In a move for greater disclosure on performance, a new Retail Industry Code of Practice on the Reporting of Sales and Occupancy Costs will come in to effect on the 1 January 2019 which has been agreed to between Shopping Centre Council of Australia and the other key retailer groups, the Australian Retailers Association (ARA), National Retail Association (NRA) and Pharmacy Guild of Australia. The new code allows for more disclosure from landlords to retailers about sales performance which can enable a retailer to benchmark their performance against other retailers.
The new code has benefits for retailers as it provided them with tools to be able to analyse their performance to make better decisions about product offerings, marketing and customer targeting. Sales information for decides have been a useful management tool for landlords and the balance is now more greatly shared for both parties.
“We’ve got new obligations to assist tenants, and overall this is positive outcome and model for industry issues going forward. It’s a credit to NSW Deputy Premier John Barilaro for supporting this industry-led and negotiated approach.” said Angus Nardi, Executive Director, Shopping Centre Council of Australia.
The purpose of this voluntary industry Code of Practice (the Code) is to establish how landlords and retailers communicate sales data between themselves. The Code establishes a mutual obligation which requires that a landlord who collects sales information is to provide this information in an appropriate form to retailers who request it.
The information shared should be in a form which enables retailers to benchmark their performance against other retailers in the same sales group within the particular shopping centre and, where applicable, within the owner’s portfolio of shopping centres.
“This landmark achievement for retailers in NSW will provide vital information to tenants in shopping centres, allowing them to better-understand the real value of their leases,” ARA executive director Russell Zimmerman said.
It is quite common practice now that landlords provide this benchmarking information already and therefore they are not obliged to alter the form in which they now do so if it meets the code requirements.
Landlords and retailers must, however, ensure that in the provision of benchmarking information the sales performance of individual retailers is not disclosed under the Act. It is recognised, for example, that where there are only two retailers in a particular sales group in an individual centre it is not possible to provide benchmarking information within the particular sales group, although it may still be possible to provide relevant information from within the broad category or from within the portfolio.
It is important to note the Code applies to NSW, with intention for it to be extended nationally and is applied to all sitting tenants and new leases moving forward. The new code was an outcome of the 2016 review of the Retail Leases Act 1994 (NSW).
The Code ‘commences’ on 1 January 2019, but has a six-month transition, so it’s ‘real’ commencement is 1 July 2019.
In addition, it is best practice if landlords ‘could’ make available other data as requested by retailers, for example consumer spend, research, foot traffic and demographic information.
For a full version of click Retail Industry Code of Practice on the Reporting of Sales and Occupancy Costs click here