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Has Scentre Group lost ground in New Zealand?

  • Opinion
  • October 18, 2016
  • Paul Keane
Has Scentre Group lost ground in New Zealand?

I have often pondered where one can go to buy speciality chocolates! If you think about it, the most popular places are probably department stores... but where do you go for that special treat? There is a very good speciality chocolate outlet in Kerikeri and another in Matakana, but nationwide where is the key brand that you’d go to for a special chocolate experience? It certainly gives you "food for thought".

Darrell Lea - that chain of chocolate shops out of Australia - did actually enter New Zealand some years ago but then left again without establishing itself in a national format.  There are other brands about, but very few. It’s rather strange that not one major chocolate supplier has ventured out into a full retail environment.

Why is that?

Some years ago, a shopping centre was the place to go for those special treats. Westfield (now Scentre Group) was typical of bringing to New Zealand new retail entrants - particularly the well-known brands - and you could almost rely on going to a Westfield centre for that brand new retail model that may be out in the market. Not so now it seems.

Kiwi Property's recent capture of the H&M and Zara brands was indicative that other shopping centre owners have stolen a march on Scentre Group. It suggests to me that Scentre Group is not as powerful as it once was; particularly in New Zealand. This is exemplified by Westfield WestCity’s recent "up for sale" status. It’s the last remaining fully owned Westfield property in New Zealand.

A quick review tells us that the Westfield stable, as it once was, is bereft of such shopping centres as Johnsonville Wellington; Northlands Christchurch; Shore City, Glenfield and Pakuranga, Auckland, all of which have been sold. All that is left is a 51% shareholding in Albany, Manukau, Newmarket, and St Lukes (all in Auckland) and Riccarton in Christchurch.

So is this a signal that Westfield as we know it will soon be no more?

I suspect so, and that will be regrettable. Why else would Westfield effectively sell down a large chunk of their shareholding to a Singaporean Fund without having considered a long (or short term) exit strategy?

The centres retained in partial ownership are still quality centres but in terms of the Westfield worldwide portfolio the New Zealand portion of ownership is tiny. The fact that key international tenants are not entering New Zealand via a Scentre Group centre suggests that they had nothing substantial to offer, or alternatively, there was not enough discussion to encourage interest.  Bear in mind that these same tenants are in Westfield centres elsewhere.

The Scentre Group of shopping centres emerged under the original ownership of Fletcher Challenge under the auspices of shopping centres throughout New Zealand. This was effectively driven by the significant development of New Zealand shopping centres in the 1970s. Maybe the way the ownership of shopping centres in New Zealand is shifting - from overseas to local dominance again - is a good thing.

So what does this have to do with chocolate shops? There are no national chained chocolate shops in New Zealand, though they exist elsewhere in the world.

The challenge for the New Zealand owned shopping centres is to get more diverse offerings into New Zealand centres.

Just like Kiwi Property have done with H&M or Zara. Chocolate shops would not be a bad start. Now you must agree!

 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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