Our recent commentary in respect of The Warehouse and its future, coupled with Kirkcaldie and Stains’ performance (as recorded in last weeks Share Watch), made us think about where the Department Store – and for that matter, the Discount Department Store – business is heading.
We were also delighted to hear this week that Kiwi Income Property Trust are injecting significant development funds into the redevelopment of the Centre Place/ Downtown Plaza complexes in Hamilton’s CBD, combining them into a single major retail destination. This development will include the closure of part of Ward Street, and the creation of a pedestrian link between the two malls. In addition, Farmers will relocate from their present secondary location in the CBD to a new 7,000 square metre store in the new development.
For those of you unfamiliar with Hamilton, this is a significant shot in the arm for the city’s CBD. The CBD has lost much of its retailing lustre in the last few years. Now we are not protectors of retail environments, we believe that retailers and developers have to stand on their own feet, and compete with others on an even playing field. Therefore, well done Kiwi for protecting your interests and investing in Hamilton. What will occur from this development is some serious competition for the Te Awa and Westfield Chartwell malls, and most importantly, some significant retention of CBD activity. This can only help the city.
So what about those department stores and discount department stores? The only activity that seems to be emerging is that by Farmers Trading Company. There is no doubt that they will have been offered a hefty carrot to relocate in Hamilton, but a 7,000 square metre store for a new development is the anchor that is needed to encourage other retailers to join the development. It is effectively the reason why new retail developments are launched. It’s a tried and proven formula. It’s ironic that Te Awa (the mall at The Base, in Te Rapa) would not have happened as a covered mall without the major statement by FTC in that development. So effectively FTC now have a serious stake in the CBD, as well as Te Awa and Westfield Chartwell. If they fail, it will affect the respective development. So how important are department stores to developments?
The list below shows, approximately, the number of stores operated by each department store company in NZ:
The Warehouse 88
Farmers 58
Briscoes 41
Smiths City 25
Harvey Norman 23
Kmart 15
H and J Smith 5
Ballantynes 3
DFS Galleria 3
Smith and Caugheys 2
Arthur Barnett 1
Kirkcaldie and Stains 1
TWL, FTC and Briscoes make up the major numbers with a total of 187 stores between them. The list highlights the significant contribution these three retailers make to retailing in this country. It also demonstrates the potential regional loyalty that consumers give to the department stores in each city. Certainly, it would be expected that per-square-metre sales by the privately owned and independent department stores would be better than the multi-store retailers. This is due to the fact that there is a better focus on performance.
SHAREWATCH – HELLABY HOLDINGS SHARE PRICES
Hellaby Holdings owns two footwear chains, Hannahs and Number One Shoes. For the year to June 2011, these chains grew revenue slightly to $166.2 million, in a “tight” market. Earnings before interest and tax (EBIT) increased from $3.3 million to $6.4 million, although there is still plenty of room for improvement.
Hannahs and Number One Shoes are both fairly mature chains, in terms of store numbers, but Hellaby have still been able to freshen up the businesses – especially Number One Shoes, which has now “completed its business turnaround with improved product ranging, branding and in-store layout”.
Hellaby states that it expects that the performance of these footwear chains will continue to improve, regardless of the economic conditions, which suggests a confidence in the businesses.
IN THE PRESS
LOCAL AND INTERNATIONAL MEDIA HIGHLIGHTS 14 – 21 NOVEMBER 2011
Kiwis flock to online bargains
The New Zealand dollars strength is a nuisance for exporters, but imports are on the rise as Kiwi shoppers flock to foreign websites to take advantage of the currency’s strength.
(Source: NZ Herald)
Google Music to battle iTunes
Internet giant Google has signed up major record firms and set itself up as the cool alternative to Apple’s iTunes.
(Source: NZ Herald)
Cadbury remains wrapped for purple
Cadbury has fought off Nestle over exclusive rights for the distinguishing purple colour it has used on chocolate packaging for more than 100 years. The Cadbury brothers are said to have selected the colour as a mark of respect to Queen Victoria.
(Source: NZ Herald)
Kathmandu eyes world wide web
Kathmandu is growing its online presence to customers in countries that could include the United States, Canada and Japan. Chief executive Peter Halkett, said the outdoor apparel retailer saw development in internet shopping as an prospect rather than a danger.
(Source: NZ Herald)
New hairdo for Hamilton Mall
Kiwi Income Property Trust has said it will spend $40 million NZD redeveloping its Centre Place Shopping Centre in Hamilton.
(Source: Inside Retailing)
