The demand on retail facilities was no more apparent than over the past week. A trip to Sylvia Park on Sunday demonstrated the impact of customer interest in the new H&M and Zara stores; the roading network surrounding the centre was congested and vehicle movement intense.
On a detour to the site of the proposed new retail development in Ormiston just 12 kilometres up the road from Sylvia Park, it was clear just how busy the relatively new Pak’n’Save has become. As I understand it, within the next 18 months this centre will have a range of new retail stores developed into a shopping centre accompanying the supermarket.
My one question; with the creation of all this new retail space and the influx of new retailers, where all the shoppers are coming from and where were they shopping previously?
For now newcomers H&M and Zara will of course attract inquisitive shoppers, but come January 2016 a trading pattern for both stores will have developed and response from customers will be less intensive. The supermarkets intensity however is a different story.
Both major supermarket operators - Progressive’s Countdown and Foodstuff’s New World - aggressively defend their positions with both opening new supermarkets in growth areas in an attempt to increase their market share. This competition is nothing new; it has been going on for decades. But more to the point, there is clear need for bricks and mortar supermarket growth.
Regardless of online retailing, large supermarket demand is in my view here to stay. This is driven by the obvious increase in Auckland's population. Simply put more shoppers demands more facilities. It’s no longer ideal to do your supermarket shop on a Sunday afternoon in Auckland, carparking is congested and traffic snarled at best.
So what will this lead to?
My prediction? Longer hours for shopping in congested consumer environments is just around the corner. Nine-to-five will be a thing of the past with all shops being under pressure to stay open longer. Supermarkets could well be open all night!
An example of this impending congestion problem is Johnsonville Mall in Wellington. This centre has served an excellent demographic since the 1970s and in the past traded very well. At one time it was one of the best trading centres in New Zealand. More recently, the owners had been reluctant to expand it due to car parking pressure. However with a change of hand the new owners, Scentre Group, have indicated a desire to expand by 2018. I’m curious if the centre will be able to return to its golden days of trading. Sylvia Park and its new tenants have validated that parking is essential for a centre to trade profitably for all stakeholders, and unless Johnsonville Mall gets this commodity right, the result could be negative.
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.