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What it takes to secure a big international retailer

  • Opinion
  • December 11, 2015
  • Paul Keane
What it takes to secure a big international retailer

Kiwi Income Property securing H&M was a major retail statement at Sylvia Park in Auckland and another indicator that international retail companies are taking New Zealand seriously as a potential venue for retail sales and ultimate profit. 

First off, a bouquet to Kiwi. Those of us who may have been in the industry for a while will understand the time it takes to secure a key tenant for a retail environment. International tenants take just that much longer. They are hardnosed and want to do a deal that betters the previous one wherever that may have been. Kiwi had to not only get the tenant but convince them that Sylvia Park was the right location.

When international retailers are approached to come to NZ, their traditional first comment is “Not really, the country isn’t big enough”. Probably a fair comment, as the H&M stores are all in the top London and regional locations in Britain and Europe.

However, from a NZ perspective, Auckland is the right place and Sylvia Park has no true department store so H&M are an outstanding anchor and new to NZ. This is a double whammy great outcome. Imagine what it will do to the asset value of Sylvia Park and to the trading results of all other retailers in the centre. To think some commentators said this shopping centre wouldn’t work 10 years ago!

What attracts international retailers to NZ

So what has actually driven international retailers to take the plunge down under? There is now Top Shop; David Jones: Tiffany; and now H&M who have planted or are going to plant a retail seed in NZ. It’s more than just our population, as local consumers will not sustain these respective new retailers. It’s about the number of tourists heading our way and the additional increase in cruise ships, together with the publicity this country receives from around the globe. There is of course the population growth in Auckland which simply cements the exposure to these outlets. Further we have been predicting for a while that more retailers will reach our shores from abroad. We are further convinced that we haven’t seen the end of them and more are on their way.

When the first ships arrived in NZ, at the turn of the last century, the passengers had undertaken an arduous journey across the seas. They bought with them new ideas. The ideas included the development of land for the growing of vegetables, principally by Chinese immigrants. Others from Britain bought their trading skills, and the Irish bought their farming and land skills. Over time, through international exposure we understood and developed shopping centres enabling all retailers to gather in one place. In 2015/16 we will see the fruits of the pioneering by our forebears, and the skills they deployed, realised, with the arrival of these new international retailers.

However, it is one thing to achieve new retailer entries like Kiwi have achieved, the goal is to retain them, and to add to the cluster.

 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 post originally appeared on RCG's blog.

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