Over the next three weeks, retail spend will be a record for the retail industry in this country. The reason I make that prediction is simply that every year is better than the last, regardless of the predictions of gloom that some commentators seem to relish in.
Having said that, I do believe that this year’s Christmas trading will be a benchmark year for a number of reasons. It will be the last year for retailers when they really don’t have to worry about the “Amazon fear” that has been permeating through the retail industry of late. 2018 will be the first full year for the Amazon effect so this year should be worry-free by comparison.
So are we likely to see a whole series of closures in 2018 due to the impact from Amazon?
I don’t think so, but I do believe there are some signals that certain retailers are going to find it uncomfortable in 2018. Our biggest retailer, The Warehouse, seems to me to have lost its mojo and I suspect there will be some pondering on their results at the start of the New Year. As a brand that is nestled now well into the New Zealand culture, over the past 30 years, it really does need a shot in the arm. Some Warehouse stores are no longer red, but rather pink – that suggest some of the repairs and maintenance has been lacking. For a group that used the Walmart model as an example to follow, its in-store merchandising remains a little laboured. There is no current threat from Amazon, so the group has probably lost the opportunity to make hay while the sun shines. The same could be said for a number of other retailers.
Certain shopping centre owners will also be wary of the coming year and the need to readdress their income streams due to a potential fall in some retailers’ sales and thus an impact on rents.
Signals as to the impact have started to become apparent in 2017 and are likely to impact in 2018, so rental structures will be under a level of stress in the New Year.
In any event, 2017 will finish the retail shopping season on a high, as I have predicted, and I suspect that the normal customer congestion as to both pedestrians and traffic will occur once again, which in itself will bely the pending issues that will have to be faced in 2018.