Paul Keane is the executive chairman of property, design and research specialist agency RCG. He offers his insights into the year that was in retail, and makes some predictions for 2015.
1. Who’s your pick for retail “personality” of the year? Who’s someone who stood out and made some bold and smart moves? The “retail personality” of the year is not a retailer, strange as it may seem. It is Chris Gudgeon, the CEO of property group Kiwi Property. His group secured H&M and Zara as key tenants for the group’s Auckland Shopping centre Sylvia Park. This would not have been an easy assignment. First off, they would have had to have been convinced that new stores in Sylvia Park would work, then they would have had to negotiate a deal that was attractive whilst at all times protecting the value of the asset. The result will really benefit other Sylvia Park retailers through the generation of additional pedestrian traffic, and most importantly will probably see these two outstanding retailers open elsewhere in Auckland and other major NZ locations. A good all round result.
2. Which retail company stood out in 2015? Rebel Sport/Briscoes. They had stunning profit results, constantly traded well but under the radar and demonstrated the ability of the company to pursue other brands, such as Kathmandu. This group will demonstrate again in 2016 just how successful they are and we predict another sound trading result.
3. Who are some ones to watch in 2016? Aside from Rebel Sport/Briscoes, I believe that the new entrants to New Zealand retailing will be watched with a great deal of interest. New Zealand has had a traditional record of seeing retailers arrive and leave soon after. Therefore, the entry of David Jones must be viewed as a key potential success and the movement to other New Zealand retail locations must be on the cards. Farmers is another worth watching given certain challenges and the need to consider its department store retailing format. Is it a department store or a discount store? Dick Smith may find NZ a little tough in 2016. Certainly their current discounting and poor profit results would suggest that the company may consider exiting, if sales and profit are not improved.
4. Who are some great smaller town or regional retailers who punched above their weight? A little café and gift shop in Tirau named Alley Cats. The coffee and food is excellent and the store alongside is bulging with a wide range of homewares stock which entices the customer to buy. This store would do well in any major city location.
5. Who made the best comeback in retail in 2015? Probably Shanton, the fashion store. The group floundered and were nearly on the rocks, but the brand recovered under new ownership and continues to survive. Also a mention for Hallenstein Glassons. Twelve months earlier, the profit result for the group was dreadful. Some careful attention to detail by management turned the company around and the latest results are very encouraging.
6. Who had the biggest fall from grace in 2015? Maybe The Warehouse Group. Just didn’t seem to fire in 2015 across all brands. The Group is our major retailer and results simply were not as attractive as earlier years. Maybe we expect too much, but compared to others not quite there.
7. Best retail innovation? The introduction of major international fashion brands to Queen St, Auckland. Retail changes in Queen St have been outstanding. Topshop arrived, Farmers opened a new store, new fashion labels took over lower Queen St and Michael Hill has made a statement. This is retail conversion and innovation at its best.
8. Most overhyped issue or innovation in retail that actually didn’t matter that much? Ironically, probably Topshop on Queen St in terms of a retailer who arrived with a fanfare and seems to have forgotten that even in New Zealand you need to market the brand to ensure its stays in front of the local market as an identity! Also, the new North West shopping centre at Massey Auckland. It was promoted as a new “mega mall” when in fact it offered no new major retail types and is smaller than a fair number of competitors.
9. What property area in New Zealand was the most interesting/dynamic for retail and why? Auckland in a nutshell, followed closely by Wellington for different reasons. Auckland retail property is hot and is taking advantage of the huge increase in population by developing and extending centres. Wellington is getting better at retail, with a focus on making Lambton Quay a shopping paradise in a conventional location. Property values in Wellington are increasing due to demand and lack of space, which is the reverse of Auckland.
10. What issues and ideas should retailers have at the front of their mind for 2016? They should get rid of negative thoughts. The taxation of online retail has been heavily promoted this year. Whilst that is understandable, the more positive approach would be to have retailers pursue a level of commitment to online retailing working well with bricks and mortar facilities. The fact that new international retailers are coming to New Zealand is proof that bricks and mortar is surviving. That will be the biggest challenge for retailers in 2016, as Fred Dagg used to say “Get in behind”!