Michael Pascoe writes:

Every newspaper in the land covered Westfield’s fat
profit announcement yesterday, but it seems only the Daily Telegraph‘s Byron
picked the real story – what’s happened and is happening to Australian
retailing: the rise and rise of the “mini-majors” that are taking market share
from everyone else.

Westfield joint managing director Steven Lowy
introduced the exotic term yesterday as he unveiled a bumper $4.2 billion
annual profit for the world’s biggest shopping centre developer. He used the term to describe shops that
aren’t quite department stores and aren’t quite specialty boutiques.

Borders bookstore, Rebel Sports, Dick
Smith and Harvey Norman electronics, JB Hi-Fi, big surfwear shops and
pharmacies are all mini-majors, Mr Lowy said. “They are category killers now,”
said the son of the country’s second richest man, Frank Lowy.

For 2005, sales from Australian
mini-majors grew 9.4% for Westfield. By comparison, department stores
grew 5.6%, while discount department stores and supermarkets grew 3%.

And that’s just one more thing that should be worrying those brave
enough to take Myer off Coles Myer’s hands. Westfield being Westfield, it will
seek to reinforce the mini-majors’ success. That will be at the expense of the

It’s particularly bad news for the small specialty store operators
in Westfield. The giant’s system of escalating rents already makes it a subsistence existence for many individual
operators who have negligible bargaining power – for every person who fails,
there’s another brave or foolish soul ready to take their place.

The mini-majors should now be able to cut the sort of deals
previously only available to the department stores and discount department
chains. That will eventually result in Westfield shopping
centres that are effectively like mega-department stores, with each department
a mini-major.

The category killers win. Life gets harder again for Myer and the
small speciality stores. No wonder David Jones is trying to make money in ways
other than retailing.