Heartland bypass: new Maxim Institute report shows many small towns set to stagnate or shrink by 2030, so can regional retailers cope?

  • News
  • March 2, 2017
  • Courtney Devereux
Heartland bypass: new Maxim Institute report shows many small towns set to stagnate or shrink by 2030, so can regional retailers cope?

A recent report from The Maxim Institute, Growing Beyond Growth, predicts populations in around 44 of the country's 67 authorities will stagnate or decline within 30 years, compared to 11 areas now. It says not doing anything about that could "risk opening the door to broader societal division between people and communities in growing areas and those in stagnation or decline". And it will also impact on retailers in those regions. So what can they do to stay afloat? 

In a cover story for NZ Retail last year, Elly Strang looked into the state of provincial retail and found that many small towns were already struggling.

A dwindling rural population has been an ongoing issue for the New Zealand heartland, placing small businesses under severe financial strain. And changes to consumer behaviour as a result of new technology have also hastened the demise of some. 

But many of those from the regions singled out by the report questioned the data and remained optimistic. Responding to the Maxim report, Whanganui Mayor Hamish McDouall told New Zealand Herald that he admits that people are continuing to leave small towns for opportunities they can’t offer.

"We don't have a university here. We accept that people will be disappearing to educate themselves, disappearing for job opportunities that may not be offered in the town.”

But he said that although people leave for opportunities, they often return to small towns to start families.

Rotorua mayor Steve Chadwick told the Rotorua Daily Post "Maxim was only interested in the data, not what the centres were doing about the data" and local retailers from Rotorua and Taupo were feeling confident that their towns were moving in the right direction. 

While most middle or larger sized cities are expected to grow, the report was not as optimistic about the outlook for the smaller towns.

Greymouth District mayor Tony Kokshoorn told that he has been dealing with population decline his whole career and it was "bloody difficult.”

Greymouth has faced population decline since the 1960s, and is the only town in the country where house prices have fallen.

Wider town solutions aside, there are several ways provincial retailers can encourage more foot traffic to their stores.

Melissa Williams, founder of Kilt clothing, says her label started a month-long event called New Zealand Made March to encourage people to shop locally.

The month encourages people to shop with both Kilt and with other New Zealand made brands.

“We have seen people really get on board with it and get excited about it. If you’ve got the option of China made and New Zealand made and they’re a similar price, most people would pick locally made. It’s keeping people in jobs, and there are a lot of feel good factors about it,” Williams says.

The small town of Gore is an example of a small town that has turned it's struggles around. Williams says Fostering a sense of community is key to retail surviving in the provinces.

“People who live in small towns enjoy a feeling of belonging. The love the fact that they know shop staff by name and we know and remember them.”

Gore has focused on localism and tourist attractions 

The Buller District rating revaluations for 2016 showed residential values across the region fell 18 percent since 2013.

Maxim Institute researcher Julian Wood told Radio New Zealand that"we're seeing a two-speed economy emerging where people in major urban areas are getting ahead".

"That's where the higher education opportunities are where the jobs are, and we're seeing the opposite happen in smaller areas ... For all the current talk of 'zombie towns' and bank closures, we are really only experiencing the beginning of a 'death by a thousand cuts' for many regional towns. New Zealand needs to accept that this sweeping economic and demographic wave of change is coming, and in many ways, already acting upon us. Regional development goals that simply aim to maximise a region's economic growth potential are inadequate for this future. Spatial or place-based regional development policy is increasingly going to be key to facing this new future."

One suggestion is for central Government to redistribute some of its infrastructure to the provincial regions. And McDouall agrees. 

Small towns and communities will always have limited options, but they struggle more when based on a single industry.

While there’s no easy cure for the problems facing small towns and the retailers that operate within them, a common thread connecting successful towns is showing residents how important shops are to maintaining a sense of community, which goes some way to combating the appeal of online international retailers and convincing national retailers they should remain. 

Strang's story gives five steps for those in the retail sector that are struggling.

Steps for those that are struggling:

1.Find strength in numbers. Band together with other retailers and businesses in the area to create a community where you can share advice and ideas.

2.Create a platform that you can engage with customers on and get feedback on what’s working and what’s not, be it your store’s social media page, a loyalty programme, or an in-store feedback form.

3.See if there’s a retailer, retired or active, who’d be willing to be a mentor.

4.Contact a retail consultancy and ask for advice.

5.Talk to the local council about what options there are; ask for examples of other New Zealand towns in hand to show there are solutions out there. 

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