State of the nation : tourism
Tourism currently stands as New Zealand’s leading export industry, with international visitors contributing $16.2 billion to the economy, 21 percent of the country’s total exports of goods and services (Tourism Satellite Account Year Ended March 2018; Stats NZ). Domestic tourism contributed $23 billion.
Compared with the same time last year there’s been a modest growth in visitor arrivals, says Antony Kennedy, Manager Business and Economic Development, Ministry of Business, Innovation and Employment (MBIE).
Overseas visitor arrivals were up by 23,500 to 307,400 for the April month according to the International Travel data from Statistics New Zealand. Compared with the year ended April 2018, visitor arrivals were up by 99,400 to 3.89 million.
“MBIE’s visitor forecast is predicting growth to continue,” says Kennedy. “We’re expecting over 5 million visitors annually by 2025 (up from 3.9 million in 2018), and for spending to reach $15 billion per year (up 34 percent from 2018).”
For the year ending March 2019, visitor spend totalled $11.23 billion, reflecting a 3 percent increase on the previous year.
In most of the regions there was a growth in tourism spends for the year to May 2019. The fastest-growing regions were Gisborne (up 9 percent), Taranaki (up 6 percent), Waikato (up 6 percent) and Wellington (up 7 percent). Kaikoura had the largest increase in visitor spend, with an increase of 26 percent to a total of $118 million for the year to May 2019.
Change for good?
While the tourism industry is flourishing, it’s certainly not immune to changes and trends existing within and beyond the sector.
Customers are shopping more with their emotions instead of their wallets, changing their preferences and attitudes to accommodate social consciousness, doing good and the impact a business makes on society, says RetailX founder Juanita Neville-Te Rito.
“Tourists want to spend their money on making memories that will last a lifetime, and that they’ll feel good about. Supporting local industry, communities, and causes feels incredible, and there’s a wonderful story to tell as well.”
Tourists also expect a seamless, world-class experience that treats their friction points. Which is why experiences such as the bike ride from Arrowtown to Gibson Valley is money well spent, says Neville-Te Rito.
“It’s an epic ride on an e-bike, supporting local businesses, who come and pick up your bike from the winery, followed by signing up to get a case of wine delivered to your home, and a gorgeous wine tasting and meal, concluding with a shuttle back to your hotel.”
Social media and the ‘cool’ factor also influences travel, she says, and is the reason why Queenstown’s Ferg Burger and Wellington’s Best Ugly Bagels have a legion of tourists waiting to experience them.
‘Over tourism’ is being touted as a negative consequence of healthy industry growth, as some of New Zealand’s prime pieces of tourism bounty are swamped by enthusiastic tourists. The March 2019 results of the Mood of the Nation Survey, commissioned by Tourism New Zealand and Tourism Industry Aotearoa, found 93 percent of responders agreed or strongly agreed international tourism is good for New Zealand. However, 43 percent thought international tourism puts too much pressure on the country, with an increasing proportion of responders who think the number of international visitors is too high.
There’s also the rise of the eco-tourist – tourists who wish to travel, but with a minimal carbon footprint and impact on the environment throughout their journey and at their destination.
Freedom campers are staying longer, but perhaps contributing less to the economic tourist tally while impacting our parks and recreational facilities. There’s a further $8 million being made available by the Government for a better freedom camping system, to encourage responsible camping and deliver better experiences for tourists and local communities.
Also receiving a boost are the regions, with the Provincial Growth Fund injecting financial support to revitalise the economy and communities. Tourist-related projects include Te Waiariki Ngawha Springs near Kaikohe, Whangarei’s Riverside Hotel and Entertainment Precinct, Kapiti Island’s Waiorua Lodge, and the new Bay of Islands Airport.
Selling the New Zealand Story
While there’s always room for improvement, Neville-Te Rito says some locations and retailers are doing an incredible job in catering for the tourist market. We’re fortunate to get a very mixed assortment of visitors from all over the world, she says, and while there’s an incredible pride in everything Kiwi, she we sometimes don’t do ourselves justice in promoting what’s unique, genuine, and authentic.
“Storytelling is so important – you can’t assume tourists will understand the ‘why’. Create a bridge to an emotional connection and you’re a step closer to conversion. Tourists want to create memories and take them home. To do this, they need to know a product exists, why it’s something they need, how they can buy it, and how they can travel home with it. It’s both a tangible and intangible wrap, pack, and deliver – both the product and the experience.”
The biggest challenge for retailers catering to tourists is New Zealand’s trading hours. In comparison, travelling in Asia, the USA and even Europe sees the evening as a big part of the experience.
“It’s difficult as New Zealand has an incredibly small population base and high wage costs, so it’s an intricate balance,” says Neville-Te Rito. “However, it’s great to see precincts extending their trading hours and stores in high-density tourist locations being open later.”
While the major cities naturally dominate the healthy end of the tourist spend, the regions are where the real impact of a positive or negative vibe is more easily felt. Retailers in these areas are almost at the mercy of the tourist dollar, and in a lot of cases rely on a bountiful busy season in order to see out the year.
Northland and Bay of Islands
There’s a multitude of efforts to bring tourists to the Far North, says Stephen Smith, NorthChamber CEO.
“Traditionally Whangarei has missed out on international visitors, as they tend to move through to the better known areas such as the Bay of Islands and further up to Cape Reinga. But we’re looking to change that and the future looks pretty good.”
There’s the CBD’s revitalisation plan reaching into the next 25 years, to improve the poor health of the town centre and offer an alternative to the tourist-friendly Whangarei Basin. Initiatives such as a connected calendar of events and open spaces will change the way locals and visitors experience the city centre, and address concerns such as parking and vacant premises.
Whangarei is also adopting space curation, utilising unused shop spaces, so even if it’s on a short term basis, spaces are productive for the community. Museums and other attractions in the region are collaborating to offer day passes, encouraging visitors to stay longer and see more when they’re on a tight schedule.
One event set to boost the local economy is the cruise ships, with first berth at Marsden Point’s Northport in January 2021. It’s expected to bring 400 crew and around 680 passengers. It’s a significant shift, says Smith, with visitors likely explore the local Whangarei environs rather than moving on to other locations in the region.
“We’re looking to make our visitors’ experience as exciting and positive as we possibly can, and stimulate our economy at the same time.”
Selling the total package
Retailers marketing to tourists need to be abreast of changes and keep actively altering the fare to remain current and have a point of difference from one season to another, says Robyn Stent, owner of The Cabbage Tree and Business Paihia’s Acting Chairperson. If a visitor returns after a year or two, they’ll expect to see some changes.
In the food and beverage sector it’s about keeping up with city trends. For retail, especially in the gift and souvenir market, the focus returns to bricks and mortar stores – online shopping is not part of the holiday experience apart from checking out reputations and getting food delivered, Stent says.
“Travellers want something with a Kiwi flavour that reflects the quality environment they’ve been seeing. Even if they only want a low-cost magnet, they expect something a bit different. Thankfully a large part of the cheap souvenir market has gone, and we have the return of small-scale New Zealand manufacturing enabling higher quality, inexpensive gifts.”
Those who discover the Far north find out how large it is, the wide range of activities, the landscapes, and the relaxed outlook, and that’s what needs to be sold says Stent. But retailers cannot work alone to fill their shops; it’s a team effort.
Tourism is about providing the total package of accommodation, activities, food and shopping.
“Retail cannot be successful if the town lets down the side. There must be a good mix of activities in terms of catering to all ages and prices. It is essential to have the widest base to ensure volume stays high and increases.”
Coastal Bay of Plenty
Tauranga’s city centre is going through a time of transformational change, impacting the foot traffic of both local and international shoppers. Earthquake strengthening work, the ever-changing face of retail, and new and competing developments in the region are all playing a part in the reduced numbers.
Current initiatives in the city’s centre are designed to pragmatically and demonstratively deliver outcomes for businesses as they’re trading through this time of change, says Millie Newitt, Downtown Tauranga’s Member Liaison and Event Coordinator.
“Thinking outside the square, some businesses are doing a great job of creating something unique and interesting to entice people to their business, and show what they’re so good at.”
Collaborative promotions bringing retailers together include LOOK Fashion Month, Shop to Win, the Look Fashion Book, Taste Tauranga Food Festival, degustation dinners, quiz nights and live music. There’s also the Activate Vacant Spaces Initiative to turn vacant spaces into art and culture installations and retail concept test stores.
Another initiative to assist in driving tourists to the city centre is a shuttle service between The Port and Tauranga Waterfront. The service has received positive feedback from retailers, the hospitality sector, and directly from cruise ship passengers says Newitt.
“When asked about their experience in the city centre, passengers commented on the cleanliness of the city, their interest in developments, experiences in the businesses, and people they encountered, and their enjoyment of the Tauranga Art Gallery, Elms, and Tauranga Waterfront. The average rating was 8/10 for the CBD experience and 9.4/10 for the shuttle bus service.”
Retailers in the picturesque destination of Wanaka have a lot to consider with the changes in the region. There’s the development of Three Parks, Wanaka’s first out-of-town shopping area, the growth of retail just 45 minutes away in Queenstown, and the release of the Wanaka Town Centre Masterplan by the Queenstown Lake District Council.
“Retail in the CBD will need to change in the next five to ten years,” says Naomi Lindsay of Ignite Wanaka, Wanaka’s Chamber of Commerce. “Coupled with the growth of online shopping, businesses will need to relook at their offering.”
Part of the role of Ignite Wanaka is to support and equip businesses for change, says Lindsay.
“We also look at things such as smaller footprints, selling unique Wanaka-made products, online options, and opening later during the busier tourist season in line with European cities. As part of the Masterplan, we’re looking at opening up the lakefront to encourage foot traffic, and, while maintaining parking, allowing for alternative transport use to encourage people to visit our best asset, the lakefront.”
The Masterplan contains a range of different options for the future of the Wanaka CBD which will benefit locals and tourists, including efforts to create a people and community focused town centre which supports retail business through engaging streets and spaces. Some ideas presented include walkable streets within the town centre to balance pedestrian, cycle, and vehicle movement, managing parking to and in the town centre to maintain safer pedestrian access, and providing sheltered locations for market spaces.
2019 – Year of the Tourist
The dawn of 2019 saw the China-New Zealand Year of Tourism begin, a collaborative initiative between the two nations to attract high-value Chinese visitors to our Kiwi shores. While it’s yet to be seen if the potential boost of $1.7 billion annually quoted by the Beehive has arrived, as the second largest visitor group to New Zealand, China is certainly a market for retailers to focus their efforts on.
MBIE’s International Visitor Survey shows 434,000 Chinese visitors had a total spend of $1.63 billion in the year ending March 2019. They’re behind first place holders Australia, with a spend of $2.65 billion, and in front of ‘the rest of Asia’ at $1.32 billion, and the USA’s $1.31 billion. Of the higher-spending visitors – those in the top ten percent of visitors by spend-per-day – Chinese tourists lead, contributing to 29 percent or $670 million of the high-spend market in the year ending December 2018, ahead of their neighbours ‘the rest of Asia’ at 18 percent, and Australia at 17 percent, in an analysis of the IVS by the MBIE Business and Economic Development Team.
Shopping is the leading holiday expense for Chinese visitors, says John O’Loghlen, Director of Alipay (Australia and New Zealand), Alibaba Group with spending at retail stores overtaking accommodation, dining, and visitor attractions.
He says for the most part Chinese shoppers visiting New Zealand largely mirror those of locals and other tourists from around the world, although there are some important differences for retailers to keep in mind.
“Our research has found Chinese visitors rate discounts and special offers as the most important factor influencing their overseas shopping decisions – just ahead of product quality, price, and the payment methods available.”
New Zealand retailers are becoming increasingly savvy in targeting Chinese visitors with tailored deals, says O’Loghlen, but the challenge is to ensure the visitors see the deals on offer.
“To better engage with Chinese shoppers, understand how and why they shop. Invest in special offers targeting Chinese visitors, engage with them through lifestyle platforms like Alipay, and make the payment experience as seamless for them as possible.”
Alipay is recognised by many retailers as the world’s most popular payment platform, with over one billion users globally. In June, New Zealand retailers were treated to its features during the Alibaba Group’s flagship Ecommerce Expo in Auckland, along with training for those wanting to access the Chinese market through Alibaba. Alipay is more than a payment platform – it’s a lifestyle platform, with users in China able to hail a taxi, book a hotel, buy movie tickets, pay utility bills, or make appointments with doctors, directly from the app.
O’Loghlen says the Alipay app enables New Zealand retailers to engage with potential and active tourists in China before they’ve boarded the plane, during their visit, and again when they return home. Numerous campaign and marketing tools within the app can assist New Zealand retailers to achieve greater awareness, customer traffic, conversion, and retention. Retailers can also participate in Alipay’s seasonal campaigns, such as Chinese New Year and Golden Week, benefiting from Alipay’s own marketing activities during key tourism periods.
“Chinese visitors, like tourists from most other countries, come to New Zealand to experience a different lifestyle, including the local goods and services which make the country unique. With this in mind, retailers should look to champion their heritage and authenticity, while leveraging platforms like Alipay to directly engage with Chinese shoppers.”
The retailer’s to do list
Catering to the tourist market requires a cost-benefit evaluation to determine if any changes are worth the commercial investment, says Neville-Te Rito. Yet there are ways to treat international and domestic visitors which require more thought than cost. She suggests:
- Tell your retail ‘why’. ‘Made in New Zealand’ is a strong selling point, and many retailers undersell this appealing element.
- Provide a store layout that heroes what tourists seek, love, or admire. In New Zealand we’re clean, green, wholesome, craftsman, at one with nature. Sell the dream. For example, we know Chinese visitors love our milk products, wellness and beauty, therefore are keen to purchase wool, alpaca, deer, and greenstone.
- Give shoppers a sense of value. This doesn’t necessarily mean marking-up to mark-down, or offering a heavily discounted price, but rather getting creative with gifts with purchase, buy-one-get-one-free and exclusive offers.
- It’s common for some tourists, such as those from China, to ask for ‘new stock’, rather than display items that have been touched by others. Have items in original packaging, and if the display stock is all that’s available, ensure it’s in perfect ‘like new’ condition with appropriate packaging. Packaging is critical not only for transit, but also for the perception of ‘new’.
- Ensure tourists can understand your store and products, and know you’re nearby to help. Have pricing and product descriptions in different languages, and sales staff who can speak different dialects or at least be able to say a few words to make visitors feel welcome. Language barriers can be tough, so patience, tolerance and acceptance is key. What might feel as a customers being ‘short and rude’ may simply be a direct question with a choice of words that aren’t quite right. Consider translation and currency converter apps and ready-reckoners to assist with communications.
Finding the balance
While the tourism industry brings dollars to the New Zealand economy, residents talk of lack of infrastructure, steadily increasing tourist numbers putting unsustainable stress on essential amenities, roads congested with rental cars and mobile homes, and tourists clogging up the pristine views.
Balancing the needs and wants of tourists, retailers and the local community is essential. Retail opportunities and success are dependant on customers, whether they’re travelling from near or far, so understanding how to welcome visitors while living in harmony with the community is important.
- Be informed by maintaining a good sense of what’s going on at the local government level. Challenge aspects of town planning, get involved, and collaborate with fellow retailers to speak out in favour or against proposals.
- Marketing to tourists is not all about buying products in shops. Widen the focus to include the community and let visitors know about the surrounding location and all it offers. Identify the elements which could assist visiting shoppers, such as storefront parking, proximity to the lakefront, close to public amenities, or the fact it’s a short stroll to a renowned restaurant or major hotel chain.
- Take the opportunity to educate visitors about how we treat our country, and the environmental steps we’re taking to protect it. As retailers, there’s a responsibility to reduce packaging or, even better, use none at all. Will visiting customers understand the relevance of this? If bags are a no-go, what are the alternatives? Do paper receipts need to be taken, or can the transaction be emailed to the purchaser?
- When the tourists return home, it’s the regular, local shoppers who will support retailers. Ensure they are not forgotten in the hustle and bustle of a busy tourist season.
This story originally appeared in NZ Retail issue 763 August / September 2019.