Mark Knoff-Thomas, Newmarket Business Association’s CEO offers an opinion piece on the global and local outlook for retail.
Retail in the UK, USA and much of Europe is experiencing certain levels of angst as many large chains are folding. With the exception of the recent coronavirus pandemic and ensuing issues caused by that, the Asian retail scene has largely been performing well. Our Australian cousins have had a pretty rough few months with the ongoing horrendous fires, floods, and a highly volatile retail sector. You will have read recent media coverage of the spate of retail closures they have experienced. By the second week of January 2020, 161 bricks and mortar stores had announced their imminent closure in Australia. Dr Gary Mortimer, Queensland University of Technology retail expert was recently quoted on news.com.au, “It has been a nightmare, and I think we’ll see this continue to happen over the next month, we’re seeing this emerging trend (of retail closures) and commentators are terming it a ‘retail apocalypse’.” Dr Mortimer said there was an element of “lazy retailing” among some of the companies that had collapsed recently. “There’s a sense that it’s all too hard, and instead of sourcing better products and improving staff training, they just discount which is a lazy way to try and respond to competitive threats,” he said.
It’s important to note the global situation, but should we expect the same type of carnage in New Zealand? New Zealand’s retail scene is far smaller than Australia’s and we are significantly “under-retailed” per square kilometre than they are. It’s fair to say that there may be some trans-Tasman impact on retailers here, and a tourism decline, will certainly be felt, but by and large our local retailers, acting with agility should be able to manoeuvre their way through a softer market and come out of it in tact at the other end. This will not be the case for everyone, and we can certainly still expect to see some closures, as we do every year, but we should not expect carnage and mass closures.
Locally in Newmarket we are obviously going through a transitionary period with lots of change and reshuffling taking place. We have been very pleased by the levels of interest from new brands looking to move into the precinct, and the majority of our vacant key sites have now been leased. In a word, our outlook is, fantastic.
As the precinct settles, we can expect to see a burgeoning small-retailer scene. Local boutiques will offer a unique point of difference, focusing on differentiated product lines and high levels of customer service, and a seamlessly integrated experience whether online or instore, and continual building of customer communities. On the larger retail scene, we will see further evolution of “experiential retail” – where entertainment, hospitality and shopping go hand-in-hand. Westfield Newmarket has certainly achieved this in their new development and have taken retail to international levels never seen before in this country
We should also see further enhancement of online retail experiences. Online retail is not a threat to local retailers – it is an opportunity. NZ’s online sales are far behind the rest of the world and currently sit at around 11.4% of total retail sales. According to BNZ’s New Zealand Online Retail Sales, December 2019, we have seen a steady increase of online purchases from NZ retailers – up 13 % on the previous year, and an equally steady decline of overseas purchases – down 9% on the previous year. The decline in Kiwis buying from overseas merchants is thanks in part to GST now being charged. Initiatives like Newmarket-based The Market (www.themarket. com/nz – a Kiwi version of ASOS), which is backed by The Warehouse Group, have made great in- roads to help bolster the local online scene. And individual retailers are constantly upping their online-ante and maximising use of social media channels like Instagram to spread the word about their offerings.
It has become commonplace to see “sale” signs on shop fronts for many months of the year, and many of us have an expectation to not pay full price. These expectations provide challenges for retailers who have fixed costs – rent, wages, rates, stock purchasing etc. This is why product differentiation, customer service, a fully integrated/ multi-channel 360-degree experience will become essential to thrive in retail.