SmartCompany/Friday, July 15 2016
Politicians are being urged to come into bat for the owners of an IGA Supermarket in the small Victorian town of Seville, who say they have been forced out of business after a Woolworths store opened nearby two years ago.
Jos de Bruin, chief executive of MGA Independent Retailers, told SmartCompany this morning he has contacted several politicians in a bid to try to take action ahead of the store’s closure at the end of July, labelling the situation as “gross”.
“I talked to Nick Xenophon who was very angry, and the Victorian Shadow Minister for Small Business Neale Burgess will be raising it in Parliament,” de Bruin says.
“These people invested everything after getting council and community support, and today they have nothing.”
As reported by Fairfax, the owners of Entwistles IGA, Barry and Jenny Entwistle, have been serving the residents of Seville for over 16 years, having purchased the 1000sqm supermarket site in 2000.
In 2006 the town fended off an application from Coles to build a supermarket in the town, with the Yarra Ranges Council reportedly fearing that nearby smaller businesses wouldn’t be able to compete. Worried by the threat from the supermarket duopoly, the Entwistles decided to expand their store.
The Entwistles invested $5 million into expanding their business, re-mortgaging their house and investing their life’s savings. The couple’s son also contributed to the expansion.
According to a MGA document, seen by SmartCompany, the supermarket recorded $14 million in sales in 2011, a year after the expansion of their business finished. The store employs over 100 local residents in a town that is home to 2,370 residents, according to the 2011 Census.
But despite previously knocking back Coles’ plans to open a supermarket in the town, the local council approved a development proposed by Lascorp to build a Woolworths and 18 other shops on a site on the Warbuton highway in 2012. The Entwistles reportedly collected 2000 signatures from town residents against the expansion, but it went ahead.
The Woolworths supermarket opened in 2014 and Barry Entwistle told Fairfax their store’s sales dropped by 18%, followed by another 18% the following year.
“We just couldn’t survive, our sales got to the point where the business became unviable,” he told Fairfax.
“I just don’t understand why would they allow a big shopping centre to come into such a small community.
“I can understand the big guys have got to continue to grow, but I don’t understand why they’ve got to do it at the expense of an independent who has invested everything he’s got into his store.”
Entwistle said if Woolworths had offered to purchase his store he would have been happy with that outcome, as it would have allowed him to recover his investments in the supermarket.
The Entwistles say they have been forced to sell their home and are now currently living with relatives, relying on the pension to live. “Now we’re telling ourselves we’ve got no money, but at least we’ve got our health,” Entwistle said.
According to Fairfax, German supermarket chain Aldi is set to move into the IGA site in the coming months.
De Bruin believes that a development the size of the Woolworths store in Seville is totally unnecessary, calling it a “one supermarket town”.
“Small supermarkets want to and will compete, but you can’t put a supermarket that big against one so small,” de Bruin says.
“Entwistles’s catchment from five kilometres around their store was only $450,000, why would Woolworths be interested in that? They’re here because they can outlast their competitors.”
Public outcry against the development is prominent, but had no effect on the plans going through, and de Bruin believes the council should listen more to its community.
“The council has made a massive error of judgement here, the public voice is absolutely not being heard,” he says.
“When it comes to sensible developments that create a competitive environment, bring it on. The council needs to look out for its community.”
SmartCompany contacted Lascorp but the company declined to comment.
SmartCompany contacted the Entswistles and Woolworths but did not receive a response prior to publication.