2020 vision: What the experts predict for New Zealand's regional retailers

  • News
  • January 3, 2020
  • Rachel Helyer Donaldson
2020 vision: What the experts predict for New Zealand's regional retailers

What does the next decade have in store for regional retailers? We talked to retailers in seven regional centres around New Zealand to find out. In this first article of the series, we reveal retail experts' forecasts for the regions.

As we head into a new decade, population growth, sustained consumer confidence and tourism activity are supporting retail spending across New Zealand’s various regional economies. In 2019, this gave many towns and smaller cities a real boost. 

The latest Infometrics Quarterly Economic Monitor found that almost all regional economies grew over the past year (June 2019) with Otago the standout region (3.1 percent per annum) followed by Hawkes Bay (3.0 percent). 

However future growth is a concern, with a “long, slow slowdown expected over the next few years”, says Infometrics senior economist Brad Olsen. “There are worries about future growth in tourism given softer growth in tourist arrivals. Primary sector outcomes also play a key role in supporting local economies, including retail offerings.”

In 2019, at least, farming gave some less touristy towns, such as Timaru and Dargaville, a boost. Meanwhile visitor activity bolstered the bottom lines of places that aren’t overtly touristy, such as Cambridge and Palmerston North.

Gisborne, meanwhile, bucked the current trend of softening tourism growth. It notched up the strongest regional growth in tourist guest nights, up 6.1 percent per annum over the June 2019 year. There was also a 5.9 percent increase in tourism spending. Olsen says this indicates “the continued strength in tourism for pockets of the country, even as tourism growth has been generally easing throughout the country”.

But, Olsen warns, if economic conditions slow over the next decade, the expectation is that consumers could become more cautious about spending. Slower population growth will also restrain similar levels of retail growth. 

There are various areas that retailers can work on to give them an edge in this environment, he says. 

This includes offering top-notch service, which can be key to acquiring and retaining loyal customers who want more than just a transaction. Convenience shopping – including subscription-based services for food, drinks and clothing – is also rising in popularity, as people’s schedules become busier. Sustainable and climate conscious retailing is another area that’s growing at pace, he adds. 

Towns wanting to boost visitor spend should look at exactly what’s driving spending in tourism hotspots. Some things will simply not transfer to different areas, he adds, and local knowledge is key. 

“Local areas should embrace their unique positions and look to their locals to highlight the hidden gems around town that should be promoted more.” 

City retailers could also learn a thing or two from successful regional retailers who provide outstanding personal service and in-store experiences, reckons Olsen. “Grassroots, local, and welcoming service” will be crucial in getting ahead of the competition, whether that’s other physical stores or online options.

As well as tourism and general population growth, many of New Zealand’s smaller centres are benefiting from a boom in, well, Baby Boomers. Masses of retirees have flocked to places like Napier/Hastings and Cambridge as the population ages and property prices in urban centres remain high. 

As a result, Olsen says, areas with more affordable housing are likely to become key retirement areas, as retirees both seek to keep their costs down, and provide more to their families to help them get on the housing ladder.

“Areas that have options for a more relaxed lifestyle, and options for care in older age, are important for retirement decisions. Retirees also want to be able to access family when possible, while remaining outside the hustle and bustle of urban centres.”

Shopping precincts that have “a sense of deep community” as well as trust, quality and reliability, always perform well among older consumers, says retail strategy expert and Retail X founder Juanita Neville-Te Rito. “Increasingly our aged shoppers know there is a trade-off between convenience and price but they still seek those who have empathy with their needs.”

She says retailers who do senior-focused retail make things easy for their customers –  those with convenient parking, great transport and mobility-friendly locations are winning. Seating where you can dwell, and a cafe “adds to the outing experience, rather than a dedicated destination”. Stores that are easy to navigate, shelves that are easy to reach and ticketing that is clear, logical and readable all help, she adds.

But what separates good senior-focused retail is those with team members that take their time with older shoppers, she says. “The best retailers are those that have empathy and great communication skills.”

Local pharmacies do an excellent job, adds Neville-Te Rito, in particular many Unichem branches.  “Their teams take the time with these shoppers but they also cater by having loads of gifting solutions as well as other odds and ends to deliver convenience.”

 Service-based retailers such as OPSM and Bay Audiology have designed their stores very much with all their customer needs in mind and have “exemplary” service. 

Palmers Garden Centres also get a namecheck, for providing an environment “where you can come and simply have a coffee and a potter but also have an extensive range of other products for retirees to browse”. They also offer a wide variety of classes and events.

Any retailer who feels that retirees are a core customer for them can excel, she adds. 

“They simply need to ensure they have a customer-centre mindset and upskill their team to understand the nuances and take the time to spend with the shopper.”

This story originally appeared in NZ Retail issue 765 December 2019 / January 2020

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