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There’s an old saying: “If the shoe fits, buy it in every colour”. While the principle may still apply, where and how consumers are spending their shopping dollars has become a more complex issue, in a more expansive environment than ever before.
Due to the rise of internet shopping and huge city fringe shopping centres, small independent neighbourhood retailers must work harder than ever to secure the consumer’s business. Although there is still a place for traditional cornerstone shopping precincts, they – and indeed all – retailers must move with the times to stay alive; convenience is key to success, industry experts say.
Traditional neighbourhood retail precincts used to include food and beverage outlets such as a dairy, liquor store, fish and chip shop, and video store. Such operations offered consumers a place to pick necessary food items on the way home, all on their doorstep.
Bayleys commercial sales and leasing general manager John Church says while consumers have the same needs they have always had, convenience has become a top priority.
“To drive business and stay in the game, retailers must understand changing consumer needs. Relevance is the key to success in retail,” he says.
Kiwis’ overall retail spending remains buoyant and there is no doubt that the online space is becoming more active. In New Zealand 6-7% of total retail shopping is online, with the percentage of clothes bought online more than double that. That figure is expected to grow by up to 15% each year as New Zealanders embrace online shopping. By comparison, projected annual growth of total retail spending is 3-4%.
One consideration for retail businesses now is whether they will sell online exclusively, store only, or, the biggest growth area, utilise both spaces.
If they choose the last option, commercial property will continue to play a huge role within the sector, for example by meeting the growing need for strategically located warehousing spaces where goods are moved from supplier to customer.
Today, consumers hold the weight of power and are expected to continue to do so, with the world of retail opening up to offer customers access to any brand at any price in the world, says New Zealand Retailers Association chief executive John Albertson.
The growing online market and changing consumer habits have had a minimal impact on physical retail spaces, Mr Church says.
“What we’re seeing is stability within the sector. In the future this is expected to create some exciting opportunities for commercial real estate.
“While online shopping offers convenience, it cannot replace a destination shopping experience. The growth of online shopping is expected to drive more collaborative development between businesses. We could see for example online shops within large retail complexes that bring unlimited options for each brand.
“The online market also creates needs for bulk warehouses and storage facilities that may be located on main arterial routes or in more economic regional locations.
Shopping strips may expand to include a wider range of products and services,” says Mr Church.
Consumer priorities are driving the changes and when it comes to making the decision about where to spend, with a combination of factors led by convenience, along with as price, location, selection, and environment coming into play, agree the industry experts.
In Auckland and Wellington mini supermarkets are popping up around the CBD to cater to apartment dwellers who don’t have a car.
Pop-up shops, bars and takeaways are a growing phenomenon, such as Wellington’s gourmet chicken caravan in Tinakori Rd every Friday, to keep up with the consumer demand for fresh, relevant services.
A greater degree of consolidation is also evident as retail outlets make themselves a one-stop-shop. Supermarkets offer an extensive range of wine and alcohol, cutting out the need for consumers to go to another store, and petrol stations are expanding to provide customers much more than petrol.
The locations of such shops are typically determined by vehicle and foot traffic and are new builds deliberately designed to cater to a specific customer base, Mr Albertson says.
The online figures illustrate consumers’ appetite for spending and in the future they are likely to retain the power in the retail chain, says Mr Albertson.
“It’s an exciting, challenging environment. If you want to be in the game you really have to stay on top of it.”