NZ retailers struggle in 'perfect storm'

23:20, Aug 24 2014
Peter Huskin
QUIET EVOLUTION: During the past five years, a storm's been brewing behind the scenes thanks to online shopping, Peter Huskin says.

A "perfect storm of change" is brewing in the retail market and New Zealand brands are struggling to keep up, an Australian industry expert says.

Peter Huskin, in Auckland for today's BelowTheLine retail summit, said New Zealand retailers needed to catch up when it came to omni-channel and online offerings if they wanted to get out of the slump they had found themselves in.

Omni-channel retailing uses multiple channels, including online and traditional shops, to sell goods.

>Share this story on Facebook

Retailers, including listed companies Hallenstein Glasson and The Warehouse, had been caught up in the downpour of online competition, reflected in their recent profits.

Huskin said New Zealand retailers were as many as five years behind the rest of the world when it came to adopting online and mobile technology to sell and promote goods.


During the past five years, a storm had been brewing behind the scenes thanks to online shopping, he said.

"It has been like a slow creep."

New Zealand retailers were facing intense competition for which they were not prepared, he said.

Retailing would continue to evolve as technology changed to offer a more personalised shopping experience, using customer information.

Some retailers used New Zealand's GST laws on online shopping as an excuse, but they needed to take responsibility for not putting strategies in place earlier to take advantage of the consumer shift to online, he said.

Online purchases from New Zealand retailers incurred GST, but purchases from overseas retailers under $400, including freight, were GST-free.

Retail analyst Tim Morris echoed Huskin's sentiments on the perceived GST woes.

"Firms are using it in their releases for a damn good excuse for bad performance," Morris said.

It was difficult for New Zealand retailers to do online shopping well because they did not have the scale of global brands, but retail and bricks and mortar stores still played a large part of the shopping experience, he said.

"I think online is overplayed and everyone talks about it because it's the only growth segment, but it doesn't mean the rest of the market has disappeared."

Morris said it was hard for clothing retailers to predict the "fickle" fashion market.

It was not as simplistic as saying the economy was doing well so people had money to spend on whatever they wanted, such as clothing, he said.

The wealthiest 30 to 40 per cent of women in the country accounted for as much as 70 per cent of fashion spending, Morris said.

Everyone else was struggling to pay their living costs like rent, petrol and food before they even thought about spending money on clothes, he said.

Huskin said New Zealand retailers needed to prepare themselves for the imminent arrival of global fashion brands Top Shop, H&M, Zara and Uniqlo and German grocery chain Aldi.

Top Shop has announced its move to Auckland, but H&M and Uniqlo say they have no plans set up shop here.

Huskin said the chains had performed strongly in Australia and it was a matter of how, not if, they would expand into New Zealand.

The arrival of Aldi would be welcomed, but there was not a lack of competition in the New Zealand grocery market, he said.

The Countdown controversy involving suppliers at the end of last year was merely a "speed bump" in the industry, Huskin said.

Better-informed Kiwi shoppers were following the global move towards organic, ethical and artisan food and groceries.

People were prepared to open their wallets a little wider when it came to good food, even during tough economic times, he said.

Despite online growth, there would always be a place for bricks and mortar stores, Huskin said.

"The experience of shopping can't be replaced in your living room," he said.