2013 retail market in nz

7/29/2019 2013 Retail Market in NZ

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The Retail Market

in New Zealand

An Analysis2013

Prepared by

John Albertson, CEO

New Zealand Retai lers Associat ion

May, 2013

promoting excellenceexcellencein retailing


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The Retail Market in New Zealand - An Analysis

New Zealand Retailers Association May 2013 1

Introduction

We believe information is the new currency.

The environment around us, competition in the market place, consumer shopping/buyingbehaviours, overseas trends and developments all impact on retail success or failure.

In these rather difficult times retailers have to maximise their sales. A better understanding ofthe market place will, hopefully, lead to more informed decision making and consequently abetter share of the consumers available dollars. Today we have the added complexity of ageneration or two who will drive the development of a whole new channel the onlinechannel. Does my business need to be there? How do I integrate my physical presence andmy online presence to give the consumer a seamless experience with my brand?

Over recent years the New Zealand Retailers Association has reviewed available information

sources and has brought this information together to paint a picture of the environment weoperate in.

This report replaces that issued in April 2012.

We have added some more information on population as this is one of the key drivers of retaildevelopment. We have also introduced a section on the tourism market as this is anexpanding sector and retail is one of the biggest recipients of the tourist dollar.

We realise the importance of the online space and are waiting on some new information onthis area. Once that information is available we will issue a supplementary report.

Much of the analysis in this report considers the big picture only. More detailed analysis is

available. We would be happy to advise on this.

Most data in this report is sourced from Statistics New Zealand. (Visit www.stats.govt.nz.)


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2 New Zealand Retailers Association May 2013

Sources Of Information:

A. Statistics New Zealand

Business Demographic Survey

Retail Sales Series

Annual Enterprise Survey

2006 Census and subsequent SNZ estimates.

Household Economic Survey

Tourism Satellite Account

B. BusinessNZ

Economic Background

C. Deloitte/National Retail Federation


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Table of ContentsPage

Section 1 The New Zealand Economy 4

1.1 Key Economic Indicators 4

Section 2 The Retail Market 7

2.1 Store Numbers 7

2.2 Retail Sector Sales Performance & Growth 11

2.3 Retail Stock Trends 14

2.4 Business Performance 14

2.5 Staffing in the Retail Sector 18

2.6 Clothing Stores in New Zealand A Case Study 20

Section 3 The Consumer 23

3.1 Introduction The Two Perspectives 23

3.2 2006 Population Census 23

3.3 Population Projections 24

3.4 Household Economic Survey (June 2010) 26

Section 4 Key Retail Chains by Sector 27

Section 5 The Global Powers of Retailing Top 250 Highlights 32

Section 6 The Tourism Market 35

Section 7 Top Retail Trends 2012 37

Appendix 1 Industry Descriptions 40

Appendix 2 ANZSIC 2006 vs ANZIC 1996 Reconciliation 42


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Section 1 The New Zealand Economy

1.1 Key Economic Indicators(Source: BusinessNZ Planning Forecast December 2012)

Executive Summary

Comments:a) The overall global economic growth outlook remains relatively benign. However, the

increasing influence of Asia (China) both in terms of exports and demand for proteinfrom its rapidly increasing middle class is positive news for New Zealand exportersover the medium term.

b) Patchy growth is the order of the day in New Zealand. The housing market is showingpositive signs of life and the Christchurch re-build is starting to gain momentum.

c) Employment growth is clearly evident in Christchurch but elsewhere results are flat-

lining.

d) While business and consumer confidence is on the positive side of the ledger,households and businesses continue to take a cautious approach to new investmentwith debt reduction still a high priority. The household balance sheet is still being re-balanced.

e) A low inflationary outlook is keeping interest rates at historic lows with no prospect ofincreases over the short to medium term.

So, for the retailer, this spells out another tough year with every sale being hard won. Stockand margin management will be critical as will resource deployment and staff rostering. Likenever before the retailer must deliver what it is that the customer wants. Retailers must

consider all of the options online presence, facebook, twitter, email marketing, texting etc.,etc. If the customer wants it we must deliver we have given the customer so much choicethey are now definitely in the drivers seat.

The real game changer is the mobile phone.

So if we look ahead what are the experts predicting? How do the various bank economistssee the economy shaping up? The latest forward look released by Business New Zealandindicates the following:

1 GDP % Growth(Source: ANZ, ASB, BNZ, National and Westpac)

Forecasts: Year Ending

Dec 2012 Dec 2013 Dec 2014% % %

Highest 2.5 3.2 3.3Average 2.5 2.7 2.6Lowest 2.5 2.2 1.6


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2 % Change in Inflation (CPI)(Source: ANZ, ASB, BNZ, National and Westpac

Forecasts: Year Ending

Dec 2012 Dec 2013 Dec 2014

% % %Highest 1.3 2.6 3.3Average 1.3 2.2 2.7Lowest 1.1 1.9 2.4

3 Labour Cost Index(Source: ANZ, ASB, BNZ, National, Westpac)

% Change (Wages & Salaries): Year Ending

Dec 2012 Dec 2013 Dec 2014

% % %Highest 1.9 2.7 2.8Average 1.8 2.1 2.4Lowest 1.7 1.6 2.2

4 Unemployment (Household Labour Force Survey)

Unemployment %: Quarter Ending

Dec 2012 Dec 2013 Dec 2014% % %


5 Interest Rates (90 Day Bills)

Period Ending

Dec 2012 Dec 2013 Dec 2014% % %



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6 Exchange Rates

a) Australian dollarNZ$1 = Aust cents

Dec 2012 Dec 2013 Dec 2014Highest 0.82 0.80 0.80Average 0.79 0.79 0.79Lowest 0.78 0.78 0.78

b) US dollarNZ$1 = US cents

Dec 2012 Dec 2013 Dec 2014Highest 0.83 0.85 0.76Average 0.82 0.81 0.74Lowest 0.81 0.78 0.685


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Section 2 The Retail Market

2.1 Store Numbers (Source: Statistics NZ)

Total Outlets by RegionPeriod: February 2012 (Released October 2012)

Statistics New Zealand has re-worked the classification system for businesses (ANZSIC) andthe numbers below have been produced under ANZSIC 2006 (previously, ANZSIC 1996).These changes have had a significant impact on what is in and what is out in the retailsector demography analysis. For example, we now exclude such sectors as automotiverepairs, household appliance repairs, footwear repairs, bakeries and cake kitchens, takeawayfood operators and panel beaters to name a selection. On the plus side we now include all ofthose hardware retail stores that were previously included in the wholesale series.

Regional CouncilRegion

Total Outlets(as defined above) % of total

Northland 1,115 3.4Auckland 12,018 36.4Waikato 2,989 9.1Bay of Plenty 2,111 6.4Gisborne 270 0.8Hawkes Bay 1,076 3.3Taranaki 795 2.4Manawatu/Wanganui 1,555 4.7Wellington 3,349 10.2

Total North Island 25,278 76.7

West Coast 263 0.8Nelson 444 1.3

Tasman 324 1.0Malborough 303 0.9Canterbury 4,014 12.2Otago 1,674 5.1Southland 672 2.0

Total South Island 7,694 23.3

Total New Zealand 32,972 100.0

The five major regions Auckland, Waikato, Wellington, Canterbury and Otago - account for73% of the countrys retail outlets. Auckland leads the way with well over a third.

Relative to the latest regional population estimates the distribution of retail stores comparesas follows:

% Retail Outlets % Population

Feb 20122012 Latest

EstimateAuckland 36.4 34.0Waikato 9.1 9.4Wellington 10.2 11.1Canterbury 12.2 12.6Otago 5.1 4.8

Auckland is a little more over shopped relative to population and, if anything, Wellington is alittle under shopped. Christchurch has seen a reduction both in population and storenumbers.


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Outlet Types By Region (selected outlets only)Source: Statistics New ZealandPeriod: February 2012

Notes: 1 As with the previous table, the table below is based on the new ANZSIC codes

(2006).

2 Store classification is based on turnover in the category. For example, if anoutlet had 55% of its business in sports goods and 45% in footwear it would beclassified as a sports goods store.

Number of Outlets by Region

Supermarkets/Grocery

DepartmentStores

Clothing Furniture*** Appliances+ ElectricalGoods*

Chemists****

FootwearBooks,Stationery,Newspapers**

Northland 122 9 94 56 57 37 9 35

Auckland 1,232 68 1,501 775 722 462 219 339Waikato 298 25 349 166 144 100 55 92

B.O.P 186 19 237 132 107 80 35 63

Gisborne 33 5 30 17 11 9 4 10

Hawkes Bay 105 9 120 77 47 51 16 30

Taranaki 88 6 89 50 37 33 17 33

Manawatu,Wanganui

169 15 149 96 81 58 17 63

Wellington 379 35 430 213 174 144 80 121

Total NorthIsland

2,612 191 2,999 1,582 1,380 974 452 786

West Coast 35 2 19 12 14 6 5 8

Nelson 28 6 60 24 32 14 11 10

Tasman 28 3 30 16 13 17 4 8

Malborough 31 5 23 15 17 13 6 11

Canterbury 367 44 470 232 215 157 80 110

Otago 141 22 242 83 73 66 32 53

Southland 76 11 67 39 28 24 11 21

Total SouthIsland

706 93 911 421 392 297 149 221

Total NewZealand

3,318 284 3,910 2,003 1,772 1,271 601 1,007

(*Includes specialist computer stores)(**Covered by two different ANZSIC codes newspapers and books and stationery goods)(*** Furniture, Floor Coverings, Houseware, Textile Goods Retailing)(**** Includes Pharmaceutical, Cosmetic and Toiletry Goods Retailing)

This analysis of outlet type by area considers only eight different categories of store. The fullanalysis from Statistics New Zealand covers 36 store types this more detailed information isavailable on request.


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The full list of store types is:

Supermarket / Grocery StoresFresh Meat / Fish / Poultry RetailingFruit and Vegetable RetailingLiquor Retailing

Other Specialised Food RetailingDepartment StoresClothing RetailingFootwear RetailingOther Personal Accessory RetailingManchester and Other Textile Goods RetailingFurniture RetailingFloor Covering RetailingHouseware RetailingElectrical, Electronic and Gas Appliance RetailingComputer and Computer Equipment RetailingOther Electrical and Electronic Goods RetailingSports / Camping Equipment Retailing

Toy and Game RetailingNewspaper / Books RetailingStationery Goods RetailingEntertainment Media RetailingMarine Equipment RetailingPharmaceutical, Cosmetic, Toiletry RetailingAntique and Used Goods RetailingHardware and Building RetailingGarden Centre RetailingFlower RetailingWatch and Jewellery RetailingCar RetailingMotor Cycle Retailing

Trailer and Caravan RetailingMotor Vehicle Parts RetailingFuel RetailingTyre RetailingNon-Store RetailingCommission-Based Buying and/or Selling


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Retail Outlets By Store Type

Total New Zealand February 2012

Store Type Number ofOutlets

% Share % Changeon Feb

2011Supermarket and Grocery Stores 3,317 10.1 +0.8Fresh Meat/Fish/Poultry Retailing 660 2.0 -0.5Fruit and Vegetable Retailing 484 1.5 +1.3Liquor Retailing 941 2.9 +3.1Other Specialised Food Retailing 964 2.9 +3.3Department Stores 284 0.9 -1.4Clothing Retailing 3,910 11.9 n/cFootwear Retailing 601 1.8 -0.5

Other Personal Accessory Retailing 186 0.6 -5.6Manchester & Other Textile Goods Retailing 504 1.5 -2.5Furniture Retailing 737 2.2 -1.1

Floor Covering Retailing 482 1.4 -1.2Houseware Retailing 280 0.8 -5.1Electrical, Electronic & Gas Appliance Retailing 1,149 3.5 -3.0Computer & Computer Peripheral Retailing 405 1.2 +1.5Other Electrical Equipment Retailing 218 0.6 +10.7Sports/Camping Equipment Retailing 1,177 3.6 +2.0Toy & Game Retailing 223 0.7 n/cNewspaper & Books Retailing 642 1.9 -6.0Stationery Goods Retailing 365 1.1 +1.4Entertainment Media Retailing 118 0.4 -13.9Marine Equipment Retailing 292 0.9 -1.4Pharmaceutical, Cosmetic, Toiletries Retailing 1,271 3.9 +2.2

Antique and Used Goods Retailing 910 2.7 -5.3Hardware & Building Supplies 1,447 4.4 -2.6Garden Centre Retailing 437 1.3 -4.3Flower Retailing 452 1.4 -3.8Watch & Jewellery Retailing 584 1.8 -4.7Car Retailing 1,638 5.0 -1.3Motor Cycle Retailing 260 0.8 -8.8Trailer & Caravan Retailing 101 0.3 -5.6Motor Vehicle Parts Retailing 344 1.0 +2.1Fuel Retailing 1,182 3.6 -1.1Tyre Retailing 654 2.0 -0.6Non Store Retailing 1,497 4.5 +3.1Commission-Based Buying and/or selling 277 0.8 +1.1Other Store-Based Retailing n.e.c.* 3,985 12.1 -3.8

Total All Retail 32,978 100.0 -1.0%

(*n.e.c. not elsewhere classified)

Comments

Overall store numbers at 32,978 were 1% down on February 2011 a net loss of 321 stores.


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Number of OutletsIf we look at the store numbers over the last decade we see some interesting changes. Thestand out movements are summarised below:

2000 2012 % Change

Total Store Numbers 30,160 32,978 +9.3%

The Big Movers:

Motor Cycle Retailing 156 260 +67Motor Vehicle Parts Retailing 246 344 +40Liquor Retailing 676 941 +39Other Specialised Food Outlets 649 964 +49Clothing Retailing 2,570 3,910 +52Footwear Retailing 480 601 +25Floor Coverings 358 482 +35Housewares Retailing 208 280 +35

Electrical/electronic/gas appliances 997 1,149 +15Computer/computer Equipment 254 405 +59Stationery Goods Retailing 249 365 +47Sport & Camping Equipment 836 1,177 +41Watch & Jewellery Retailing 505 584 +16Toy & Game Retailing 172 223 +19

The Big Losers:Fuel Retailing 1,643 1,182 -28Fresh Meat /Poultry /Fish Retailing 764 660 -14Fruit & Vege Retailing 546 484 -11Newspapers & Book Retailing 941 642 -32

Antique & Used Goods Retailing 1,174 910 -22

2.2 Retail Sector Sales Performance & GrowthSource: Statistics New Zealand

Long Term Trend

12 MonthsEnding

Total Retail Sales$ m

% Change on PriorYear

Index(year 2005 = 1,000)

Dec 2012 70,300 +3.7 1,255

2011 67,800 +4.1 1,2112010 65,100 +3.7 1,1622009 62,800 -0.8 1,1212008 63,300 +0.3 1,1302007 63,100 +6.2 1,1272006 59,400 +6.1 1,0612005 56,000 +6.5 1,000

Note: The above includes all retail categories, including the motor vehicle sector, cafesand restaurants, hotels, accommodation etc.

Comments1 Over the eight-year period retail sales grew by $14.3b or 25.5% (around 3.5% p.a.).


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Retail Sales - By Sector

12 Months ending December

Category 2012 2011%

Change

$m % $m %2012 vs

2011Supermarket & Grocery Stores 16,693 23.7 16,563 24.4 +0.8Specialised Food 1,378 2.0 1,329 2.0 +3.7Liquor 1,354 1.9 1,266 1.9 +7.0Non Store & Commission Based 851 1.2 837 1.2 +1.7Department Stores 3,809 5.4 3,682 5.4 +3.4Furniture/Floor Coverings/Houseware/Textiles

1,873 2.7 1,726 2.5 +8.5

Hardware/Building/GardenSupplies

4,859 6.9 4,553 6.7 +6.7

Recreational Goods 1,908 2.7 1,905 2.8 +0.2

Clothing/Footwear/Accessories 3,545 5.0 3,544 5.2 n/cElectrical & Electronic Goods 2,643 3.8 2,704 4.0 -2.3Pharmaceutical & Other StoreBased Retailing

4,786 6.8 4,522 6.7 +5.8

43,699 62.2 42,631 62.9 +2.5

Accommodation 2,736 3.9 2,672 3.9 +2.4Food & Beverage Service 7,111 10.1 6,881 10.2 +3.3

9,847 14.0 9,553 14.1 +3.1

Motor Vehicles & Parts 9,138 13.0 8,207 12.1 +11.3Fuel 7,619 10.8 7,425 10.9 +2.6

16,757 23.8 15,632 23.0 +7.2

Total 70,303 100 67,815 100 +3.7

In the latest year the growth slowed a little (3.7%) compared with what was achieved in 2011relative to 2010 (5.5%). Last year we had a lift from the Rugby World Cup.

Across the various store types there is considerable variability electrical and electronicgoods went backwards (-2.3%) but this is likely to be the result of deflation in this store type.The supermarket sector showed only modest growth (+0.8%) and this no doubt reflects thecompetitiveness of these stores.

The focus in the short to medium term is going to be margin management. Retailers will needto retain their competiveness but take every opportunity to improve margin. The necessity forthis is underscored by the margin analysis that follows later in this document.

The store type classifications used in this analysis are based on the ANZSIC 2006 codes. Forthe first time we see the appearance of non-store sales as a specific category. This willinclude all pure play online retailers but it will not include the online sales achieved by retailerswith a bricks and mortar presence.

Note1 There are some minor differences in some totals this is due to rounding at the sub-

category level.

2 An outline of what stores are in each category follows in Appendix 1.


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2.3 Retail Stock Trends

We have seen how the sales levels have changed over time but how good is the stockmanagement? How have retail stocks varied relative to change in sales performance?

Category Sales 12 Months Ending

December 2012 vs. 2011%

Stock % Change

End Dec 2012 vs. 2011%

Supermarket & Grocery Sales +0.8 +8.1Specialised Food +3.7 +23.4Liquor Retailing +7.0 +1.1Non Store & Commission BasedRetailing

+1.7 +17.9

Department Stores +3.4 +3.1Furniture, Floor Coverings,Houseware, Textiles

+8.5 +6.3

Hardware, Building, GardenSupplies

+6.7 n/c

Recreational Goods +0.2 -2.6

Clothing, Footwear, Accessories n/c +5.3Electrical & Electronic Goods -2.3 -4.8Pharmaceutical & Other StoreBased Retailing

+5.8 +4.8

Accommodation +2.4 -3.3Food & Beverage Sales +3.3 +0.8

Motor Vehicles & Parts +11.3 +12.5Fuel +2.6 +7.8

Total +3.7 +5.0

Comments

In the main, retailers have managed their stocks reasonably well. The increase in stock wasslightly ahead of the increase in sales and in fact, was more in line with the sales growth ofthe previous year. This may have reflected a degree more optimism than the marketdelivered. There was some variability by store type.

2.4 Business Performance

Statistics New Zealand conducts an annual survey of business performance (AnnualEnterprise Survey). The latest results available are for the 2011 year (gathered during 2012).

Note:

Some retail categories are not available due to issues of confidentiality. For example,specific data for supermarkets and department stores is not available.

Data is, in general, at a level lower than that normally reported by Statistics NewZealand, therefore the details shown must be treated with caution.

Definitions of terms used are as follows:-

a Sales: Closing Stock This is a crude measure of stock turn based on stockvalued at cost. For example: Liquor retailing showed total sales of $1,149m andstock at the end of the period of $145m. The ratio calculated is 7.9.

b Salaries & Wages/Sales - This is the total cost of salaries and wages, includingthat paid to working proprietors, divided by total income.


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c Gross Margin This has been calculated on the basis of sale of goods notfurther processed, minus purchase of goods for re-sale, divided by sale of goodsnot further processed.

d Employee Count Is Based On RME Rolling, monthly employee count. This

replaces full-time equivalents (FTE) which has been used in the past.

e Surplus Before Income Tax - Total income less total expenditure (excludingsalaries and wages paid to working proprietors) divided by total income.

The figures are derived from a specific survey. Therefore, the turnover figures will notnecessarily be the same as those derived from the retail sales series.

Business PerformanceRetail Trade and Accommodation

2011 2010 2009 2008Sales: Closing Stock (stockturn)

10.4 10.4 10.5 10.1

Salaries/Wages % Sales (%) 13.3% 13.2% 13.2% 12.7%Gross Margin (%) 26.2 26.2% 26.2% 26.6%

Income Per Employer ($000) 208.2 202.0 193.9 195.4Surplus Per Employer ($000) 6.2 5.9 3.9 5.9Return on Equity (%) 17.6% 17.4% 12.7% 19.1%

Return on Total (%) Assets 6.0% 6.0% 4.3% 6.7Net Margin (before tax andexcluding salaries and wagespaid to working proprietors)

3.0 2.9 2.0 3.0

Comments

Over the four years under review, performance across the whole industry has beenreasonably consistent.

On some measures the 2009 performance was below 2008 but it would appear the necessarycorrections have been made in 2010 and this has been sustained in 2011.

However, when we look at the bottom line achieved year by year for the last eight years wesee the impact of the competitive price driven market:

Net Profit Before TaxAs % of Total Income

2011 3.02010 2.92009 2.02008 3.52007 4.12006 4.22005 5.22004 5.5

2003 6.3

Margin erosion has been significant.


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Analysis for 2010 (data gathered during 2011)

Sector Sales:ClosingStock

(a)

Salaries &Wages% to Sales

(b)

GrossMargin

(c)

IncomePer RME

(d)

SurplusPer RME

(d)Ratio % % $000 $000

Fresh Meat/Fish/ PoultryRetailing

23.7 14.1 27.7 209.7 0.5

Fruit/Veg Retailing 21.5 11.6 20.6 216.4 2.8Liquor Retailing 9.9 7.0 20.4 463.9 7.4Other Specialised FoodRetailing

7.8 18.8 25.8 134.4 (-2.8)

Furniture Retailing 5.0 16.0 33.0 245.4 (-9.1)Floor Coverings Retailing 13.1 12.2 29.0 400.5 8.8Houseware Retailing 6.0 19.7 43.3 143.6 (-13.6)Manchester Other TextileGoods Retailing

4.7 22.0 31.8 165.1 (-11.1)

Electrical/ Electric/GasAppliance Retailing 7.3 11.5 21.8 326.2 2.8

Computer & ComputerPeripheral Retailing

11.7 10.4 26.9 371.8 18.7

Hardware & BuildingSupplies Retailing

6.3 12.3 27.1 306.9 6.0

Garden Supplies Retailing 6.7 19.5 36.2 157.4 2.7Sport & Camping EquipmentRetailing

4.0 15.3 39.0 221.9 8.9

Entertainment & MediaRetailing

5.3 12.0 40.0 221.6 5.3

Newspaper/Book Retailing 4.4 15.2 45.1 161.3 6.6Clothing Retailing 5.2 16.7 48.9 156.7 5.3Footwear Retailing 5.0 18.2 50.2 145.1 5.3

Watch & Jewellery Retailing 2.8 14.6 48.2 227.6 50.2Pharmaceutical/ Cosmetics/Toiletry Goods Retailing

12.4 17.9 34.9 201.2 12.4

Stationery Goods Retailing 7.2 16.1 34.4 220.0 8.7Flower Retailing 15.7 18.1 45.6 160.1 16.1Antique & Used Goods 6.7 19.2 36.1 170.1 2.3Non Store Retailing 12.6 13.4 46.5 323.5 22.1Total Retail 10.4 13.3 26.2 208.2 6.2

Note: For reasons of confidentiality, supermarket and department store data is combined.These two sectors account for some 46% of regular retail and nearly 30% of allretail. Their absence has a marked impact on the total retail figure above and thecomparison with other sectors.


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Net Profit Before Tax As % Of Total Income

Sector 2011%

2010%

2009%

2008%

Fresh Meat/ Fish/ Poultry Retailing 0.2 2.1 1.4 0.9Fruit & Vegetable Retailing 1.3 * 1.6 2.9

Liquor Retailing 1.6 0.8 2.4 3.2Other Specialised Food Retailing (-2.1) (-2.3) 1.2 1.7Furniture Retailing (-3.8) (-3.8) (-2.4) (-2.3)Floor Coverings Retailing 2.2 2.2 0.8 0.3Houseware Retailing (-9.1) (-4.4) (-8.1) 2.6Manchester and Other Textile Goods (-6.6) 2.7 1.2 3.6Electrical/Electronic/Gas Appliances 0.9 0.9 0.5 4.7Computer & Computer PeripheralRetailing

5.23.0 2.2 10.4

Hardware & Building SuppliesRetailing

1.91.4 (*) 4.3

Garden Supplies Retailing 1.7 0.3 (-1.8) BE

Sports & Camping EquipmentRetailing

4.0 6.1 3.8 0.5

Entertainment Media/Toys/Games 2.3 3.1 (-0.9) (-1.3)Newspaper Book Retailing 4.2 5.5 2.9 4.1

Clothing Retailing 3.4 1.8 1.3 3.0Footwear Retailing 3.6 3.0 1.7 4.8Watch & Jewellery Retailing 22.4 16.4 9.9 9.4Pharmaceuticals/cosmetics/ToiletryGoods Retailing

6.2 6.7 5.9 5.6

Stationery Goods Retailing 4.0 2.5 1.0 3.4Flowers Retailing 9.5 3.6 * (-4.4)Antique & Used Goods 1.3 2.8 2.8 3.0

Non Store Retailing 6.8 4.7 4.8 5.1Total All Retail 3.0 2.9 2.0 3.0

Note: * = less than 0.5%(*) = less than -0.5%BE = Break Even

Comments

This analysis has been taken to a detailed level and the output should be viewed with caution.The numbers are indicative only and due to small base sizes the sampling error is, in somecases, quite large. The numbers should not be relied upon for any significant decisions.

The net profit calculation excludes salaries and wages to working proprietors from the costside of the equation.

Across the past decade we have seen the margin available in the sector shrink. From 6.3%in 2003 we are now down to 3%. The latest year (2011) was slightly better than 2010 which inturn showed a little improvement over 2009 lets hope this is an indicator of improvementsto come.


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2.5 Staffing in the Retail Sector

Geographic Distribution of Retail Staff

Note: The table below is based on ANZSIC 2006 and ties back into the outlet analysis in anearlier section.

2012

Share Of OutletNumbers

%

Staff Numbers000s

Share Of StaffNumbers

%Northland 3.4 6,120 3.1Auckland 36.4 61,010 31.4Waikato 9.1 17,370 8.9Bay Of Plenty 6.4 12,220 6.3Gisborne 0.8 1,680 0.9

Hawkes Bay 3.3 6,820 3.5Taranaki 2.4 5,060 2.6Manawatu/Wanganui 4.7 10,630 5.5Wellington 10.2 21,680 11.2Total North Island 76.7 142,590 73.4

West Coast 0.8 1,600 0.8Canterbury 12.2 27,000 13.9Otago 5.1 10,820 5.6Southland 2.0 4,880 2.5Tasman 1.0 2,060 1.1Nelson 1.3 2,950 1.5

Malborough 0.9 2,250 1.2Total South Island 23.3 51,560 26.6

Total NZ 100 194,150 100

Comments

Auckland accounts for over 36% of the store numbers but only 31% of staff. This could be areflection of bigger stores leading to economies of scale or it could simply be greater costawareness in Auckland leading to fewer staff.

Wellington is the reverse of this 11.2% of staff vs 10.2% of store numbers.

So if thats the geographic spread how does the staffing level compare with store numbersat a store type level?

Once again, this analysis has been undertaken on the basis of the 2006 ANZSIC codes seesection 2.1 Store Numbers for the definitions.


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store in this store type, at 17.4, is low due to the impact of dairies and small grocerystores.

Department stores account for nearly9% of all staff but less than 1% of store numbers.

So what can all of this data tell us? How can we paint a picture of a sector of the market

with these numbers?

Set out below is a statistical portrait of the clothing retail sector. In reviewing this it needs tobe realised that we are not considering all sales of clothing but rather sales through clothingstores. This does not account for clothing sales through outlets such as department stores,sports stores etc.

2.6 Clothing Stores in New Zealand A Case Study(2012 Version)It is realised that this same case study has been run for the last few years in thisdocument. We have decided to stay with it as it clearly demonstrates how publiclyavailable data can be used to paint a picture of a market. A similar analysis could bedone for any other sector.

2.6.1 Numbers of stores / growth

Year EndingFeb

Number of ClothingStores

% Change Year onYear

2012 3,910 n/c2011 3,910 +0.92010 3,874 -1.62009 3,938 +0.52008 3,901 +5.72007 3,690 +4.92006 3,518 +5.4

2005 3,338 +8.22004 3,086 +9.82003 2,811 +5.32002 2,669 +4.32001 2,558 -0.52000 2,570 N/A

From the turn of the century (2000) the number of specialist clothing stores in NewZealand increased from 2,570 to 3,910 an overall increase of 52%. Over this sameperiod total retail outlets (based on the new ANZSIC 2006 classifications) increasedfrom 30,076 to 32,978 an increase of only 10%. (and it should be noted that this isonly specialty clothing stores it does not take account of stores selling clothing as part( less than 50%) of their overall range.)

2.6.2 Number of Stores / Location

We have seen really significant growth in this store type over the past twelve years. Hasthis growth been uniform across the country or has there been regional concentration?


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Clothing Outlets By Region

%Population2012 Est

2012 2000% Growth2012 v 2000

No of

Stores

% Total No of

stores

% Total

Northland 3.6 94 2.4 78 3.0 20.5

Auckland 34.0 1,501 38.4 906 35.2 65.7Waikato 9.4 349 8.9 222 8.6 57.2BOP 6.3 237 6.1 163 6.3 45.4Gisborne 1.1 30 0.8 15 0.6 100.0Hawkes Bay 3.5 120 3.1 99 3.9 21.2Taranaki 2.5 89 2.3 57 2.2 56.5Manawatu/Wanganui 5.2 149 3.8 116 4.5 28.4Wellington 11.1 430 11.0 277 10.8 55.2

Total North Island 76.6 2,999 76.7 1,933 75.1 55.2

West Coast 0.7 19 0.5 20 0.8 (-5.0)

Nelson 1.1 60 1.5 31 1.2 93.5Tasman 1.1 30 0.8 24 0.9 25.0Malborough 1.0 23 0.6 18 0.7 27.7Canterbury 12.6 470 12.0 347 13.6 35.4Otago 4.8 242 6.2 142 5.5 70.4Southland 2.1 67 1.7 56 2.2 19.6

Total South Island 23.4 911 23.3 638 24.9 42.8

Total New Zealand 100 3,910 100 2,571 100 52.1

In terms of percentage growth in the number of clothing stores, Auckland leads theway with an increase in store numbers of over 65% over the period ( except for the

smallish areas of Gisborne and Nelson). In a region that accounts for 34% of thepopulation, the number of clothing stores has increased from 906 to 1,501.

The only area to show negative growth in store numbers was the West Coast, whichlost a net one store over the period - from 20 down to 19.

2.6.3 Clothing Stores Retail Sales

In considering the performance of the clothing sector over recent years we havecompared it with what we earlier termed regular retail, that is, the retail sectorexcluding the hospitality and vehicle elements.

So how has the clothing sector performed?

Note:Under the new classifications, clothing stores are included with footwear and accessorystores. However, as clothing would account for 85% of the category, the movementshown will reflect what is happening with clothing.


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West Coast 15.8 28.8Canterbury 15.1 24.5Otago 14.5 22.5Southland 15.2 25.4Total New Zealand 13.3 21.3

Across the whole country the 65 and over group accounts for 13.3% of the populationcurrently and in 20 years time this group will represent 21.3% of the population. Whilethis is quite dramatic in itself some areas will see an even more pronounced impact Marlborough will have nearly a third of its population in the 65+ group whereas inAuckland it will only be half this level. This has a significant impact on planning wheredo we need what outlets in 10 20 years time?

While these numbers reflect the proportion of each areas population that will be in thissenior age group what about the absolute numbers?

Area % of 65+ age group2011 2013

% %

Northland 4.4 4.3Auckland 26.8 30.1Waikato 9.7 9.5Bay of Plenty 7.6 7.3Gisborne 1.0 1.0Hawkes Bay 4.0 3.7Taranaki 3.0 2.6Manawatu Wanganui 6.1 5.4Wellington 10.4 9.9Tasman 1.3 1.4Nelson 1.2 1.2Marlborough 1.5 1.4West Coast 0.9 0.9

Canterbury 14.4 14.5Otago 5.2 4.6Southland 2.5 2.2

Total 100% 100%

When we view the analysis this way we see another impact at play the shift in totalpopulation. While Auckland only has 16.9% of its population in the 65+age bracket in2031, this city still accounts for over 30% of the total group. This simply reflects thatAuckland overall is growing at a faster rate than the rest of the country. We need tolook at these figures closely and determine what exactly these changes will mean forour business. There is no one size fits all analysis of population we need tounderstand our target population and look closely at what is happening to them within

our catchment area. Population change will have more impact on a retail business thanany other economic variable.

When the results from the 2013 Census are published we will be able to get down tomuch greater detail not only will we be able to look at age by area by population butwe will also be able to consider family structure, income, ethnicity etc.

We are more than happy to assist with detailed analysis of specific areas.


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Section 4 Key Retail Chains by Sector

Who Is Who In New Zealand Retail?

Set out below is a listing of the key companies in each on the major sectors of retail. It is not

exhaustive but we believe it covers the major players:

Supermarkets Farro Fresh FoodFoodstuffs (Auckland)Foodstuffs (Wellington) New World, PAKnSAVE, 4 SquareFoodstuffs (South Island)Fruit WorldMoore Wilson LtdNosh FoodmarketProgressive Enterprises Ltd } Countdown, Supervalue

Department Stores Arthur BarnettBallantynesFarmersH & J SmithKirkcaldie and StainsSmith and Caughey

Clothing Retailers3 Wise Men KimberleysAmazon KookaiAnnah Stretton Kooky FashionBaby City LippyBaby Factory Louis VuittonBallentynes Fashion Central MarcsBarkers MerricBendon Max FashionsBillabong Meccano MenswearBras N Things Millers RetailCalvin Klein Jeans Munns MenswearCaroline Eve Nicholas JerymnCharlie & Me North BeachCity Chic Pagani ClothingCotton On Group Paris TexasCountry Road Peter AlexanderCue International PortmansDavid Lawrence Postie PlusDecjuba Pumpkin PatchDotti RicochetEsprit Rip CurlEzibuy Rodd & GunnForever New RubyGlassons ShantonGregory StaxsHallensteins SuprHartleys Suzanne GraeIdentity T & T ChildrenswearJ K Kids Gear TarocashJacqui E TemtJay Jays The Department StoreJean Jones Untouched World

Jeans West Valley GirlJust Jeans Veronika MaineK & K Fashions Vincent


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Karen Walker WitcheryKate Sylvester Working StyleKathmandu ZambesiKeith Matheson Zebrano

General Merchandise Briscoes

FarmersK MartThe Warehouse

Footwear RetailersAndrea Biani Mi PiaciAthletes Foot Number One ShoesBanks Group OverlandDowsons Rubi ShoesEcco ScarpaFootlocker Shoe ClinicFootloose Shoe Connection

Hannahs Smiths Sports ShoesHush Puppies WildpairNovo Shoes Ziera

Furniture RetailingBedpost Harvey NormanBeds R Us HazelwoodsBig Save Norman RossDanske Mobler McKenzie and WillisEarly Settler North & South GroupFreedom Furniture Smith CityFurniture City Target

Furniture Court

Floor Covering RetailingCarpet Court Flooring XtraHarrisons Carpert One ForhomesFlooring First The Design Store

Domestic Hardware and Housewear

Acquisitions MicoBM Pacific Mitre 10

Briscoes NoodBunnings PlacemakersCarters Plumbing PlusColourplus Plumbing WorldGuthrie Bowron RedcurrentHomePlus Resene PaintsITM Stevens HomewaresLighting Direct Storage BoxLighting Plus Tile WarehouseLiving and Giving ToolshedMastertrade


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Fabrics/ SoftgoodsArthur Toye Fabrics Household LinensBed Bath and Beyond Knit WorldBed Bath and Table LewissCurtain Studio SpotlightHarvey Furnishings The Linen Cupboard

Domestic Appliances/Electronics/Phones

2 Degrees Jaycar ElectronicsAppliance Connexion Leading Edge CommunicationsAppliance Network NewboldsDick Smith Electronics Noel Leeming GroupEB Games Norman RossGodfreys Smiths CityHarvey Norman Telecom Retail StoresJ B Hi Fi The Good GuysL.V. Martin & Sons Vodafone

Sport and Camping Equipment

Avanti Plus Hunting and FishingBike Barn MacpacBivouac Outdoors NZ Pro Fishing and ShootingCanoe & Kayak Rebel SportChampions of the World SportspowerCheapskates Ltd SportsworldDwights Stirling SportsFCO The Golf WarehouseHamills NZ

Toy and Game Retailing Educational Experience Stores

Toyworld

Newspaper, Books and Stationery Retailing

Kikki K SmiggleNZ Post Take NoteOffice Max TypoOffice Products Depot Warehouse Stationery

Paper Plus Whitcoulls Group

Photographic StoresCamera House Photo WarehouseKodak Express

Pharmaceutical, Cosmetic and Toiletry Retailing

Amcal Life PharmacyCare Chemists LushHardys Pharmacy BrandsHealth 2000 Radius

Healtheries The Body ShopLOccitane Unichem


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Watch & Jewellery Retailing

Christies Jewellers Stewart DawsonsMichael Hill Jewellers SilvermoonNationwide Jewellers Showcase JewellersPascoes Walker & Hall

Partridge Jewellers

Flower RetailingInterflora Teleflora

Automotive FuelBP MobilCaltex Z EnergyGull

Tyre RetailingBeaurepairs GoodyearBridgestone Tonys Tyre ServiceFirestone

Other Food RetailersBurger King Restaurant BrandsCarl Jr Retail Food GroupDominos Robert HarrisFoodco NZ SubwayHollywood Bakery The Mad ButcherMcDonalds Restaurants Wendys

Pita pit

Liquor RetailingGlengarrys LiquorlandLion Nathan Super LiquorLiquor King The Mill Liquor Save

Vehicle PartsRepco Mag &Turbo WarehouseSuper Cheap Auto

OpticalOPSM VisiqueSpecsavers

RuralCombined Rural TradersPGG Wrightson

RD1

Costume Jewellery

Bling EquipDiva Lovisa


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AccessoriesStrand Bags Sunglass StyleSunglass Hut

Pets

Animates Four SeasonsCareVets Pet Essentials


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Section 6 The Tourism Market

Summary results - 2012 (Stats NZ)

Tourism plays a significant role in the New Zealand economy in terms of the production of

goods and services and the creation of employment opportunities. Tourism expenditureincludes spending by all travellers, whether they are international, resident householders, orbusiness and government travellers. International tourism expenditure includes spending byforeign students studying in New Zealand for less than 12 months.

Key results for the year ended March 2012 are: Total tourism expenditure was $23.4 billion, an increase of 2.4 percent from the previous

year.

International tourism expenditure increased 1.6 percent ($149 million) to $9.6 billion andcontributed 15.4 percent to New Zealands total exports of goods and services.

Domestic tourism expenditure increased 3.0 percent ($397 million) to $13.8 billion.

Tourism generated a direct contribution to GDP of $6.2 billion, or 3.3 percent of GDP.

The indirect value added of industries supporting tourism generated an additional $9.7billion for tourism, or 5.2 percent of GDP.

The tourism industry directly employed 119,800 full-time equivalents (FTEs) (or 6.2percent of total employment in New Zealand), a decrease of 0.7 percent from theprevious year.

Tourists generated $1.3 billion in goods and services tax (GST) revenue.

Overseas visitor arrivals to New Zealand increased 4.4 percent in the year ended March2012, driven largely by visitors to the 2011 Rugby World Cup.

Key events that influenced tourism activity in the year ended March 2012 included the hostingof the 2011 Rugby World Cup, the impact of the devastating February 2011 earthquake inChristchurch, ash from the Chilean volcano disrupting air travel, and the ongoing effects of

the global financial crisis.

Tourism Satellite Account: 2012does not separately identify the impact on tourismexpenditure at both a domestic and international level for these events.

Tourism Satellite Account: 2012incorporates the new industry classification, Australian andNew Zealand Standard Industrial Classification 2006 (ANZSIC06), which better representsthe current economy. This has resulted in a change in the composition of tourism industriesand commodities, and has led to revisions to expenditure and employment measuresthroughout the official time series back to 1999.


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Tourism Expenditure by Type of Product:

In the year ending March 2012 total tourism expenditure reached $23.4b which was anincrease of just under 3% compared with the previous year. The composition of theexpenditure was as follows:

2012$m

2011$m

Accommodation Services 2,064 2,053Food and Beverage Serving Services 2,900 2,813Air Passenger Transport 4,165 4,033Other Passenger Transport 2,400 2,422Retail Sales fuel and other automotive products 2,744 2,571Retail Sales other 5,119 5,020Education Services 662 645Other Tourism Products 2,039 2,002GST Paid On Purchases By Tourists 1,302 1,290

Total Tourism Expenditure 23,394 22,848

If we combine fuel, automotive and other retail sales together we reach a total of $7.9b or justover a third of the expenditure by tourists (both domestic and overseas tourists). It is reallyimportant that everyone in the retail sector understands the role played by retailers in thetourism market it is not just about the jet boats and bungy jumping activities shopping isstill a critical part of the tourists activities.

The retailers strategy needs to incorporate the domestic and overseas tourist both groupsoffer long term opportunities. Obviously, the domestic tourist is close by but we shouldntoverlook the long term possibilities of the overseas tourist. If we get it right here there arefuture prospects from our website after the tourist returns home. These people now offer the

potential for repeat business.

A supplementary report will be published later in the year highlighting the specific categoriesof retail that contribute most to these retail figures.

As a strategic initiative it makes total sense for retailers and other providers of tourism goodsand services to work together. When one thinks of the American theme park that has a realfocus on merchandise why cant we do that here via business co-operation?


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Section 7 Top Retail Trends 2012

From a variety of sources we have identified a number of trends that retailers need toconsider as part of their planning. This is not an exhaustive list but it does highlight a numberof issues that keep recurring across a range of material.

1 The Consumer Has Changed and, we believe, changed forever.

1.1 The consumer has lost his/her appetite for debt and is now living much morewithin their means. There has been a reduction in credit card debt and hirepurchase debt (and fewer finance companies to borrow from).

1.2 The consumers have been enticed to improve their savings activity KiwiSaver.

1.3 The consumer is a little unsure of the future and where everything is heading.Will I need some cover for a rainy day?

All of this has resulted in a much more risk averse consumer with better managedspending and savings habits.

They have re-balanced their household balance sheet and in the foreseeable future wewill have a more restrained consumer.

2 Price vs Value

There appears to be a move from straight price offers to price offers linked to brands.That is, the offer is becoming more about value and less about cheap.

We expect this to continue. Retailers will need to give real thought to the brands theyoffer.

Brands will need to match the aspirations of the stores target market.

Exclusivity of brands will give the retailer a point of difference and will limit theconsumers opportunity to undertake price comparisons across competing stores andchannels.

3 Technology smart phones, tablets, and whatever comes next

We are seeing significant changes in consumer behaviour, linked to developments inmobile technology in particular. In the coming years we will see this trend accelerate.

Already we have a whole range of applications available (not necessarily in NewZealand).

e.g a) Price comparisons it is now possible to read the bar code on a productand see what prices are being charged for that product by a range ofoutlets in the local vicinity.

b) Credit/debit card on the phone - trials are already underway using nearfield communication to process contactless transactions on the phonerather than a contactless card.

c) Using either bar codes or QR codes we can now assemble an order (as aconsumer) send it to a retailer, pay for it on-line and wait for the order to bedelivered.

d) Peer Review we can now try on clothes at the retail store, take 360photographs, send them via phone to a friend and get a second opinion.


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For those of you who are really observant you will have realised that these last coupleof pages are the same as those in last years publication. It is our view that the keytrends havent changed the thing that has changed is the speed with which changeis occurring. The online market is now at closer to 6% (from 5%) and the rate ofgrowth of this channel is outstripping traditional retail.

We are waiting for a couple of new reports to be published and once this data is to

hand we will produce a report that has its focus on the online channel.


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Appendix 1 - Industry Descriptions

ANZSIC06 Retail Classifications

An entity is included in an industry based on its predominant activity in terms of sales. For

example, a petrol station will sell petrol and diesel, but it may also sell car parts and groceryitems. The store will be classified to the fuel retailing industry if most of its sales come fromthe sale of fuel. Data published for 15 industries, which are defined as follows:

ANZSIC06 industries, class codes, and descriptions for the Retail Trade Survey (RTS)RTS industry and description used in publishedtables

ANZSIC06 class and description

G1110 Motor vehicle and parts G391100 Car retailingG391200 Motor cycle retailingG391300 Trailer and other motor vehicleretailingG329100 Motor vehicle parts retailing

G392200 Tyre retailingG1120 Fuel G400000 Fuel retailingG1210 Supermarket an grocery stores G411000 Supermarkets and grocery stores

G1221 Specialised foodG412100 Fresh meat, fish and poultryretailingG412200 Fruit and vegetable retailingG412900 Other specialised food retailing

G1222 Liquor G412300 Liquor retailingG1311 Furniture, floor coverings, houseware, textiles G421100 Furniture retailing

G421200 Floor coverings retailingG421300 Houseware retailingG421400 Manchester and other textile goods

retailingG1312 Electrical and electronic goods

G422100 Electrical, electronic, and gasappliance retailingG422200 Computer and computer peripheralretailingG422900 Other electrical and electronicgoods retailing

G1313 Hardware, building, and garden suppliesG423100 Hardware and building suppliesretailingG423200 Garden supplies retailing

G1321 Recreational goodsG424100 Sport and camping equipmentretailingG424200 Entertainment media retailing

G424300 Toy and game retailingG424400 Newspaper and book retailingG424500 Marine equipment retailing

G1322 Clothing, footwear, and accessories G425100 Clothing retailersG425200 Footwear retailingG425300 Watch and jewellery retailingG425900 Other personal accessory retailing

G1330 Department stores G426000 Department stores

G1340 Pharmaceutical and other store-based retailingG427100 Pharmaceutical, cosmetic, andtoiletry retailingG427200 Stationery goods retailingG427300 Antique and used goods retailing

G427400 Flower retailingG427900 Other store-based retailing nec


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G1350 Non-store and commission-based retailing G431000 Non-store retailingG432000 Retail commission-basedbuying/selling

H2110 Accommodation H440000 AccommodationH2120 Food and beverage services H451100 Cafes and restaurants

H451200 Takeaway food servicesH451300 Catering servicesH452000 Pubs, taverns, and barsH453000 Clubs (hospitality)

Note:Nec = not elsewhere classified


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2013 retail market in nz

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