Archive | Retail

Online trading sees more US mainstreet shops close

America’s big retail chains are snipping off large chunks of mainstreet retail space as shoppers continue to head online.

Image above: In what used to be prime retail space on Queen St in Auckland, discount shops were promoting pre-Christmas sales, with a street beggar one door down.

Even after the closures, though, the US will have far more retail space per capita than New Zealand, where the opening of new malls has always been accompanied by comparisons with Australia & the US showing how poorly served we’ve been.

Some New Zealand retailers have succeeded online while others have maintained their physical presence as their main, or entire, business. But the weakness of mainstreet retail is glaringly apparent when discount shops (pictured) take up what used to be prime Queen St space – right at the spot where annual pedestrian surveys showed Auckland foot traffic was its heaviest – and add to the insult by heavily promoting pre-Christmas sales.

Further down towards the foot of Queen St, exclusive foreign retailers have taken up glittering space intended for exclusive – mostly cruise passenger – shoppers, with the doors firmly closed to locals.

The disarray in the US retail sector was highlighted last week by closure announcements for large numbers of Macy’s, Kmart & Sears outlets.

CNN Money noted the disparity between the market value of online retailer Amazon compared to 10 of the biggest names in mainstreet & mall trading. Amazon has a market value of $US370 billion – 4 times more than the combined $US95 million value of Macy’s, Kohl’s, Sears, JCPenney, Nordstrom, Best Buy, Barnes & Noble, Dillard’s, Gap and Target. Take away Target’s $US40 billion, and the other 9 are worth a combined $US55 billion.

Sears announced it was shutting 150 more stores, including 108 Kmarts, on top of 78 closures in 2016 and over 200 in 2015. From sales of $US1.2 billion over 12 months, the 150 stores about to close lost $US60 million.

Sears Holdings said in a release: “The decision to close stores is a difficult but necessary step as we take actions to strengthen the company’s operations and fund its transformation. Many of these stores have struggled with their financial performance for years and we have kept them open to maintain local jobs and in the hopes that they would turn around. But in order to meet our objective of returning to profitability, we have to make tough decisions and will continue to do so, which will give our better performing stores a chance at success.”

Macy’s Inc is closing 68 of its 880 stores (3 already shut). It expects to lay off about 3900 staff as a direct result, and to axe another 6200 jobs as it streamlines its management team.

It expects the initial closures to generate savings of $US550 million/year, enabling it to invest an extra $US250 million in growing the digital business, store-related growth strategies, Bluemercury, Macy’s Backstage & China.

Macy’s Inc chair & chief executive Terry Lundgren said: “Our plan to close about 100 stores over the next few years is an important part of our strategy to help us right-size our physical footprint as we expand our digital reach. We are closing locations that are unproductive or are no longer robust shopping destinations due to changes in the local retail shopping landscape, as well as monetising locations with highly valued real estate.”

Links:
CNN Money, 6 January 2017: Amazon worth more than Sears, Macy’s and Target combined
CNN Money, 5 January 2017: Sears and Kmart closing 150 stores
CNN Money 4 January 2017: Macy’s job cuts
4 January 2017: Macy’s release

Attribution: CNN Money, Macy’s, Sears.

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Research indicates wave of foreign retailers will grow

The wave of foreign retailers coming to New Zealand will keep growing, CBRE researchers in Australia & locally have found.

Their biggest target is also foreign – the spend by Chinese tourists in New Zealand has risen from $770 million 2 years ago to $1.75 billion.

CBRE’s New Zealand head of research, Zoltan Moricz, was joined by Australian counterparts Stephen McNabb & Danny Lee in producing the Viewpoint paper out yesterday, Pacific retail – brands driving change.

Mr Moricz said CBRE tracked 450 international retailers, and 130 of them were looking to roll out stores in Australia & New Zealand over the next 3-5 years. Research suggested 80% were certain or highly likely to execute their rollout plans, and 50 of those retailers were likely to turn up in New Zealand.

The implications for New Zealand are, first, more international retailers in the cbd (Precinct Properties NZ Ltd’s new Commercial Bay development on Lower Queen St is an obvious target), and some entry to larger malls, rents driven higher, and stiffer competition for space for large local retailers and some of the Australian chains.

Mr Moricz said there was competition for space in new markets between international brands, saturation in existing markets drove them to look further afield, and the constant pressure driving growth meant these retailers had to grow to dominate.

New Zealand & Australia used to be seen as separate markets, and international brands would go to Australia first, turning up on this side of the Tasman as an afterthought. Now, Mr Moricz said, they treat Sydney, Melbourne & Auckland as their first catchment, then look at smaller centres in both countries after that.

tourists1610Chinese tourists were more inclined to buy to take home – 30% of purchases were to take home, versus 6% for visitors from the UK. Chinese tourists’ spend in Australia averaged $6500/trip versus $2800/trip for the top 5 visiting countries.

Chinese visitors to New Zealand quadrupled to 400,000/year over the last 10 years, according to CBRE. Statistics NZ figures show the rise in Chinese tourism has been even greater in the last 2 years – up by 65%, or 160,000.

He said high Chinese immigration as well as tourism had helped change the perception of Auckland, because of the greater acceptance of international retailers through Asia. The internationals’ penetration rate in New Zealand was 16%, 28% in Australia but 45% in China, Singapore & Hong Kong.

Mr Moricz said rental pressure could push some local retailers back to secondary malls, especially in the sectors where the international brands were trying to dominate, such as fashion.

While luxury brands tended to focus on the cbd, the CBRE research showed mid-range fashion & specialty clothing brands were also looking harder at New Zealand, and they had a broader target market which would take them into suburban malls.

Attribution: CBRE research paper, interview.

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TopShop to open in Wellington

Top Retail Ltd, the New Zealand licensee for UK retailer TopShop, will open its third New Zealand store in Wellington, at 256 Lambton Quay.

Like its first store, opened on the corner of Queen St & Victoria St West in Auckland in March last year, the Wellington premises will be on 2 levels, a total 1200m² with escalators between. TopShop is also in The Department Store in Takapuna.

The leases were negotiated by Metro Commercial Ltd, and the Wellington deal stitched together by director Nathan Male & brokers David Grant & Bryan Block on behalf of landlord Wilmshurst Properties Ltd, owner of part of Capital on the Quay.

The new store will take up ground-floor spaces previously occupied by YD and Maher Shoes, plus an extensive area of the first floor where numerous tenancies have been vacated. Base building works are being completed by the landlord, including seismic strengthening, and Topshop expects to open later this year.

Attribution: Agency release.

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Foodstuffs to replace Clendon store with Pak ’n Save

Foodstuffs North Island Ltd has decided to replace its New World store in Clendon with a bigger Pak ’n Save supermarket.

It’s had a New World in the Clendon shopping centre since the South Auckland suburb was established in 1984, but Foodstuffs property development general manager Angela Bull said yesterday it was time, after 30 years, for a complete makeover: “We have had a good look at the store and seen there’s a great opportunity for Pak ’n Save to come to Clendon to best meet our customers’ needs.”

The conversion from the present store’s gross floor area of 2993m² to the proposed Pak ’n Save 4706m² will happen in stages and the store will stay open throughout the construction. The redevelopment has consent and Ms Bull expected construction of the first stage of the new supermarket to start in mid-2016.

Attribution: Company release.

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From desultory to thought-provoking, Westfield tour unfurls ideas

I walked away from a 3-hour presentation on retail’s future this morning starting to feel slightly impressed after a desultory start. The first 2 presenters, both international, had been abysmal. One prompted face-down notes, the other no notes. The third prompted a positive note. The last loved everything too much but did highlight some cameos that got me thinking.

The Auckland presentation was the last in Westfield’s breakfast series, which follows on from the international mall owner’s annual world retail study tour.

David Roth, chief executive for Europe, the Middle East, Africa & Asia of advertising & PR company WPP plc’s “global retail practice”, The Store, mentioned referral towards the end of his half hour, then commented: “You need to be where your customers are.”

Instead of the transaction being the completion, he was saying greater knowledge of the customer & their preferences led to referral for ongoing business. Out of that, I thought, he was really saying retailers needed to convince their customers where to be, by referring people to a place which they didn’t know would be their preference.

He said there would be fewer & smaller stores, and I wondered why. On my walk back down Queen St I passed the Asian restaurant & cafe strip, a line of small eathouses not yet open for business for the day, and the Real Groovy building with its host of outlets spread around an old warehouse, different adaptations of people’s needs.

The eathouses are in a structure preserved when the rest of the block was up for an overly grand development at the end of the 1980s, developed into apartment blocks 2 decades later. The Real Groovy building just above Mayoral Drive was among the next batch in line for replacement when that 80s boom ended. They are locations requiring tenants to pay the rent.

“There will be fewer stores,” Mr Roth mentioned. And my response: “There will be locations, will they be filled? Will somebody come & try, but maybe not succeed because time has marched on from the eras of these old edifices? In the digital age, will something else take their place or will the spaces lie empty? If he’s right and there are fewer stores, will the commercial landscape shrink or will these shops find themselves dotted among vacant buildings, or vacant sites? Or will these buildings be put to quite different uses?”

James Stewart, partner & retail practice leader specialising in restructuring at accountancy firm Ferrier Hodgson in Melbourne, said leading US retailers were using data analytics to know who to sell what and through which channel.

IdeaWorks chairman Jon Bird conceded, in a quick world tour of retail ideas, that “New Zealand does food better than anywhere else in the world”. 2 examples he discovered at the recently opened City Works Depot in the Victoria Quarter (where the mostly Australian IdeaWorks has an office): Best Ugly wood-fired bagels in the Montreal style, and Food Truck Garage, proclaiming “the world’s healthiest fast food” – no deep fryer here.

Around the world, he said, star retailers were about connectivity. The Burberry store on Bond St in London combined screen images & services with store traditions better than any. The internationalising of retail in the digital era had been led by the expansion of US & UK brands, but “We’re about to see the second wave of retailers, Chinese & Korean,” he said.

2 more points: “Online retailers are challenging what stores could & should be” and “Retail needs to be entertaining, far more than transactional.”

The presentation material is on the Westfield study tour website (link below).

Out in the street, though, as I pass the physical shops, change is evident in Auckland. The kiosks of Queen’s Lane, where the Methodist chapel stood not so long ago, and at 350 Queen St are evidence of different retailing dynamics.

And online? Trade is being conducted by a combination of physical shop & web, and online transactions are taking a growing share of business. It reaches into spheres few would have dreamed only a decade ago would be touched to the extent they have by the digital – into real estate and into publishing, for example.

The presentation did get me thinking – of possibilities, of change forcing change.

Links: Westfield retail study tour
Burberry
City Works Depot
IdeaWorks
The Store

Attribution: Company release.

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Briscoe first-quarter sales down 0.09%

Published 4 May 2009

Briscoe Group Ltd said on Friday unaudited sales for the first trading quarter ended 26 April were $90.2 million, 0.09% lower than the $90.3 million a ear earlier. On a same-store basis, the group’s sales for the quarter were 0.94% behind the first quarter for last year, which group managing director Rod Duke said reflected the continued competitiveness across the retailing industry. Despite the relatively flat sales, the gross margin percentage & ebit were up. Sales for the group’s homeware segment decreased by 3.35% to $58.7 million, while sporting goods sales increased by 6.61% to $31.5 million. On a same-store basis, homeware sales decreased by 4.63% while sporting goods sales were 6.61% ahead. Mr Duke said Briscoe had removed a tier of operational management and realigned store management remuneration so it’s linked more closely to performance of their stores. “At this stage we are expecting to report a bottom-line profit for the half-year to 26 July  that is ahead of the first half of last year.”

 

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Attribution: Company statement, story written by Bob Dey for the Bob Dey Property Report.

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Hallenstein’s NZ first-quarter sales down 8%

Published 5 November 2008

Hallenstein Glasson Holdings Ltd said yesterday its first-quarter sales fell 8% in New Zealand, 6.7% overall.

 

Australian sales for the quarter (2 August-31 October) rose by 1%.The company said it was hard to predict projected earnings for the first half to 1 February 2009 due to the uncertain nature of the market and the significant impact December trade well below last year’s.

 

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Attribution: Company statement, story written by Bob Dey for the Bob Dey Property Report.

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Briscoe third-quarter sales down 11.2%

Published 5 November 2008

Briscoe Group Ltd said on Monday its unaudited sales for the 13-week period to 26 October 2008 fell by 11.2% to $77.8 million.

Group managing director Rod Duke said the timing of Labour Day made a significant difference: “Last year, Labour Day activity was accounted for in the third-quarter sales, whereas this year Labour Day fell as the first trading day of the fourth quarter and so is not included in this year’s third quarter. Adjusting for this and on a same-store basis, the group’s sales for the period were 8.1% below those for the third quarter of last year.”Homeware sales fell by 10.2% to $53.1 million, sporting goods by 13.3% to $24.7 million. Again adjusting for Labour Day and on a same-store basis, homeware sales fell 8.4%, sporting goods sales 7.6%.A new Briscoes Homeware store in Masterton and a new Living & Giving store on Elliot St in Auckland’s cbd increased homeware store numbers to 56. The company has 32 sporting goods stores (unchanged). The group is on schedule to add a further Living & Giving store at Queensgate, Lower Hutt, in December.The October quarter sales figure takes unaudited group sales for the year to date (28 January-26 October) to $259.8 million, a decrease of 6.5% on the first 9 months of last year. Homeware sales fell 4.4%, sporting goods 10.9%.Mr Duke said: “Our August & September results were poor but we were reasonably satisfied with a more buoyant October performance. The group will be behind last year’s second-half net-profit-after-tax result of $11.9 million, but we continue to expect to be closer to this than was reflected by our result for the first half of this year.”

 

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Attribution: Company statement, story written by Bob Dey for the Bob Dey Property Report.

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Life Pharmacy proposes rights issue

Published 8 August 2008

Life Pharmacy Ltd said yesterday it intended to undertake a 3-for-2 renounceable rights issue of partly paid ordinary shares at 40c/share, 20c payable on subscription & 20c payable 12 months after allotment.

The rights issue is expected to raise a minimum of $9 million. Life Pharmacy intends to use the net proceeds to:

 

reduce bank debtprovide adequate resources for growth & working capital in the health, beauty & wellness sector, andinvest in pharmacy growth.

Chairman Liz Coutts said the company’s 2 largest shareholders, LPL Trustee Ltd (backed by Andrew Bagnall) & PIMS 2005 Ltd had indicated their support for therights issue.Record date is 21 August 2008. The short-form prospectus & investment statement should be posted to shareholders on Friday 22 August. Rights trading is scheduled from 22 August to Monday 15 September, with share allocation on Thursday 18 September. Life Pharmacy owns the Life Pharmacy & Care Chemist brands and holds a 49% shareholding in 19 pharmacy companies, representing 22 of the 36 Life Pharmacy & Care Chemist stores. The company also operates 2 Life Outlet stores and is franchisor to 10 Care Chemist branded pharmacies.

 

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Attribution: Company release, story written by Bob Dey for The Bob Dey Property Report.

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Hallenstein winter sales down 6%, profit forecast down 30%

Published 10 July 2008

Hallenstein Glasson Holdings Ltd chief executive Shayne Quanchi said today the group’s sales for the winter season were down 6% as pressure from a deteriorating retail market continued in both New Zealand & Australia.

 

Mr Quanchi said profit after tax for the full year to 1 August was now expected to be about $15 million, down 30% from $21.3 million last year.Mr Quanchi said the change in the retailing climate was the result of consumer reaction to increased fuel & food costs and higher mortgage interest rates."The current environment is the most challenging experienced for a number of years. There is fierce competition for consumers’ wallets. As a result, margins are being squeezed and every effort is being made to control stock levels. Fortunately our business model is based on high stock-turn, so we expect to end the season with our stock levels in good shape."Hallenstein Glasson expects to release its full-year result on 24 September.

 

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Attribution: Company statement, story written by Bob Dey for this website.

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