Strong demand for AUS and international brands in NZ

Yesterday, as we got ready to watch the Cricket World Cup final, I pondered on the differences that exist between Australia and New Zealand. Apart from different currencies, visiting one country or the other is like being at home.

Each country has a strong belief in its own ability, and both are proud of their heritage. Australia has a vastly larger population base, of course, and New Zealand is small by comparison, but certainly on the world stage it bats well above itself.

That applies to both business and sporting activities.

However, we constantly seek further improvement in our commercial activities. Retailing is the lifeblood of so many Kiwis from an employment perspective that we constantly need to be reminded of just how important the retail industry is to this country.

Retail isn't just about selling goods, it assists the property industry in a major way, through significant bricks and mortar occupation. The recent arrival of Topshop was one such example.

Time for IKEA and Aldi to cross the ditch?

So is a major sporting event such as the Cricket World Cup a generator for more business activity in this country? Is it time for the likes of Ikea, Aldi, Costco and others to finally make the move to enter the NZ market? Of all the major brands the two that have led the charge in the consumer’s eye have been Aldi and Ikea. The demand is significant.

With regard Aldi, it’s all about giving the two NZ supermarket players a run for their money, giving consumers another option besides Pak N Save, New World and Countdown. Aldi is all about cheap prices but a more limited range in smaller stores. Will they come? It’s a big call. What they need is numbers of stores to give them the need for an infrastructure. There's no point in opening a store in Auckland and Christchurch as they need volume. Our guess is it will be a long time.

As for Ikea and others, there is no doubt the consumer wants them here, demand certainly exists. A typical example is a NZ visitor to Australia deliberately making a trip to Ikea to buy goods, and then bringing the flat packs back home. It’s not that hard, but having an Ikea here would be a lot easier. However, we are small fry on the world stage for major retailers.

If we can be treated as another state of Australia then we might have a chance, but for any major to establish here is a big call and many examples of times past has proven that Australian retailers don't always become successful in NZ.

Win or lose sports matches, we will always be close rivals who support each other in times of need. That is not necessarily the case in business, where profit is the major motivator.

It’s been a tough 48 hours for New Zealand, having made it all the way to the final of the Cricket World Cup – for the first time ever – only to fall short and finish second. Who would have thought we could come so far in the last couple of years?

The NZ Captain said before the game, "we are playing for our nation". The Australian Captain said "play for me, I am retiring". After the game, the sides were quick to congratulate each other, and Brendon McCullum shook Michael Clarke’s hand as he left the field, having been dismissed for an unbeaten 74 with just nine runs left for Australia to win.

Sportsmanship is still a key part of what makes New Zealand special, and makes our professional athletes and our people well respected around the world. The approach to retailing in NZ is much the same!


Sharewatch | Restaurant Brands

It’s been another satisfying year for Restaurant Brands investors, with the company continuing to grow sales and share prices. For the year to February 2015, sales rose 9.2% to $359 million, although it’s not as straightforward as it looks – there was an extra week’s trading, Carl’s Jr. sites were acquired from another franchisee, while some Pizza Huts were sold off to franchisees.

KFC had another impressive sales performance, with sales up 7.7% to $265 million, and notching up the same increase on a same-store basis.

Pizza Hut sales dropped slightly to $48.4 million, but same-store sales rose 6.3% as Restaurant Brands continued to sell off some of its lower volume stores. Pizza Hut now has nearly as many franchised stores in New Zealand as it does corporate stores – 42 versus 46.

Starbucks has been gradually improving, with sales of $26.1 million, up 5.1% on a same-store basis. The business now seems to be delivering a good return on investment for Restaurant Brands, probably better than it ever has before.

Carl’s Jr., the newest offering in the Restaurant Brands stable, continues to grow sales, reaching $20.1 million for the year. Restaurant Brands now controls all 18 Carl’s Jr. sites in the country. It’s also interesting to see how big a splash the brand made on entry – same-store sales are actually down 28.3%, as the opening hysteria subsides and stores start to settle down to normal.


In the press

Local and international media highlights 25 Mar - 31 Mar 2015

Lovisa snaps up SA stores
Australian jewellery chain, Lovisa, has purchased 21 fashion accessory stores in South Africa. Though the name of the acquired company has not been disclosed, Inside Retail believes it to be Zuri, which was launched in December 2013. The majority of stores will be rebranded to Lovisa following the April 1 handover. Lovisa paid $2 million for the chain, with a further $250,000 payable in April 2016.
(Source: Inside Retail)

Singapore Govt in new Akl property deal
The Singaporean Government is expanding its New Zealand property holdings, taking a further stake in Auckland via a new office block yet to be built. Listed landlord Goodman Property Trust has just announced that Fletcher Building has struck a deal to sell a new Wynyard Quarter building, 80 per cent leased to Datacom, to the Singaporeans and Goodman. The purchaser is Wynyard Precinct Holdings - 49 per cent owned by the Singapore state's Government Investment Corporation and 51 per cent owned by listed landlord Goodman Property Trust. The buyer will pay $86.2 million for the Datacom building.
(Source: NZ Herald)

AMI “insures” a good in-store experience
When it comes to the in-store experience, insurance stores aren’t what pops into mind straight away as a retail leader. AMI Insurance plans to change that with its new store fit out, which focuses on creating a new face-to-face experience for customers. AMI enlisted the help of RCG, a property, architecture, design and research company, to kit out their flagship store in the Auckland suburb of Takanini. RCG started by strategically analysing AMI’s store performance both regionally and nationally.
(Source: The Register)

Consumers buoyant after fuel, rate drop
Consumer confidence has strengthened over the past three months, the Westpac McDermott Miller survey found, thanks to a rebound in rural New Zealand. The survey's overall index rose 2.5 points to 117.4. That is comfortably above its long-term average of 111.5 and consistent with signs of buoyant retail activity in electronic card transactions data, said Westpac economist Felix Delbruck. The improvement was unsurprising given further falls in petrol prices and fixed mortgage rates since the December survey, while house and share prices had continued to rise.
(Source: NZ Herald)

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