It’s no secret that there’s been a flood of international brands arriving on our shores as of late, but why now?
Donald reckons we have our Australian neighbours to thank. He says international brands committing to expansion in Australia means they’re also casting their eye over to New Zealand.
“It’s a natural connection to look at Australia and New Zealand as one market. They’ve already made the commitment to trading in Australia and the overheads of a distribution centre and head office there, they need to grow their branches for critical mass within the Oceania region,” he says.
Deloitte’s 2015 Global Powers of Retailing Report found that 37 (15 percent) of the world’s top 250 retailers now operate in Australia, an increase from 30 in 2014.
Big-name brands like H&M, Uniqlo, Forever 21, Japanese homeware store Muji and French makeup chain Sephora all entered the Australian market in 2014.
With H&M recently announcing it’s opening a store at Sylvia Park in 2016, there seems to be an albeit delayed, but eventual flow-on effect to New Zealand.
Donald says hopefully Swedish furniture store Ikea, Muji, US warehouse club Costco and German supermarket chain Aldi will be next to follow others into the New Zealand market.
“All of these retailers are already established in Australia – the most recent of which was the opening of Muji’s flagship Australian store in Sydney in April this year,” he says.
He says another reason they’ve all come at once could be that once one popular international retailer moves into an area, it can be a catalyst for others to follow.
“We’ve seen this happen with women’s clothing store Topshop which recently opened in Auckland’s Queen Street,” he says. “This has in turn triggered the move of other brands into the CBD with Chanel and Tiffany & Co. due to enter the market. No doubt other retailers will follow.”
Rather than being disadvantaged, he says local retailers can benefit from retailers taking up residence near them.
“Good international retailers, for example Ikea, are excellent traffic generators. A whole shopping centre could be built around a store such as this – generating opportunities for local businesses.”
He says it does mean there’s increased competition, but often there is already “retail leakage” through online shopping before overseas retailers open a store.
There are admittedly hurdles that come with opening stores in New Zealand’s small market.
Donald says the limited market and wide distribution area within that market can mean high costs for retailers when it comes to moving their goods around the country.
“In addition, we don’t enjoy the critical mass of other countries, which can be a barrier to many retailers,” he says.
Auckland is often the testing ground for international brands, he says.
If all goes well, the retailers often then expand into Christchurch and Wellington at the same time before moving into the provinces.
However, there are exceptions to this rule: David Jones, for example, seized an opportunity to buy Kirkcaldie & Stains and entered the market via Wellington first.
Donald says in the end, it’s dependent on the retailer and its demographic.
“For example, a Costco, will want one million people within a 30-minute drive time of each store, while car parts retailer Supercheap Auto might only want 20,000 people within a 30-minute drive time,” he says.
Donald says international retailers coming here is affecting New Zealand shopping centres by increasing demand for individuality.
He says this is leading a resurgence in high street shopping in places like Queen St, Britomart, Teed and Osborne St in Newmarket, and Cuba St in Wellington.
“Some of the most prevalent examples of this are in the food and beverage industry, where there has been a backlash to franchised restaurants. Consumers want something more edgy and original as a dining experience. For example at Auckland’s Depot, celebrated chef Al Brown is often visible and engages with diners,” he says.
So who’s in (or going into) Australia that isn’t in New Zealand yet?
- Forever 21
- Miss Selfridge
- Banana Republic
- T.M. Lewin
- Thomas Pink
- River Island
- Companies rumoured to be looking at Australia include Marks & Spencer, Sports Direct and Ashley Furniture.