed to compete with the existing Coles supermarket at Kilmore. This increased competition is likely to lead to reduced food and grocery prices for consumers.
Kilmore supermarket development 38 Economic Impact Assessment Section 5: Economic impact findings
4. Expanding the role of Kilmore as a retail centre A full line supermarket at the subject site will be a natural extension of the Kilmore Town Centre retail offer. The development would significantly strengthen the role of the town centre, generating increased patronage from which the other town centre shops and services could potentially benefit.
The increased patronage would result in both increased retention of the available food and grocery expenditure generated by residents of Kilmore, and increased attraction of food and grocery expenditure from residents of other towns (e.g. Broadford, Lancefield, Heathcote) due to the fact that Kilmore would then have two major supermarkets, and an increased level of competition for food and grocery shopping. As a result, Kilmore would offer an expanded range of grocery shopping alternatives; a greater range of specials; downward pressure on prices; and further it would be perceived by consumers to offer an increased range and a more competitive destination for food and grocery shopping.
5. Attracting people to live in Kilmore The proposed supermarket at Kilmore and its potential flow-on benefits to the remainder of the Town Centre will encourage greater numbers of people to settle in the town. This would support the planning aims of Plan Melbourne, with respect to attracting population growth to designated peri-urban areas.
6. Creation of additional employment opportunities A new supermarket at Kilmore would create a substantial number of additional jobs in the region, both for the construction and related industries during the construction phase, and for the economy generally once the centre is operational. The additional employment creation is discussed further later in this report.
Kilmore supermarket development 39 Economic Impact Assessment Section 5: Economic impact findings
5.2 Employment stimulus
This sub-section provides estimates of the employment levels likely to be created by the proposed Kilmore Supermarket Centre. The methodology used in estimating the number of potential news jobs at the centre is regularly used in retail economic impact assessments. The purpose is to provide a general indication of the number of jobs potentially created from the development.
Table 5.1 details the employment likely to be created by the proposed Kilmore Supermarket Centre. Based on the quantum and nature of floorspace to be included in the proposed development, we estimate that approximately 177 net ongoing jobs would be created by the proposed retail development.
Table 5.1 Kilmore - Est. additional employment
Estimated employment GLA Employment Factor per 1,000 sq.m (sq.m) (persons)
Supermarket (inc. liquor) 33 3,800 125 Specialty shops/services 40 1,154 46
Total retail 35 4,954 172 Medical centre 50 300 15
Total development 36 5,254 187 Net increase in employment* 177
*Net increase allows for some redirected employment from other centres/businesses
As the retail expenditure generated by the trade area population increases, new retail developments will provide new job opportunities that will not necessary impact on the number of jobs at existing centres. Nevertheless, it may be argued that some job losses will occur at other centres as a result of the proposed supermarket centre at the subject site. In estimating the net employment opportunities, we have allowed for 5% of the additional employment that is likely to be created at the future centre to be absorbed in job losses at other centres, resulting in a projected net employment increase of 177 jobs.
Kilmore supermarket development 40 Economic Impact Assessment Section 5: Economic impact findings
The proposed Kilmore Supermarket Centre will also create a number of new jobs during the construction and related industries during the construction phase, and for the economy generally once they are completed. Table 5.2 provides an estimation of both direct and indirect employment that would arise from the proposed neighbourhood centre. Based on the estimated construction costs of the project of $12 million, during the construction period of the project approximately 51 direct jobs would be created.
Further jobs in the broader community would also be created from supplier induced multiplier effects during this period (based on the appropriate ABS input/output multipliers).
Jobs created include both full-time and part-time positions.
Table 5.2 Kilmore - Est. future employment (permanent and temporary)
Direct Direct Supplier Total employment employment emp. multiplier Employment Factor (long term) (const. period) impacts
Centre employment* 170 68 237
Construction of project** 51 84 135
*Net increase allows for some redirected employment from other centres/businesses **Based on estimated construction costs of $12 million
5.3 Consideration of trading impacts
A number of factors need to be taken into account in determining the likely broad trading impacts and subsequent consequences arising from the proposed centre on other retail facilities in the surrounding region. The following analysis presents an indicative projection of the anticipated impacts on other shopping centres in the surrounding area. Such projections can be considered indicative only for the simple reason that it is very difficult to predict with certainty the precise impact on any one retailer or any other centre that will result from the change of retail structure serving a particular region.
Kilmore supermarket development 41 Economic Impact Assessment Section 5: Economic impact findings
The impacted centre or retailer has a number of possible actions which it may be able to take that may mitigate the extent of the impact or may eliminate it all together. Expansions and improvements may be undertaken at other centres throughout the region, and all of those factors can change the nature of the impact of the new centre being developed.
It is much more reasonable for the purposes of impact analysis, therefore, to consider the likely broad changes in competitive circumstances, and in particular the changes in availability of retail spending for competitive centres, that can reasonably be expected to result from the proposed Kilmore Supermarket Centre. These broad changes effectively set the market conditions within which the competitive centres will operate as a result of this development, and reasonable conclusions can then be drawn about the possible impacts of these broad changes in market conditions.
Table 5.3 details the estimated trading impacts on retail facilities in the surrounding area that can be anticipated following the proposed development of the Kilmore Supermarket Centre. The table outlines the estimated sales and potential impacts for each strip centre located in the main trade area, as well as for the major retail centres located beyond the trade area. All figures are expressed in constant 2016/17 dollars and include GST.
Table 5.3 Kilmore - estimated impact on specific centres, 2020/21 ($M)*
Est. 2020/21 Est. impacts (2020/21) Change 2017-21 Retail Est. sales Without With Dist. Of GLA 2016/17 dev't. dev't. impacts Est. impacts Centre (sq.m) $M $M $M (%) $M % No dev't With dev't
Within trade area Kilmore - existing** 15,000 103.5 127.8 115.5 33.0% -12.4 -9.7% 23.5% 11.5% Wandong 1,600 9.2 10.0 9.3 2.0% -0.7 -7.5% 8.9% 0.8% Broadford 3,900 23.4 26.2 24.4 5.0% -1.9 -7.1% 12.3% 4.3% Lancefield 2,800 20.5 22.5 20.6 5.0% -1.9 -8.3% 10.1% 0.9% Heathcote*** 5,400 31.8 37.8 36.0 5.0% -1.9 -4.9% 19.1% 13.2% Other 2,000 8.2 9.1 9.1 0.0% 0.0 0.0% 11.1% 11.1% Total within 30,700 196.6 233.6 214.9 50.0% -18.7 -8.0% 18.8% 9.3% Beyond trade area Wallan 15,000 95.8 112.9 101.7 30.0% -11.2 -10.0% 17.9% 6.2% Other n.a. n.a. n.a. n.a. 20.0% -7.5 n.a. n.a. n.a. Total beyond n.a. n.a. n.a. n.a. 50.0% -18.7 n.a. n.a. n.a.
Total 37.4
*Including GST and expressed in constant $2016/17 **Aldi opened during FY2017/18 ***Assumes Heathcote Supa IGA expands
Kilmore supermarket development 42 Economic Impact Assessment Section 5: Economic impact findings
The following observations and conclusions can be drawn from the above analysis:
• The existing retail facilities in Kilmore are estimated to be achieving $103.5 million of sales at 2017, which is estimated to increase to $127.8 million at 2021. The proposed supermarket development at the subject site is estimated to impact retail facilities at Kilmore by $12.4 million (or 9.7%) at 2020/21, with the majority of this impact falling on the Coles and Aldi supermarkets. These supermarkets are currently trading strongly, and their sales will increase further in the period before any new development at the subject site is approved and built, a period likely to be at least two years.
• Currently a substantial proportion of retail expenditure is escaping the trade area, being directed to facilities at Wallan, Seymour and throughout metropolitan Melbourne. A new full range supermarket at Kilmore would reduce the amount of escape expenditure, and $7.5 million of sales at the new supermarket-based development is estimated to be a result of impacts on other supermarkets located beyond the trade area, e.g. at Seymour or throughout metropolitan Melbourne.
• There are a number of reasons why, as shown in Table 5.3 above, any trading impacts resulting from the proposed new development would be spread across a number of locations in addition to the existing Kilmore town centre, for example to Wallan and Seymour. This is because those locations contain the closest collections of major supermarkets for many trade area residents, and in particular the closest Woolworths supermarkets, for all trade area residents. Given the level of escape spending from Kilmore, the addition of a third supermarket at Kilmore will, first and foremost, help meet some of the needs of those trade area residents whose expenditure is escaping to those locations because they contain a Woolworths supermarket. Therefore, the total impact from the development will be distributed across the existing Kilmore retailers, primarily the supermarkets, as well as a number of major supermarket centres in a number of other locations. For this reason, the estimated impact on Kilmore retailers is $12.4 million or 9.7% on average.
Table 5.3 shows that over the period 2017-2021, the existing facilities, both in Kilmore and elsewhere, will still be able to achieve some real growth (in addition to inflationary increases) in sales volumes, despite the new development.
Kilmore supermarket development 43 Economic Impact Assessment Section 5: Economic impact findings
5.4 Summary and net community benefit
The proposed supermarket at the subject site would locate alongside Coles at the northern edge of the Kilmore Town Centre, forming a natural extension of the town centre. The supermarket would be well integrated with the existing retail facilities and complement the current retail provision within the town centre. The Sydney Street strip is well established and there are no realistic sites, other than the subject site, which would be suitable to accommodate the development of a shopping centre anchored by full range supermarket. The desirable site attributes for such development include adequate size for the store and associated carparking; easy accessibility; and strong connections with the existing retail offer.
Currently, many parts of the existing Sydney Street strip are clearly not functioning particularly well. There are a number of vacancies dispersed throughout the strip, and some buildings have been poorly maintained, while the range of available stores is quite limited. Overall, the Kilmore Town Centre does not make a strong positive statement to prospective customers. The development of a full range supermarket at the subject site in Kilmore would greatly improve the overall convenience offer of the town centre. The increased patronage levels generated by a second full line supermarket within the Kilmore Town Centre would create an opportunity for many of the existing retail stores and services provided within the town centre to also increase their business.
There is a clear gap in the market for a new full line supermarket at Kilmore, and the new supermarket will effectively serve the growing needs of the catchment, while also providing the community with greater retail variety. The analysis in this report has demonstrated that a range of economic and social benefits are likely to arise from the proposed supermarket centre at the subject site, including the following:
• addressing an existing shortfall of supermarket floorspace within the trade area;
• catering to the increased population in the trade area;
• substantially improving shopping choice, convenience and amenity for local residents;
Kilmore supermarket development 44 Economic Impact Assessment Section 5: Economic impact findings
• increasing competition;
• expanding the role of Kilmore as a retail centre;
• attracting people to live in Kilmore; and
• creating additional employment opportunities.
Furthermore, the proposed development would meet the objectives outlined in the Kilmore Structure Plan, in particular:
• providing an additional supermarket within the Kilmore Town Centre;
• supporting the establishment of township gateways which mark the arrival into the Kilmore Town Centre;
• promoting high quality built form outcomes along the Northern Highway interface having regard to its roles at the northern gateway;
• discouraging car parking along the Northern Highway frontage and encouraging access from Clarke Street; and
• promoting finer grain built form outcomes fronting the Northern Highway.
Against these benefits, some impacts are projected on centres in the surrounding area. The potential trading impacts arising from the proposed Kilmore Supermarket Centre would be dispersed across a range of retail centres. The potential impacts though would not threaten the ongoing viability of any existing retail centre or retail shop. Therefore, it can be concluded that a net community benefit will result from the proposed development, particularly as the development will provide greatly increased shopping choice for residents while also creating job opportunities for the local community.
Kilmore supermarket development 45 Economic Impact Assessment