The past week has seen us being contacted by various members of the media, Ikea was one subject and the other was Queens Wharf. On the Ikea issue, we were told that the interest from the public in Ikea was huge and when are they going to arrive etc.
This is something for Ikea to advise and not for us to comment on. However, what we do know is that there is a huge gap in the market for Ikea type merchandise, this emerges from our own research. What are the recognised furniture stores in NZ? Where are the designer type furniture stores located? Interesting isn’t it, and not easy to quickly identify. There is a real gap in the market that is literally waiting to be filled.
Queen’s Wharf
The Queens Wharf saga seems to have now come and gone with the bureaucrats finally getting their heads around the fact that sometimes you need to move with a level of urgency and avoid the red tape. We are still of the view that despite the decision for Auckland to have a “Party Central” on Queens Wharf there remains absolutely nil information as to what will be on there and who will run it.
This needs more than an architect with a good pencil to make that decision!! Meantime if you are contemplating renting your house or apartment out for the Rugby World Cup, don’t be coy about what you charge. As we said in a previous issue, Europe and the UK have no scruples about charging plenty so why should NZ be any different!!
Bunning’s Growth
Bunning’s seem to be announcing a new store every month. They recently opened a new store in Dunedin and are currently building a new store at Rongatai in Wellington, which will be due to open in December this year or the New Year, and they have recently been granted resource consent for a new store in Glenfield on what was the previous 3m site.
Assuming each store is around 8-10,000 sq metres that’s 24-30,000 sq metres of retail space that Bunning’s as one retailer will add to the NZ retail industry in one year. We also know that there is more to come. All this in a continuing flat retail market that is anything but Buoyant. So what’s the secret? Basically achieving market share and taking trade away from others. Remember when we used to have “hardware stores” only? These new large format outlets can no longer be classed as “hardware”.
They appeal to the female consumer as much as they do to the male, and the merchandise range increases every week? Can they get bigger? We believe they can and we see a connection between them and the forgotten member of the group family ” Kmart”. Well why not? Keep a range of merchandise under one roof, this reduces overheads by eliminating one store type and all the premises, but retains customers, thus profitability for the group improves!!
Crazy thinking you may say, but name one retail major group in the past year that has developed more retail space than Bunning’s? Still thinking? Well even the supermarket people haven’t achieved a great deal of new growth. This demonstrates that there is still opportunity for more retail activity in various parts of the country, but if you cannot get the sites then you cant grow. Bunning’s have achieved this over others!!
Top Shop
Some weeks ago we mentioned Top Shop and their entry to the “Department Store” on Auckland’s north shore. We thought we should let the euphoria die down then pay it a visit as a consumer. The area occupied is small, it must have the smallest representation of the brand anywhere in the world. Certainly the section allocated to “Top Shop” within the store was busy, but does it represent the total “Top Shop” range?
We don’t believe it does. So does this represent a level of brand negativity? Probably not, but key international brands have to be careful as to representation. As an example, can you buy an Abercrombie and Fitch garment in New Zealand? Well you can but the retailer is not entitled to advertise it due to the brand being eroded. (How many of you know where to buy an A&F garment?)
Property “Reuse”
Meanwhile as an example of a property being “reused”, Bunning’s former premises in Ti Rakau Drive in Auckland are to be converted into a Chinese market? There are two outcomes to this story. The first is that empty buildings can be put to alternative use with some ” outside the square” thinking, and secondly the new Bunning’s is located very nearby so this was a relocation of a major retailer from one location to just up the road.
This is a signal to property owners not to take major retailers for granted. If the market moves or the site is no longer trading to potential then they will move on. Some supermarkets may also fall into that category, so property owners really need to be on alert. The question of a “Chinese Market” in east Auckland is interesting.
Will it work? Our research shows that it certainly will due to the Asian population that exists in East Auckland. In fact it could be a real winner with visitations from well outside its demographic. And what a better spot than to be housed in a former Bunning’s shell, all under one roof with parking. The latter may however be the Achilles heel. If this project works then customers will want to park with ease, and we are not convinced that sufficient parking will be satisfied.
RCG Projects - Banks, Cafes, Stadium Corporate Boxes
We seldom discuss RCG projects in the news in brief. We use this tool to recognise achievements in the market or we indicate where we believe the market is heading, or where a retailer may be going, or what is a key property issue. However, this week we should acknowledge the work that our interiors team have done and recognise their achievements.
We undertook the redesign of the Westpac Box in Wellington at the Westpac Stadium and also new premises for Royal Caribbean Cruises in Auckland. Both have received outstanding compliments from both clients and others, as have the new branding and design for Westpac branches. We are also engaged in some major food and beverage work as well as some major retail planning exercises that will become apparent in a few weeks, all of which have been undertaken by our own RCG team. Some of you will be receiving a “taste” of what we have worked with so watch out for the couriered parcel!!
Sharewatch
The National Property Trust has released its annual report at the end of last month. The trust manages a diversified portfolio of retail and office properties. NPT has made the decision to sell non-strategic properties to reduce debt and has followed through. The result- the trust has reduced its exposure to retail investments.
For the 12 months to 31 March 2010, property valuations have fallen by 4.8% due to the general market conditions. While vacancy rates have increased from 4.2% March 2009 to 5.7%, surprisingly, it has been offices and industrial buildings with falling occupancy, not retail. Christchurch’s Eastgate (98% occupancy) and the Ocean Boulevard in Napier are still having leasing challenges, but the vacancy rate has not been significant. Another good news is that the average increases in rent over the last 12 months have been 5.6%.
Retail News NZ
Renewal closer for Victoria Park Market
The ink is almost dry on a deal to finally revamp Auckland’s tired Victoria Park Market.
Property developer David Henderson hopes to finalise the plan next week for the sale of the site to a syndicate of buyers who will implement his long-held redevelopment plans.
(Source: NZ Herald)
Patient Bunnings gets the green light
Bunnings has secured resource consent to build its newest Bunnings Warehouse on the corner of Wairau Rd and Archers Rd in Glenfield on a site recently vacated by 3M.
Bunnings is well advanced with its plans to redevelop the site, says general manager Rod Caust.
(Source: NZ Herald)
Shoppers remain cautious
The consumer remained torpid in May as retail sales continued to saw-tooth around a flat trend line.
Total retail sales at $5.54 billion were up 0.4 per cent on April when adjusted for seasonal effects, but that followed a 0.3 per cent fall in April, continuing a one step forward, one step back pattern clear since late last year.
(Source: NZ Herald)
Cotton On in massive underpayment error
Australia – A repentent Cotton On has back-paid 3289 of its employees more than $278,000 after it was discovered the company had failed to pay staff for attending training out of working hours.
The back-pay – an average of $84.56 per employee – follows an investigation by the Fair Work Ombudsman which found that the Geelong-based retail giant contravened workplace laws when it failed to pay staff attending training sessions and staff meetings between February and December, 2008.
(Source: insideretailing.com.au)
Kiwis buying less from supermarkets
For the first time in at least 15 years retail sales at New Zealand’s supermarkets and grocery stores were lower in May than they were a year earlier.
The NZ$1.24 billion spent in supermarkets and grocery stores during May was down just $1 million over the year, but that compared to an average increase of 5.8 per cent when sales were compared to those from the same month a year earlier, Statistics New Zealand (SNZ) said Wednesday.
(Source: insideretailing.com.au)
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