(b) it could have used the newly available funds to launch a new store in an area where it did not already have a presence and tap into a new market.
39 He believes that the most appropriate relocation of the Homebush store would have been to the Auburn area, either within the 'Megacentre Auburn' ('Auburn Centre') or in the strip shopping area running eastward of the Auburn Centre along the Great Western Highway/Parramatta Road for approximately two kilometres. This area contains the largest concentration of bulky goods and homeware stores in Sydney, is very well known and would have been a very good alternative to the Homebush store.
40 He does not agree that the Auburn Centre was not a suitable replacement for the Carpet Fashion store at the Centre because it would draw on customers already served by the North Parramatta store for a number of reasons:
· the Auburn Centre is less than five kilometres closer to the North Parramatta store than the Centre. Therefore, while it may draw on the North Parramatta store's customers to some degree, he does not believe that it would do so to such an extent that Carpet Fashion should not have considered opening a store in that area;
· the North Parramatta store is likely to attract a very different customer base to a store set up in either the Auburn Centre or the surrounding area. He would expect that the North Parramatta store would draw areas principally from the north of Parramatta whereas a store in Auburn would tend to draw customers predominantly from areas to the south, east and west of Auburn. These customers tend to be from different sociological groups and therefore may be attracted to the different centres;
· customers who would have frequented the Homebush store and those in the catchment area for an Auburn store would be unlikely to frequent the North Parramatta store. As mentioned above, customers to the North Parramatta store would be more likely to come from the north and would be unlikely to bypass the North Parramatta store in favour of an Auburn store if their primary purpose was to inspect or purchase carpet. Similarly, given the quality of the Auburn Centre and the range of homewares tenants in the surrounding area, it is unlikely that customers from around the Homebush area who would have frequented Carpet Fashion's store at the Centre would now proceed past Auburn to the North Parramatta store. Instead, they would shop at one of Carpet Fashion's competitors who had a store in Auburn. By establishing its own store in Auburn, Carpet Fashion could regain these customers who have taken their business elsewhere; and
· one of Carpet Fashion's main competitors, Carpet Choice, has stores at 570 Church Street, Parramatta and 265 Parramatta Road, Auburn. The Parramatta Carpet Choice is very close to Carpet Fashion's North Parramatta Store and the Auburn Carpet Choice is very close to the Auburn Centre. He presumes that both these stores are profitable and therefore Carpet Fashion could also trade profitably in both locations.
41 His evidence was that:
· if Carpet Fashion chose not to establish a store at the Auburn Centre, or elsewhere in the Auburn area, the resources which became available to it after it terminated its lease at the Centre could have been used to open a store in an area where Carpet Fashion did not already have a presence.
· Given Carpet Fashion's stores in operation in late 2000, there were several bulky goods and homewares precincts in the Greater Sydney area where Carpet Fashion did not have a presence and where it could have opened a new store and thus tapped into a new market.
· In late 2000, the areas in and around South Bankstown, Moore Park, Norwest/Bella Vista, Erina and Balgowlah were all developing or developed bulky goods and homewares precincts. Carpet Fashion did not have stores in or around any of these areas. Upon the freeing up of resources after the termination of the lease at the Homebush Centre, Carpet Fashion could have opened and, in his belief, run a successful store from any of these areas.
· He understood from an expert's report that Carpet Fashion in fact opened a new store in the Bella Vista / Norwest area in February 2001. This store is located in an area of Sydney which is experiencing rapid population growth as a consequence of new housing development. Arguably, this store was a replacement for the Homebush Centre, despite the fact that it is in a different area of the city to the Centre.
42 Significantly he did not put himself forward as having any experience in relation to carpets and flooring and floor coverings. Most of his experience had been in retailing, the planning and development of retail shopping centres, particularly bulky goods shopping centres. [Transcript 27 May 2003, 58]
Mr Lechmere
43 From about September 1997 to mid 1999, Mr Lechmere was employed by Forma. Part of his job involved negotiating with prospective tenants for leases of retail and/or exhibition space at the centre. Prior to that, he was employed by Supa Dupa Promotions Pty Ltd from about early 1996. Supa Dupa had been engaged to assist in finding tenants for the exhibition space at the Centre. The Centre was to contain both retail and exhibition space. The brief to Supa Dupa was to create a permanent home show at the Centre. Mr Lechmere was heavily involved in this work when he was employed by Supa Dupa. He had had considerable experience in organising the International Home Show that is held in Sydney. Over the course of time, in addition to negotiating with prospective tenants of exhibition space, he also conducted negotiations with prospective tenants of retail space.
44 During 1996, he was involved in negotiations with Carpet Fashion. His evidence covered these negotiations.
45 He gave evidence concerning the prospects of success of the Centre as follows:
· At the time he was negotiating with Mr John with respect to Carpet Fashion taking a lease of premises at the Centre, he believed that the Centre had a very good prospect of success as a specialist centre for the exhibition and retail sale of homemaker and renovator products. He was aware that Forma had commissioned reports into the viability and likely success of the Centre. He was provided with and read extracts from these reports. [The mid 1995 and June 1996 reports] He recalled in particular that the reports indicated that the Centre would attract high customer levels due to its accessibility and location in the demographic centre of Sydney.
· He believed that one of the main reasons why the Centre was not successful was due to problems leasing out the exhibition space. By the time the Centre officially opened in March 1997, the retail space was mostly leased - there were only about three or four vacancies. In contrast, the exhibition space was only about a third full. He expected that the remaining exhibition space would be leased once the Centre opened. However he subsequently experienced difficulties in getting potential exhibitors to commit to leasing exhibition space. Some major exhibitors, such as CSR, were late in opening their exhibitions. Some expected exhibitors did not actually open their exhibitions. For instance, companies including General Electrical, Major Electrical Appliances and Schollets were negotiating to lease a major area to build a complete display of electrical products. However, this display was eventually built at another location. Finally, he found that some companies, despite initially enthusiastic, elected to direct their marketing budget towards the International Home Show, rather than having a permanent display at the Centre.
· He believed that had the Centre (including the exhibition space) been fully leased, it would have been a success. As it turns out, there were ongoing problems filling vacancies in the exhibition area, despite concerted efforts to locate prospective exhibitors, and a decision to transform some of the exhibition space into retail space.