New stores coming to NZ in 2017: Aussie chains on the way but speculation about Ikea is just that

German-based supermarket Lidl, a rival to Aldi, may enter Australia - could it come to New Zealand?
PHILIPPE WOJAZER/REUTERS

German-based supermarket Lidl, a rival to Aldi, may enter Australia - could it come to New Zealand?

New names, smaller stores, and flashier signage - all trends the New Zealand shopper can expect to see this year.

Competition is fiercer than ever in retail. 

"It's extraordinarily competitive domestically and we've got big global players as well dabbling in the New Zealand market," Retail NZ spokesman Greg Harford said.

Zara opened its first store in Auckland to great fanfare - where might it go next?
BEVAN READ/FAIRFAX NZ

Zara opened its first store in Auckland to great fanfare - where might it go next?

The good news is that retailers have had a bumper year, with spending up 6.7 per cent, and a stable economy forecast for this year.

READ MORE:
* Ikea online store rolls out in Australia, rules out New Zealand
* Retail pressure unlikely to ease in New Year

So what lies ahead?

Ikea continues to remain elusive when it comes to entering New Zealand.
ANTHONY BAGGETT/123rf

Ikea continues to remain elusive when it comes to entering New Zealand.

Uncertainty

Last year was disastrous for several well-known retailers, including Pumpkin Patch, Shanton, Valley Girl and Dick Smith.

And Paul Keane, retired executive chairman of consultancy RCG, fears there will be a few more collapses.

Competitive pricing, shrinking margins and rising rents would no doubt claim at least another couple of fashion store scalps, he predicts.

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"This will force some to rethink their strategy and the need to diversify from their current trading arrangements," he said in his recent Christmas blog.

"Let's not forget the multitude of fashion retailers owned by major conglomerates just waiting to add to their stable of retailers."

More big names

2016 was the year of new entrants.

Top Shop opened a second store in Wellington, and Australian department store David Jones opened its first, while Tiffany's and fashion mega-brands H&M and Zara took up residence in Auckland.

The arrival of big global brands - eyeing up New Zealand's strong economy and growing population -  is expected to put local retailers under pressure.

They include a growing cluster of Australian chains.

Homeware chains Nick Scali, Adairs and King Living, petcare brand Petstock, footwear chain Wittner and eyewear store Bailey Nelson are just some of the Aussie newcomers.

K-Mart will also roll out more stores this year, upping the ante against The Warehouse.

But perpetual speculation about Swedish furniture giant Ikea crossing the ditch appears to be just that.

Aldi, the cut-price grocery upstart hurting Coles and Woolworths in Australia, has also repeatedly said it has no plans to come to New Zealand.

However, in September it was reported that Aldi's rival, German discount supermarket Lidl, was increasingly applying for trademarks in Australia, a sign it might be readying to enter the market.

New tech

Walk down Auckland's Queen St and you can't miss the number of video showing in shop windows, commanding your attention.

Interactive technology is also improving all the time - increasingly your mobile phone will flash up with specials for stores you're passing and stores will email your receipts. 

That won't seem strange because we're using our phones increasingly to compare prices in-store. How much of this will happen this year is hard to say, but it's coming. 

Investment

Fresh energy in the retail scene is putting a bounce in the retail property market as well.

"We are seeing occupancy highs in many locations – albeit retailers sticking to basics are the winners," Keane said.

Because many retail rents have an inflation component to them, retailers leasing in less exclusive locations can expect rent hikes to be modest.

But low interest rates have also made retail property more popular with investors with several big transactions last year. As of the start of 2017, that's looking unlikely to change.

Micro retail

Another trend in retail property right now is the changing footprints of stores.

In Australia, there's talk of "micro-stores" as retailers strive for more central city stores at the expense of size.

Competition for space has pushed up rents, forcing many retailers to get creative.

A recent report by CBRE said a myriad of Melbourne retailers were moving into stores sized at 60sqm or less – with some spaces as small as 18sqm.

"Retailers are saying that it's better to have three small stores in three pockets of the CBD then having one big store because you get to touch onto three different demographics and three groups of foot traffic," CBRE's head of retail leasing in Victoria, Zelman Ainsworth, told Australian media.

The downsizing trend can already be seen here in the supermarkets sector, where "metro" outlets are springing up in CBDs.

For customers this can be frustrating, since shrinking footprints means department and fashion stores have started to offer "curated" ranges.

However, the "smaller is better' movement is not for everyone. Some popular brands are getting bigger, creating "hero" stores which are aimed primarily at drawing customers wanting greater choice.

Already at Sylvia Park, Glassons has opened a much larger store to ward off the likes of H&M and Zara.

Greater choice

It's an old story but Kiwis are expected to continue being adventurous buyers online, both locally and overseas.

"People are widening their vision in terms of where they can be buying from," First Retail Group's Chris Wilkinson says.

 "I don't necessarily think it's a value thing, because whether the exchange rate's up or down, the online spending continues to grow."

Retailers are stepping up the pressure on the Government to join Australia in bringing in a tax on "low-value" imports this year.

It's becoming more pertinent as giant online traders Amazon and Alibaba step up their presence in this part of the world this year.

If Amazon opens a distribution centre in Sydney as rumoured, "that make a material difference to how Amazon can service the New Zealand consumer and will be something that retailers will be watching pretty closely," Harford says.

 - Stuff

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