The announcement that Farmers plans to open a new department store in the Whitcoulls premises on the corner of Queen Street and Victoria St in Auckland’s CBD drew some attention last week. For the uninitiated, the location is traditional in that Whitcoulls has been on this site for many years. The building is known for the giant Santa which is erected in late November each year, and sits proudly above its entrance enticing customers to visit with a moving finger! The fact that Farmers are going to take over the space raises a number of questions.
The history of Farmers and Whitcoulls
Farmers has been owned by the Kiwi-owned James Pascoe Group since 2003. This chain of department stores has had an Auckland CBD branch for most of the last century. Whitcoulls has an equally long history, but in the last decade or so it has started to feel the heat from Amazon, ebooks and the other new forms of competition which have been hurting bookstores around the world.
In 2011, Whitcoulls’ parent company REDgroup Retail, which also owned bookstores across Australasia, went out of business, and Whitcoulls was bought by James Pascoe Group. We predicted at the time that Farmers would take over the Whitcoulls Queen St space, so we were pleased to be proven right by last week’s announcement.
Farmers vacated their old location on Queen St just over a year ago. The old premises were far from ideal for a CBD department store - they want flagship locations, with plenty of visibility. Instead, what they had was a store with limited visibility from the street, with limited space, half of which was on a basement level.
Farmers will now have an extremely high profile site - perhaps not as large as they'd like, but on one of the busiest and most visible corners in town. It's in a heritage building too, which is always a plus for a department store with such a long history. We would expect a carefully curated product range and store layout, to make the best of the space restrictions.
Farmers have been a supporter for Auckland’s CBD over a long time, with the Santa Parade etc. In fact, the Santa that graces the Whitcoulls store was originally from Farmers: it went up above the Farmers Hobson St store every year from 1960 to 1990. So there’s a certain poetry in knowing that it will be advertising the premises of Farmers once again.
The fact that Farmers are moving into this site will make a major retail statement for the city, particularly with Topshop having opened recently and nearby. The fact that Farmers are returning to the CBD will also have many local customers very happy, and it cements a retail statement in midtown Queen Street with Smith and Caughey's also within easy walking distance.
To be very clear, this move is good for the CBD. Farmers will be much more effective in that location than Whitcoulls could have been. The CBD has a Farmers department store again, and it should be very successful.
It does suggest, however, that Whitcoulls is no longer the business that it once was. Effectively its statement will no longer be on Queen Street, but one assumes that Farmers will provide a generous “Whitcoulls” offering in its new store as part of the wider Department store offering. Certainly as both brands are part of the one ownership it would seem sensible to retain some level of representation.
What happens to Whitcoulls?
However, the wider question will be the sustainability of the Whitcoulls brand over time. Is it now a book shop or a gift shop/book shop? In an answer to questions on the subject, a spokesman for the Group suggested that Whitcoulls wasn’t leaving Queen street, as it is retaining a presence in Downtown Shopping Centre. However, that centre will soon be demolished to make way for the major retail and office development to be undertaken by Precinct Properties, and being built above new railway tracks for the City Rail Link.
If developed properly, one would expect that this location will develop into the key activity hub for the city, and will be surrounded within easy walking distance with like activities. This then suggests that Farmers will not have a presence in the Precinct development, given that they are going to be located in the current Whitcoulls premises instead. Conversely, one assumes that Whitcoulls will be represented in any new development, if its brand remains intact.
The next question will be, if not Farmers as a department store then who? Certainly Auckland is big enough to house a major department store statement of international ranking. Some years ago, David Jones were keen to be located on Quay Street, but the deal dried up and they didn’t come.
Is it likely that a new department store brand will arrive in New Zealand? We believe it is just a matter of time. Major retailers are looking and that should result in an arrival of a major presence, sooner rather than later.
When Costco opened in Sydney, it is reported that their sales for the first day’s trading created a world record. Auckland has matured both in spend and population to be awarded with some major retailers of world class, we expect them to be here within the next 5 years. Size and location availability will however dominate their arrival.
The expectation for a Queen Street resurgence in Auckland will be swayed by those factors, and we shouldn’t expect the traditional majors to be in a Queen Street development - due to parking and access difficulties - but a quality department store is certainly on the cards.
Paul Keane is a registered property professional and has vast experience in New Zealand’s commercial property industries. He provides retail and property consultancy including development management to many New Zealand property owners, developers and city councils. This article was originally published on RCG's blog.