Posted June 16

Fast Fashion retailers flock to New Zealand

International fast fashion and luxury retailers have recently flocked to Australia, forcing domestic brands to adapt their business models in the face of fresh competition. With the rapid expansion of these international brands in Sydney, Brisbane and Melbourne, JLL New Zealand anticipate this trend will arise in Auckland this year and are aware of some overseas brands that are currently circling New Zealand.

JLL’s research team track 100 international retailers; 50 luxury brands and 50 mid-tier brands. Auckland currently has 18 of these international retailers that have taken up space on our prime shopping strips, which mean there are still another 82 top competitive set retailers who are not YET in New Zealand. Chris Beasleigh, JLL New Zealand national director of retail leasing explains how global names such as Zara, Mango, Forever 21 and H&M are going to potentially change the face of New Zealand’s high streets.

How will the New Zealand retail market need to adapt to make way for these potential international brands?
Local brands will have to adapt their business models to account for the expected influx of overseas brands. Domestic brands will need to make smarter property decisions and improve their production lines to allow them to counter balance the effect that overseas brands will have on their market share. However, if demand grows from overseas brands for Auckland’s prime high streets, we expect this to force domestic brands to secondary locations. In the next 5-10 years, I anticipate CBD retail will expand into flow on streets such as Albert Street rather than traditionally staying on Queen Street.
How do you think New Zealand shoppers will react to the increased choice?
The New Zealand consumer is well-travelled, internet savvy and understands price points. Until recently there hasn’t been a vast variety of options in New Zealand so I expect New Zealanders will welcome the increase in choices.
Larger international brands will fill the gap in the market offering cheaper, fast fashion. However, discerning shoppers will remain loyal to domestic brands when it comes to mid-market, higher quality products.

What effect do you think the emergence of new brick and mortar stores will have on the New Zealand’s e-commerce market?
Retail property appears to have best reflected social evolution over time and appears to be the best asset class to weather the storm of the technology evolution. Although online sales will continue to pose a threat to retailers, they still only make up a small percentage of New Zealand sales.
With Auckland’s Queen Street experiencing high demand but short supply, the issue is whether we have the properties that will suit the requirement space for all the overseas brand wishing to expand here.

The strength of New Zealand’s retail market is undoubtedly an enticing prospect for these global brands, but life in New Zealand is a different ball game for most with seasonal variations and logistical challenges. In your opinion, what are the biggest challenges facing these retailers?
Seasonality is definitely something that varies greatly across New Zealand and will require new entrants to have well thought out stock placement strategies. Most groups in the fast fashion space entering New Zealand will need to seek advice on central locations to allow for expedited transportation across the country. The most significant challenge that new entrants will face is the lack of available space in Auckland and well considered entry strategies.

How will New Zealand’s retail industry fare over the rest of 2015?
Overall conditions in the prime retail market continue to improve. The potential growth for the retail sector in New Zealand this year is huge. We can already see an expansion of luxury brands in Sydney, Brisbane and Melbourne and anticipate this trend to continue to arise in Auckland this year as international retailers such as Prada, Gucci, Louis Vuitton, Christian Dior and TopShop have successfully entered the New Zealand retail market.

 

NZ-Shoptalk-post

Check out JLL’s latest retail development opportunities across New Zealand in 2015’s first edition of Shoptalk Magazine.