The decline and imminent closure of Toys R Us, is just another major retail brand closing its doors. Back in the late 1990s, I had many discussions with the company on the possibility of them entering the New Zealand market. We were very close to securing the brand but at the last minute they decided not to, which at the time was a great disappointment as we wanted this major category killer in our centre at the time. For those of you who are not familiar with the brand, it has been an iconic toy store brand in the USA and beyond for many years. It offers a full range of toys and games and the stores were renowned for in store toy demonstrations, they were a great experience for children and children alike.
"So why did they close?"
It wasn't due to online shopping. It was purely a reflection of the market and competitors who offered a wider choice not just toys. It also demonstrated just how retailers specialising in one sector of merchandise, need to seriously consider varying their product range to enable them to maintain a future order book.
"Let's face it, in New Zealand, there are few if any Toy stores operating in New Zealand, without doubt they are a forgotten breed."
In the USA, the majority of Toy Sales are via the general merchandisers such as Walmart. The same applies in New Zealand with The Warehouse and Farmers Trading dominating the major share of toy sales. Being flexible is the key to success in all retail markets. Being a one off category killer may not be the best measure of success into the future. Few branded stores will be able to survive into the future if they do not contain a wide range of merchandise beyond one specialist category, those days have gone.
The NZ Retail Interiors Association held the annual “Red Awards” on Saturday night at Mantells in the Viaduct. They had a record number of entries this year and the night was attended by some 160+ people including other designers, suppliers, shopfitters and clients.
RCG won both the service and Popup/Temporary divisions for BNZ Christchurch and the Cooperative Bank kiosk in Sylvia Park – well done to the wider team and our clients!
Congratulations to all the winners and participants, it was a great night.
Veritas Investments, the company behind The Mad Butcher, Nosh (until recently) and various bars has just released its annual report.
It’s been a hard year for Veritas. The year began with Nosh’s continued poor performance, an ultimatum from Veritas’ bankers that the chain would have to be sold, and an eventual sale to a buyer which quickly proved to have no substance. Over the eight months Veritas continued to own Nosh, the business lost several million dollars, from a mixture of trading losses and a sale price less than what Veritas had originally paid.
Veritas’ diminished portfolio of Auckland bars (they have sold their Hamilton bars) saw improved performance. The bars made EBITDA of $5.9 million ‘prior to significant items’, and all of them are profitable.
The Mad Butcher business was more of a struggle. Three franchised stores closed in a “very competitive” market, and EBITDA fell from $4.6 to $3.7 million ‘prior to significant items’. The thing is, it’s hard to see the market getting less competitive, so Mad Butcher will simply have to compete more effectively.
Veritas has now sold most of its underperforming businesses, so there’s a huge disconnect between their ‘profit from continuing operations’ of $4.06 million, and their overall result (a loss of almost $800,000 after tax). Now that Veritas is shorn of the loss-making businesses, they should be profitable again – but they’re still a tiny business by NZX standards, and they’ll need to manage their two food retail businesses very carefully in order to rebuild.
In the Press
NZ's three booms - tourism, migration, construction - may have peaked
Economists at New Zealand largest bank warn economic growth appears to be cooling, opening the possibility of future interest rate cuts. ANZ chief economist Cameron Bagrie has also predicted that government fiscal policy, in the form of tax cuts, will become one of the drivers of the economy in 2018 when it would be "a lot looser than what's being openly acknowledged at the moment".
Fletcher confirms KPMG review of biggest projects
Fletcher Building has issued an NZX notice confirming speculation that consultants KPMG is reviewing its two biggest construction projects. "Fletcher Building is aware of speculation that it has commissioned KPMG to review projects in the company's construction division.
New Wellington developments 'just the start'
Demand continues to outstrip supply in Wellington's prime office sector, fuelling the need for further development, a research analyst says. Richard Carr, of CBRE Wellington, said available prime office space was "lower than ever", contributing to renewed investor demand.
Tomorrows retail innovations
Once upon a time, an autobot was a Transformer toy and scratch and sniff cards were considered interactive services. Not so these days - tech is getting real and retailers need to stay savvy. A quick look north to Europe and America gives you just a taster of what’s to come.