Stop, shop and roll with the flow

As we go to print, New Zealander’s movements and freedoms are splintered across alert levels in the wake of the tricky Delta variant that emerged unannounced in the community.

Following on from 2020’s challenges, this is naturally impacting the retail sector in all its guises quite significantly as (yet again) business owners grapple with changing protocols and health-related mandates.

In our broader industry tool box, we look at seasonally-adjusted data to see how retail sector spending is tracking in any given financial timeframe, letting it account for expected fluctuations.

There was never an adjustment tool in existence to reflect a global pandemic so, in real terms – how is the retail sector faring after an 18-month whirlwind that will go down in history as transformational, unprecedented and very sobering?

Broadly, and crudely, the retail market has been fractured into winners and losers in the wake of COVID-19’s disruptive presence.

Some sub-sectors of the retail landscape have had an exceptional run. Others have faltered, fallen, regrouped and emerged stronger. Some will not recover.

As specialists in the retail property sales and leasing market, we acknowledge that for many retail businesses – in particular those aligned with hospitality, travel, tourism and CBD retail – the 2020/2021 financial year was more than tough. It was punishing, and for many, the pain continues.

For all the talk about pivoting, being adaptable and thinking outside the usual boxes, reality has bitten hard for a lot of New Zealand businesses.

Earlier this year, we thought some normality was returning, with hopes pinned on the travel bubble with Australia to boost some of our more affected retail and hospo’ sub-sectors. Sadly, COVID’s long tail is proving that we can’t get too comfortable and the breathe, pivot and adapt mentality will be with us all for some time yet.

The first half of 2021 was one of record busy-ness for Bayleys’ retail teams. Those operators looking for new or additional premises recognised there was opportunity in the marketplace to secure good deals on the back of freed up space.

There remains very strong demand for large format and service retail space. There is little to no vacancy in the bulk retail market and minimal inventory for service retail like nail salons and hairdressers.

The fashion sector has struggled due to consumers’ ongoing love affair with online shopping, which only strengthened during the height of New Zealand’s pandemic response. Bricks and mortar apparel stores are having to rethink their offerings – both from a stock angle and an added-value/shopping experience stance.

Large-format hospitality has had a difficult time of it, and this has necessitated a rethink of what optimal space, food offerings and staffing levels look like – with closed borders only adding to the headaches around staff recruitment and retention.

To a large extent, the pandemic disruptor has brought landlords and tenants to a new understanding. Landlords now have a better appreciation of how their tenants’ businesses operate, and occupiers can see things more clearly from a landlord’s perspective.

Leases now reflect greater transparency, have some flexibility and include special pandemic-related clauses.

Despite COVID’s disruptions to business, we have seen significant new retail footprint come to the leasing market in the last year or so and there’s more to come.

As examples, Commercial Bay in downtown Auckland opened last year, Ormiston Town Centre in south-east Auckland opened in March and various retail precincts are either planned or underway in the regions.

Bold moves in the face of global uncertainty are to be applauded.

Likewise, neighbourhood hubs and local shopping centres that are aligned with areas of emerging and identified population growth, are attracting occupier attention.

Eyes are turning and wallets are opening to Westgate, Kumeu, Drury, Flat Bush, Pukekohe, Silverdale, Tauranga, Timaru and other regional centres where investment and development is making a mark – and where infrastructural improvements are helping facilitate business.

Supply chain hiccups and fulfilment delays have made trading somewhat unpredictable for those businesses that rely on imported inventory to fill their shelves, but this has shone a light on those innovative, niche New Zealand businesses that are self-reliant to a large extent and able to generate a following and sales off their unique points of difference.

This edition of Talking Shop has opportunity galore for retail operators looking to make their next move.

With a well-connected and cleverly-networked retail leasing presence across New Zealand, Bayleys is here for the retail sector.

Contact us to turn opportunity into reality.

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