Overseas retailers can exit as quickly as they enter, RCG warns landlords

Property owners are being warned that the arrival of big new international retail brands in New Zealand may mean an upsurge in quick exits or closures.

Paul Keane of retail consultancy RCG says the closure of Dick Smith and also department store Target's decision to axe all its 133 store in Canada reinforced the fact that big retailers can be "brutal" over non-performing stores.

"If the brand isn't working, closure – rather than prolonged trading agony – is the best option. It enables the brand to close and exit quickly."

In Target's case, the various landlords had been severely impacted, and some were pursuing legal action against the company for breaches of lease obligations, Keane said.

The flipside of new international brands like Top Shop and Zara, and grocery store Aldi which is only in Australia so far, was that they would "lift the game" of other retailers.

Big local retailers like the Warehouse, Farmers, Foodstuffs and Progressive, would be on notice and some of them were already modernising their stores and merchandise.

Both Briscoes and the Warehouse are already engaged in major refurbishment programmes, and Keane said he suspected both supermarket chains "will focus on lifting their image of their respective brands".

For property owners relying on long tenancies, particularly syndicates, Keane recommended they look to local brands.

"For New Zealand property investors, the key is to take heart from securing leases with traditional New Zealand retailers rather than pursuing long leases with new entrants.

"History has demonstrated that new entrants have less chance of surviving than the traditional New Zealand chains who are in it for the long haul."

By Catherine Harris, stuff.co.nz

© RCG Ltd 2012
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