Mustafa told to stop selling from warehouse

Source : Straits Times – 6 Nov 2009

WELL-KNOWN local retailer Mustafa, which had converted part of its Kallang warehouse into a department store and supermarket, has been ordered to stop selling out of what should be a storage facility.

The Urban Redevelopment Authority (URA) said yesterday that it has served a writ of summons on the company, Mohamed Mustafa & Samsuddin, for the unauthorised use of the six-storey building in Kallang Pudding Road.

Until three weeks ago, the warehouse was closed to the public, except for occasional warehouse sales.

Then, the shutters went up to reveal a department store on the ground floor and a supermarket on the second.

Competitors complained that Mustafa was getting away with operating a retail store while paying lower warehouse rents, reported The Business Times yesterday.

The Straits Times understands that the company received the court order a day earlier.

Yesterday, its managing director, Mr Mustaq Ahmad, who was on a business trip in Malaysia, said he would look into the matter.

‘We will definitely comply with the law. If we can’t sell things, we will continue with all other activities but stop sales of items,’ he said.

However, a Straits Times check of the warehouse yesterday found that retail operations at the warehouse were still in full swing.

There was a new wrinkle, too: Shoppers who wanted to purchase items had to first become ‘members’ of the store. Thumbprints, pictures and personal particulars were taken before they were issued with a free membership card on the spot.

Staff and regular patrons said the need for membership was new.

When contacted, Mr Mustaq insisted that he was not operating a retail outlet for the public, and that only members could buy in a pilot project ‘to test out different paying systems’.

He added that the first two levels facilitate small orders for its home delivery business.

URA said, however, that any sale transactions are considered commercial activities. Under the Planning Act, a person responsible for a planning offence may be fined up to $200,000 if convicted.

Mustafa had, with the approval of URA in 2001, developed the building for warehouse use on a 58,400 square foot freehold site it owned.

According to the URA, the company applied to change the use of the building to a wholesale centre for household goods and appliances in 2004.

Its application was denied because the proposed wholesale centre involved the sale of products, a commercial use not allowed in the zone that the development was in.

Only uses such as light industry, clean industry and warehousing are permitted in the zone.

Also, warehouses which are approved to sell out of their premises must pay a higher retail rent and be in approved zones, among other conditions.

Since then, Mustafa had not submitted another request for change of use.

Retail expert Lynda Wee told The Straits Times yesterday: ‘Generally speaking, warehouse rent is the lowest across all rental categories because they are usually in isolated areas.

‘Places like the Ikea and Courts establishments in Tampines are different because they were approved for retail uses. They could be paying higher retail rent.’