Dress Smart is up for sale and, while it may not be at a discount, it’s still a smart buy. That’s the thinking from one retail expert who says outlet shopping in New Zealand remains “rock’n’roll retail”.
Dress Smart’s two discount retail factory outlet malls – one in Auckland and one in Christchurch – are part of a portfolio of properties with a price tag of more than $350 million. The sale could be one of the largest retail property sales in years, if not the largest.
As well as Dress Smart Onehunga in South Auckland and Dress Smart Hornby in Christchurch, also up for sale is Dunedin’s prime Meridian Mall on George Street in the CBD. Both Dress Smarts have 99 per cent occupancy, while the Meridian Mall has 95 per cent occupancy.
Internationally, outlet shopping grew significantly during the 1900s and early 2000s but has steadied in recent years, due to the dominance of big-box or ‘everyday value’ retailers like TK Maxx and as online competitors slash prices.
But in New Zealand, a number of factors still make outlet shopping desirable, says Retail X managing director Juanita Neville-Te Rito.
For one thing, New Zealand is “an isolated geographical market – we will always need an channel to get rid of product”. Another reason is that Kiwis are born bargain hunters, she says.
“We rank as one of the most value-conscious countries in the world. It’s in our DNA.”
Yet we also love branded premium and luxury goods. These “are still a strong beacon in our shopper psyche: we will continue to seek them out while they serve as a status symbol of taste, quality and aspiration”.
There’s also the fact that buyers “still continue to get it wrong regardless of demand planning” and over-buy stock. Finally, aggregation of all these goods in one spot “makes perfect sense”, she adds.
Neville-Te Rito cites Onceit.co.nz as an online equivalent to going to an outlet mall, however “the work to find the bargain is still hard work and doesn’t provide the same level of ‘wow’ that an outlet mall does”.
But there are trends that, over time, will eventually push back outlet shopping, she warns.
These include better demand planning and stronger supply chain value (for instance, fashion retailers that produce smaller quantities more often, when it’s gone it’s gone), as well as, she says, “the rise of anti-brand and anti-stuff, as in ‘do we really need all this crap’?”.
Despite this, Dress Smart has done a “stellar job” of putting desirable brands in key locations and creating a magnet for off-price and value shoppers, she says.
Shoppers still have strong desires to be social and “go shopping”, to want to touch, try or feel an item physically, to grab a bargain and to seek status through premium brands, she adds.
They also “expect to be able to park out the front and get everything in a relatively contained location, such as a mall”.
Meanwhile retailers appreciate “the channel to market it provides – literally getting the right stuff to the right place at the right time”.
She adds: “If you don’t believe me, head to a Dress Smart shopping event and see if you can find a carpark.”
The portfolio is owned by Australian property and construction giant Lendlease Group. Colliers International and CBRE Australia are managing the sales campaign. The closing date for offers was Thursday (November 21) but an announcement about a buyer is yet to be made.