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.
Chinese 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.