THE head of Australia's largest independent supermarket chain has called for a two-year moratorium on building new retail space.
Fred Harrison, chief executive of Ritchies' 70 IGA-affiliated supermarkets, said a building frenzy over the past decade was likely to disadvantage small businesses, particularly those struggling with changing consumer habits in the form of internet shopping.
Over the past 18 months, Ritchies has expanded in a big way in New South Wales, acquiring nine Franklins stores, four IGAs and a Coles supermarket in Taree.
It now has 70 supermarkets under its brand concentrated on Australia's east coast, 66 of which are super IGAs that compete head to head with Woolworths and Coles. Fifty of its stores also hold liquor licences.
About 1400 independent supermarkets unite for marketing purposes under the IGA store banner.
The amount of available retail floor space in Sydney and Melbourne had increased from two to three square metres per person in the three years to 2010, Mr Harrison said.
If it kept growing at a similar rate it would have ''long term repercussions for competition and sustainability'', he said.
''Combined with the issues of the internet taking sales away from bricks-and-mortar retail, there's going to be an oversupply of retail outlets.''
That will add significant competitive pressure to existing small stores over the next five to 10 years and may lead many to reconsider the viability of their leases, he said. ''I'm suggesting a two-year moratorium on new retail development to give existing retailers some confidence to invest,'' he told BusinessDay.
Two weeks ago, Tom Daunt, the Australian head of German discount supermarket chain Aldi, called on NSW and other state governments to follow Victoria's lead and reform planning laws to make it easier to get approval for new developments, especially supermarkets and other commercial projects.
The Victorian reforms will allow more uses ''as of right'' and cut the number of existing business zones from five to two.
But Mr Harrison said any such change would lead to a surge in retail space that would reduce margins and increase competition for independent retailers, a move that would play into the hands of the dominant supermarket chains, Coles and Woolworths.
''Lets finish off projects that are started, but governments should be trying to help retailers who are battling and not approve any new developments for two years,'' Mr Harrison said.