NIB: NEWS IN BRIEF, 20th FEBRUARY 2012

Last week we concluded the NIB with a comment or two relative to Christchurch, and stated that the city would be a long time in recovery mode, and that cities need character. This brought a number of comments from Christchurch folk who live and work in that great city. They were keen to point out that Cantabrians still enjoy themselves despite the problems that the city faces. They dine out in the suburbs, they still picnic, go to the movies etc. We commend people in Christchurch for their fortitude, however it does not change our belief that recovery will take many years, and the city will need to again create character.

We spent a few days in Melbourne last week. It created an opportunity to review some property and retail activities, to talk to players in the industry and to make some comparisons. For those of you who haven’t been to Melbourne recently, take a trip. Not only is it the sporting capital of Australia (probably the world), but it’s a progressive interesting city. Australians love to dine out and to enjoy their spare time, and the range of restaurants in this city is as good as, if not better than you would get anywhere. The redevelopment of the Myers department store in the CBD is a remarkable makeover, bulging with atmosphere on most levels and plenty of stock to boot. The physical transportation of goods and merchandise through the seven floors of retailing is in itself a major achievement.

The view from the top is fascinating. Not only does it pick up on wider city views but also the demolition of part of the old Myers store in preparation for a new “Myers Emporium”. The retention of a major façade is an experience that totally captures the viewer. The skeleton of the building remains is a hive of activity and you can actually see the demolition occurring in front of your eyes. Why Myers do not have a “dine and view” experience from the top level is beyond belief. A real opportunity, which its customers would be attracted to, is simply not being capitalised on. As for the store itself, the refurbishment has taken the opportunity of creating breakout areas that allow some relaxing downtime in small in-store cafes on different levels. A good idea and they are obviously profitable, judging by the patronage.

Elsewhere in Melbourne a visit to the new Doncaster shopping centre is a must; it’s fresh, comfortable, and an enjoyable experience, with a range of merchandise from many stores. Things aren’t so bright, however, on the fringes of the CBD. There are a number of empty shops in locations that were previously sought after, a signal perhaps of simply lack of business and thus lack of retailers to fill the space available. Certainly our feedback is that these are very tough times throughout Australia, and the only safe haven and protection to the economy is their mineral wealth. Certainly general merchandise prices now seem to be at best on par with, and in some cases higher than, New Zealand. The cost of petrol remains well below the NZ cost, but our excess cost is driven by the amount of fuel tax we have to endure. So are we now the land of milk and honey? It certainly seems like the worm has turned. While our incomes may be lower, the opportunities in Australia are not what they once were.

Finally, this past week we have been intrigued by the number of real estate advertisements describing locations as “prime”. It occurs to us that the word is used more as a method of attracting investors or tenants rather than the real description of the site or building. A “prime” piece of land may well be prime in terms of the traffic that passes by, either pedestrian or vehicular, but the real value is only determined when you get buildings and quality tenants on site. One such example was the “Westgate” shopping centre. It was originally a bare piece of greenfield land that nobody wanted. RCG designed the shopping centre, leased it and branded it. Now it’s “prime”. One day, the word may be tested and those in the industry should quantify the description at the point of marketing!

SHAREWATCH – WESTFIELD GROUP

The world’s biggest mall owner, Westfield Group, released their annual results last Wednesday, and
as always they make for interesting reading. Most of Westfield’s malls in New Zealand posted small
sales increases, with Riccarton sales up 16.3% – due in large part to other centres and the CBD being
closed off after the earthquakes in February last year. Sales at Glenfield, WestCity and Queensgate
fell marginally, while those at Chartwell in Hamilton dropped 16% as the competing Te Awa mall
opened. Overall, the results are evidence of a fairly flat retail market, but at least one that is holding
up.

The value of Westfield’s New Zealand portfolio fell by just 1.2% during the year, with almost all of
the decline coming from the less successful shopping centres. This shows that property values have
finally stabilised. Westfield remains the biggest retail property owner in New Zealand, with $2.9 billion
in assets here.

IN THE PRESS

LOCAL AND INTERNATIONAL MEDIA HIGHLIGHTS 13 – 20 FEBRUARY 2012

Woolworths Australia trials new supermarket concept
Grocery leader Woolworths is trialling a new form of Supermarket retailing, several of the companies Australian branches are giving the revolutionary ‘virtual supermarket’ concept a go. The wall, launched at Sydney’s busiest commuter station, is a similar design to the one being rolled out by Tesco in South Korea.
(Source: Inside Retailing)

Luxottica puts all it’s eyewear in one basket
Eyewear giant Luxottica is to phase out lesser brands in favour of developing the OPSM network and brand identity. In a two year program announced recently, the company will shut upwards of 100 retail outlets. While total store numbers are to be reduced, Luxottica says it will invest $40 million on store designs and fitouts over the period and a further $5 million on brand marketing.
(Source: Inside Retailing)

Mitre 10 set for further NZ expansion
Mitre 10 has revealed it will develop at least four new Mega stores in 2012, including stores in Whangarei, Rotorua, Manukau and New Zealand’s on the mend city, Christchurch.
(Source: Inside Retailing)