One of Canberra's largest independent supermarket chains Supabarn has announced it is selling most of its stores in the ACT and NSW to Coles in a move that has been labelled a dark day for retailing in Canberra.
A spokesman for the Koundouris family that built Supabarn from the ground up said in a statement the move was for family reasons, but the buyout would not mean the chain would disappear entirely from the grocery scene. The move is expected to see a $15 million injection by the supermarket giant into upgrades to the Supabarn stores.
"Supabarn will not totally exit the market. It will open and operate, as a specialised supermarket retailer in Kingston, and will continue to trade in Gymea, Sydney," a company statement said.
While the Koundouris family declined to comment on Friday, a source close to the deal, which is yet to be approved by the Australian Competition and Consumer Commission, said 72-year-old patriarch of the Supabarn empire, Eric Koundouris, was looking to step back from the increasingly cut-throat competitive supermarket environment, but younger members of the family would continue to operate the remaining supermarkets in Canberra and Sydney.
The dominance of the two sector giants, Coles and Woolworths, as well as newer players Aldi, Costco and wholesaler Metcash is understood to have contributed to the move, which is understood to be costing Coles in the order of $100m.
If given the green light the deal would affect the Civic, Wanniassa, Kaleen and Crace stores, as well as a new Casey store currently under construction. In NSW stores at Five Dock, Sutherland, Annandale and Sans Souci will also be sold. Coles will acquire the stores on a leasehold basis, and the deal does not include the SupaExpress stores.
"Coles will range locally-produced food at the new stores and will seek to stock local products such as Eight Mile Beef produced near Harden, Coles' grass-fed beef range, GRAZE, produced by farmers from Gunning and other beef products sourced from across NSW including the Cooma area," a Coles spokesman said.
ACCC chairman Rod Sims announced a public inquiry into the deal on Friday, to test whether it would lead to a substantial lessening of competition in the market.
"Given Supabarn's position as a significant independent supermarket chain, an important focus of the ACCC's review will be whether its removal as a competitor would substantially lessen competition between supermarket chains. The review will also examine each of the individual local markets in which the Supabarn stores operate, and any effect on grocery wholesaling and supply markets," Mr Sims said.
Supabarn became involved in a bitter decade-long planning stoush with the ACT government when it backed a coalition trying to prevent Woolworths from building a supermarket at the derelict Giralang shops site. The chain also argued strongly against the dominance of the two major chains during the ACT government's controversial review of supermarket policy, that was later abandoned in 2013.
One of the architects of that policy, former ACT Chief Minister Jon Stanhope, said on Friday Supabarn had done their best, but had been let down by poor planning that had allowed Coles and Woolworths to spread to smaller group centres.
"I fear what will happen is the same thing that has happened in petrol, where service stations across Canberra have closed since Coles and Woolworths were allowed into the market," he said.
"Those smaller group centres where the majors have been able to spread their tentacles are not their preferred market, and if they are unable to sell those sites, I fear they will close, leaving the community worse off," Mr Stanhope said.
But ACT Chief Minister Andrew Barr welcomed the news, saying the 100 extra jobs created would have far-reaching benefits for the community.
"Canberra's supermarket sector is competitive with international chains such as Aldi and Costco available to Canberra consumers," Mr Barr said.
The ACCC will begin its inquiry next week and will accept public submissions until mid-July.