RETAIL PREVAIL

Image Courtesy of Flo & Frankie

New Zealand has long been the domain of small retailers, a peaceful little shopping haven with a variety of New Zealand owned and operated boutiques and chains. But overseas giants are threatening our retail environment - the entry of Topshop, quickly followed by H&M and Zara was touted as the end of local brands (namely Glassons), and now it is reported that a slew of other overseas retailers are eyeing us up. 

While traditionally, large international brands overlooked New Zealand due to our geographic isolation and the relatively high cost of operating here, they increasingly see New Zealand as a lucrative new market. So how are Kiwi retailers responding? And is this the end of New Zealand fashion retail as we know it? 

According to a report from CBRE, over 50 international brands have picked New Zealand as the location for their next expansion. These brands view the Pacific as an emerging market, and while many brands have been in Australia for a while, the spotlight has fallen on New Zealand more recently, due to our untapped consumer potential. While the fast fashion giants landed first, they are not the only ones planning to make the trip down-under. CBRE’s report specifically points to mid-range and specialist clothing brands as the most likely segments to enter New Zealand. Additionally, rumours are rife that David Jones will be opening a large new store in the Westfield complex in Newmarket - a direct competition to Smith & Caughey’s Newmarket presence.

Max has been a mid-priced mall fixture in the New Zealand retail market for years, and aren’t letting the presence of international competitors ruffle their feathers. Simon West, the managing director of Max, has noticed significant changes in the retail market in recent years, but not solely resulting from the increasing internationalisation of our market. “The changes are occurring in two ways,” explained West. “Firstly, there is the increased focus in online and digital and secondly, there is the growing presence of international competitors which is affecting us, but only in a very localised way.” According to West, the internationalisation is happening in two areas of the fashion industry - the fast fashion sector and the luxury sector. While Max is traditionally positioned between these two as a mid-priced brand, “the changes in digitalisation and the increasing popularity of disposable fast-fashion as well as luxury items has meant we have modified to keep up.” 

“We’re in a good area coming from a mid-priced position because now we offer more entry-level priced items which appeal on a fast-fashion level, as well as more exit-level priced items, for consumers who are looking for something that feels more like a luxury product. We have also adopted more multichannel strategies, blending online and social media to reach customers.” But there have been changes to bricks and mortar too, with malls now pulling ahead of stand alone stores regarding foot-traffic and sales revealed West. “We’ve seen a shift in the mall environment. Some malls have increased their performance, and chased on-trend food offerings and popular retailers, which make them better destinations, and improves our stores’ performance within them. On the other hand, some malls have fallen behind, not updated food offerings, and the stores within them are weaker as a result.” While the presence of brands like H&M and Zara have added competition in particular areas, the effect has been localised to those malls. “We look at these stores, like Zara at Sylvia Park, as just a single store to compete with, they aren’t competing with us for all of New Zealand, just the customers in that specific location.” 

Flo & Frankie have been expanding all over Auckland, with a mixture of pop-up stores, permanent physical stores and their online and social media presence. The launches of overseas brands have not affected their business, according to Fashion buyer and marketing manager, Ruby Conyngham. “We’re not in the same market, so aren’t in direct competition, and we aren’t trying to compete,” explained Conyngham. “When Zara and H&M arrived, there was a lot of hype, but no real change to our business.” While they are appealing to consumers for different reasons, and operating on a vastly different business model, Conyngham suspects there will be a positive effect on the New Zealand market due to the presence of these brands which may spill over to Flo & Frankie. “Having larger fast-fashion brands here gets people thinking about trends more, and opens the New Zealand market up to overseas trends which otherwise might not get attention from consumers here. It’s good to have that international exposure because it means we can be more risky with our buying. At the moment, we work six months behind the overseas trends, but now that the larger, international brands are introducing the trends, we can have more fun as consumers are processing trends faster.” 

Conyngham admits that there are challenges to this approach “We do have a slower turnaround time, it’s harder for a small New Zealand retailer to get garments made or sourced garments than the large brands.” For small Kiwi retailers, the presence of a large international retailer may be intimidating, but Conyngham has plenty of sage advice from her years of growing the Flo & Frankie brand. “New Zealand retailers shouldn’t try to compete with larger corporates on price, it’s impossible for us to do that. Instead, we need to find what we do best - whether it is customer service or quality - and be competitive with that. Positioning is also important, Flo & Frankie is a small, family-run business, although many customers don’t realise that. We try to make sure our customers know who we are, and realise that we are a New Zealand business. Combined with our high-quality products, this separates small businesses like us from large corporates.”

Olivia Vincent, the owner of Muse Boutique, has similarly not noticed a change in the retail environment thus far. While Zara and H&M are operating in an entirely different sphere to Muse, which is a small luxury boutique with international brands and their own cashmere line, Vincent said that the arrival of David Jones in Newmarket’s 277 Westfield would bring changes to her business. “Newmarket would be even more of a shopping destination,” explained Vincent. “Hopefully they won’t be stocking the same brands like us, but I do have a long relationship with my suppliers, so I don’t think that would happen.” The challenge for Vincent is pricing; “A larger company might make 50,000 cashmere sweaters at once, so they can charge less, but we make small quantities so charge a higher price. Some people point that out and go online to find things cheaper, but some of them understand and want to support a local business. All our customers are our friends, and that’s our strong point.” With increased internationalisation, Vincent said “everyone needs to focus on their brand and aesthetic. Supplier exclusivity is also very important.”