Some 15 years ago I was in the USA on business with a colleague when he decided to purchase an engagement ring for his partner. He spent some time making the selection (with some assistance from me) and headed home happily with the Tiffany's engagement ring secured in its special box. The engagement, by the way, was secured, and I assume at some point in the future the couple will marry!
However, the topic of this week’s post is Tiffany & Co's arrival in Auckland. The location frankly, is not Queen Street; situated on Takutai Square in Britomart, one might need to be pointed in the right direction to it to find the store.
It’s inevitable that Tiffany & Co will open more stores once the new store has settled down… or will they?
The jewellery business in this country is awash with jewellery outlets. The growth of Michael Hill, a publicly listed company, together with the growth of Pascoes and Stewart Dawsons, which are privately owned by James Pascoe Group (who also own Farmers Trading Company, a host of other stores as well as a 17.5% stake in The Warehouse Group), provides some context for this new arrival. Not to mention the numerous independently owned jewellery stores throughout the country.
Shopping centre developers have a love affair with jewellers. You will find them on most crossroads of shopping centres in the prime spots; they are prepared to pay the rent thanks to the very significant margins in the jewellery business.
So what will Tiffany's entry to New Zealand mean to its competitors?
I doubt that the other jewellery traders will worry too much, although I suspect that it will spur a brand refresh of the somewhat dated Pascoes and Stewart Dawsons; neither of which have had a makeover for years. The arrival of a major retailer such as Tiffany’s does usually stimulate some improvement in competitors due to the surge of interest in the retail specialisation.
Tiffany’s are of course an upmarket retailer who will not encourage the average Kiwi customer. They are exist for the bigger spender and as the location of this new store suggests, will be driven by destination seeking customers with reasonably fat wallets.
Tiffany’s will be the last in a slew of new international retailers to arrive in New Zealand this year, and they will all be focused on achieving pre-Christmas sales for the balance of 2016. It’s worthwhile taking a moment to consider the pretty impressive list of new entrants in 2016; David Jones, Topshop, Zara, H&M, to name just the well-known brands.
As we enter the pre-Christmas shopping rush, we should recall that this time last year Dick Smith were in trading mode, and it is probably useful to recall the number of shopping vouchers that were purchased and subsequently couldn't be redeemed due to Dick Smith’s closure.
That's how fickle the retail industry can be; it changes constantly and never is one year the same as the last!
As for my colleague, now that Tiffany's has arrived in New Zealand, I think it is time he bought the wedding ring!
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.