2013 Retail Market in NZ

The Retail Market in New Zealand An Analysis 2013
Pre p a re d by John Alber t so n , C EO New Zealand Ret ailer s As s o c i a t i on
M ay, 2 0 13
promoting excellence in retailing
The Retail Market in New Zealand - An Analysis
Introduction
We believe information is the new currency. The environment around us, competition in the market place, consumer shopping/buying behaviours, overseas trends and developments all impact on retail success or failure. In these rather difficult times retailers have to maximise their sales. A better understanding of the market place will, hopefully, lead to more informed decision making and consequently a better share of the consumers available dollars. Today we have the added complexity of a generation or two who will drive the development of a whole new channel the online channel. Does my business need to be there? How do I integrate my physical presence and my online presence to give the consumer a seamless experience with my brand? Over recent years the New Zealand Retailers Association has reviewed available information sources and has brought this information together to paint a picture of the environment we operate in. This report replaces that issued in April 2012. We have added some more information on population as this is one of the key drivers of retail development. We have also introduced a section on the tourism market as this is an expanding sector and retail is one of the biggest recipients of the tourist dollar. We realise the importance of the online space and are waiting on some new information on this area. Once that information is available we will issue a supplementary report. Much of the analysis in this report considers the big picture only. More detailed analysis is available. We would be happy to advise on this. Most data in this report is sourced from Statistics New Zealand. (Visit www.stats.govt.nz.)
New Zealand Retailers Association May 2013
Sources Of Information:
A. Statistics New Zealand
Business Demographic Survey Retail Sales Series Annual Enterprise Survey 2006 Census and subsequent SNZ estimates. Household Economic Survey Tourism Satellite Account
B.
BusinessNZ
Economic Background
C.
Deloitte/National Retail Federation
Table of Contents
Page
Section 1 The New Zealand Economy

1.1 Key Economic Indicators
4
4
Section 2 The Retail Market

2.1 2.2 2.3 2.4 2.5 2.6 Store Numbers Retail Sector Sales Performance & Growth Retail Stock Trends Business Performance Staffing in the Retail Sector Clothing Stores in New Zealand A Case Study
7
7 11 14 14 18 20
Section 3 The Consumer

3.1 3.2 3.3 3.4 Introduction The Two Perspectives 2006 Population Census Population Projections Household Economic Survey (June 2010)
23
23 23 24 26
Section 4 Key Retail Chains by Sector Section 5 The Global Powers of Retailing Top 250 Highlights Section 6 The Tourism Market Section 7 Top Retail Trends 2012 Appendix 1 Industry Descriptions Appendix 2 ANZSIC 2006 vs ANZIC 1996 Reconciliation
27 32 35 37 40 42
Section 1 The New Zealand Economy

1.1 Key Economic Indicators
(Source: BusinessNZ Planning Forecast December 2012)
Executive Summary
Comments: a) The overall global economic growth outlook remains relatively benign. However, the increasing influence of Asia (China) both in terms of exports and demand for protein from its rapidly increasing middle class is positive news for New Zealand exporters over the medium term. b) Patchy growth is the order of the day in New Zealand. The housing market is showing positive signs of life and the Christchurch re-build is starting to gain momentum. c) Employment growth is clearly evident in Christchurch but elsewhere results are flatlining. d) While business and consumer confidence is on the positive side of the ledger, households and businesses continue to take a cautious approach to new investment with debt reduction still a high priority. The household balance sheet is still being rebalanced. e) A low inflationary outlook is keeping interest rates at historic lows with no prospect of increases over the short to medium term. So, for the retailer, this spells out another tough year with every sale being hard won. Stock and margin management will be critical as will resource deployment and staff rostering. Like never before the retailer must deliver what it is that the customer wants. Retailers must consider all of the options online presence, facebook, twitter, email marketing, texting etc., etc. If the customer wants it we must deliver we have given the customer so much choice they are now definitely in the drivers seat. The real game changer is the mobile phone. So if we look ahead what are the experts predicting? How do the various bank economists see the economy shaping up? The latest forward look released by Business New Zealand indicates the following:
GDP % Growth
(Source: ANZ, ASB, BNZ, National and Westpac)
Forecasts: Year Ending Dec 2012 % 2.5 2.5 2.5 Dec 2013 % 3.2 2.7 2.2 Dec 2014 % 3.3 2.6 1.6
Highest Average Lowest
% Change in Inflation (CPI)

(Source: ANZ, ASB, BNZ, National and Westpac
Forecasts: Year Ending Dec 2012 % 1.3 1.3 1.1 Dec 2013 % 2.6 2.2 1.9 Dec 2014 % 3.3 2.7 2.4
Labour Cost Index

(Source: ANZ, ASB, BNZ, National, Westpac)
% Change (Wages & Salaries): Year Ending Dec 2012 % 1.9 1.8 1.7 Dec 2013 % 2.7 2.1 1.6 Dec 2014 % 2.8 2.4 2.2
Unemployment (Household Labour Force Survey)

Unemployment %: Quarter Ending Dec 2012 % 7.0 6.9 6.6 Dec 2013 % 6.3 6.2 6.1 Dec 2014 % 6.2 5.7 5.3
Interest Rates (90 Day Bills)

Period Ending Dec 2012 % 2.8 2.7 2.7 Dec 2013 % 3.5 3.3 3.2 Dec 2014 % 4.8 4.3 3.8
Exchange Rates
a) Australian dollar NZ$1 = Aust cents Dec 2012 0.82 0.79 0.78 Dec 2013 0.80 0.79 0.78 Dec 2014 0.80 0.79 0.78
Highest Average Lowest b) US dollar
NZ$1 = US cents Highest Average Lowest Dec 2012 0.83 0.82 0.81 Dec 2013 0.85 0.81 0.78 Dec 2014 0.76 0.74 0.685
Section 2 The Retail Market

2.1 Store Numbers (Source: Statistics NZ) Total Outlets by Region
Period: February 2012 (Released October 2012) Statistics New Zealand has re-worked the classification system for businesses (ANZSIC) and the numbers below have been produced under ANZSIC 2006 (previously, ANZSIC 1996). These changes have had a significant impact on what is in and what is out in the retail sector demography analysis. For example, we now exclude such sectors as automotive repairs, household appliance repairs, footwear repairs, bakeries and cake kitchens, takeaway food operators and panel beaters to name a selection. On the plus side we now include all of those hardware retail stores that were previously included in the wholesale series.
Regional Council Region Northland Auckland Waikato Bay of Plenty Gisborne Hawkes Bay Taranaki Manawatu/Wanganui Wellington Total North Island West Coast Nelson Tasman Malborough Canterbury Otago Southland Total South Island Total New Zealand Total Outlets (as defined above) 1,115 12,018 2,989 2,111 270 1,076 795 1,555 3,349 25,278 263 444 324 303 4,014 1,674 672 7,694 32,972
% of total 3.4 36.4 9.1 6.4 0.8 3.3 2.4 4.7 10.2 76.7 0.8 1.3 1.0 0.9 12.2 5.1 2.0 23.3 100.0
The five major regions Auckland, Waikato, Wellington, Canterbury and Otago - account for 73% of the countrys retail outlets. Auckland leads the way with well over a third. Relative to the latest regional population estimates the distribution of retail stores compares as follows: % Retail Outlets Feb 2012 Auckland Waikato Wellington Canterbury Otago 36.4 9.1 10.2 12.2 5.1 % Population 2012 Latest Estimate 34.0 9.4 11.1 12.6 4.8
Auckland is a little more over shopped relative to population and, if anything, Wellington is a little under shopped. Christchurch has seen a reduction both in population and store numbers. New Zealand Retailers Association May 2013 7
Outlet Types By Region (selected outlets only)

Source: Statistics New Zealand Period: February 2012 Notes: 1 2 As with the previous table, the table below is based on the new ANZSIC codes (2006). Store classification is based on turnover in the category. For example, if an outlet had 55% of its business in sports goods and 45% in footwear it would be classified as a sports goods store.
Number of Outlets by Region

Supermarkets /Grocery Northland Auckland Waikato B.O.P Gisborne Hawkes Bay Taranaki Manawatu, Wanganui Wellington Total North Island West Coast Nelson Tasman Malborough Canterbury Otago Southland Total South Island Total New Zealand 122 1,232 298 186 33 105 88 169 379 2,612 35 28 28 31 367 141 76 706 Department Stores 9 68 25 19 5 9 6 15 35 191 2 6 3 5 44 22 11 93 Clothing Furniture*** Appliances + Electrical Goods* 57 722 144 107 11 47 37 81 174 1,380 14 32 13 17 215 73 28 392 Chemists **** 37 462 100 80 9 51 33 58 144 974 6 14 17 13 157 66 24 297 Footwear Books, Stationery, Newspapers ** 35 339 92 63 10 30 33 63 121 786 8 10 8 11 110 53 21 221
94 1,501 349 237 30 120 89 149 430 2,999 19 60 30 23 470 242 67 911
56 775 166 132 17 77 50 96 213 1,582 12 24 16 15 232 83 39 421
9 219 55 35 4 16 17 17 80 452 5 11 4 6 80 32 11 149
3,318
284
3,910
2,003
1,772
1,271
601
1,007
(*Includes specialist computer stores) (**Covered by two different ANZSIC codes newspapers and books and stationery goods) (*** Furniture, Floor Coverings, Houseware, Textile Goods Retailing) (**** Includes Pharmaceutical, Cosmetic and Toiletry Goods Retailing) This analysis of outlet type by area considers only eight different categories of store. The full analysis from Statistics New Zealand covers 36 store types this more detailed information is available on request.
The full list of store types is: Supermarket / Grocery Stores Fresh Meat / Fish / Poultry Retailing Fruit and Vegetable Retailing Liquor Retailing Other Specialised Food Retailing Department Stores Clothing Retailing Footwear Retailing Other Personal Accessory Retailing Manchester and Other Textile Goods Retailing Furniture Retailing Floor Covering Retailing Houseware Retailing Electrical, Electronic and Gas Appliance Retailing Computer and Computer Equipment Retailing Other Electrical and Electronic Goods Retailing Sports / Camping Equipment Retailing Toy and Game Retailing Newspaper / Books Retailing Stationery Goods Retailing Entertainment Media Retailing Marine Equipment Retailing Pharmaceutical, Cosmetic, Toiletry Retailing Antique and Used Goods Retailing Hardware and Building Retailing Garden Centre Retailing Flower Retailing Watch and Jewellery Retailing Car Retailing Motor Cycle Retailing Trailer and Caravan Retailing Motor Vehicle Parts Retailing Fuel Retailing Tyre Retailing Non-Store Retailing Commission-Based Buying and/or Selling
Retail Outlets By Store Type

Total New Zealand February 2012 Store Type Number of Outlets 3,317 660 484 941 964 284 3,910 601 186 504 737 482 280 1,149 405 218 1,177 223 642 365 118 292 1,271 910 1,447 437 452 584 1,638 260 101 344 1,182 654 1,497 277 3,985 32,978 % Share % Change on Feb 2011 +0.8 -0.5 +1.3 +3.1 +3.3 -1.4 n/c -0.5 -5.6 -2.5 -1.1 -1.2 -5.1 -3.0 +1.5 +10.7 +2.0 n/c -6.0 +1.4 -13.9 -1.4 +2.2 -5.3 -2.6 -4.3 -3.8 -4.7 -1.3 -8.8 -5.6 +2.1 -1.1 -0.6 +3.1 +1.1 -3.8 -1.0%
Supermarket and Grocery Stores Fresh Meat/Fish/Poultry Retailing Fruit and Vegetable Retailing Liquor Retailing Other Specialised Food Retailing Department Stores Clothing Retailing Footwear Retailing Other Personal Accessory Retailing Manchester & Other Textile Goods Retailing Furniture Retailing Floor Covering Retailing Houseware Retailing Electrical, Electronic & Gas Appliance Retailing Computer & Computer Peripheral Retailing Other Electrical Equipment Retailing Sports/Camping Equipment Retailing Toy & Game Retailing Newspaper & Books Retailing Stationery Goods Retailing Entertainment Media Retailing Marine Equipment Retailing Pharmaceutical, Cosmetic, Toiletries Retailing Antique and Used Goods Retailing Hardware & Building Supplies Garden Centre Retailing Flower Retailing Watch & Jewellery Retailing Car Retailing Motor Cycle Retailing Trailer & Caravan Retailing Motor Vehicle Parts Retailing Fuel Retailing Tyre Retailing Non Store Retailing Commission-Based Buying and/or selling Other Store-Based Retailing n.e.c.* Total All Retail (*n.e.c. not elsewhere classified)
10.1 2.0 1.5 2.9 2.9 0.9 11.9 1.8 0.6 1.5 2.2 1.4 0.8 3.5 1.2 0.6 3.6 0.7 1.9 1.1 0.4 0.9 3.9 2.7 4.4 1.3 1.4 1.8 5.0 0.8 0.3 1.0 3.6 2.0 4.5 0.8 12.1 100.0
Comments
Overall store numbers at 32,978 were 1% down on February 2011 a net loss of 321 stores.
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Number of Outlets
If we look at the store numbers over the last decade we see some interesting changes. The stand out movements are summarised below: 2000 Total Store Numbers 30,160 2012 32,978 % Change +9.3%
The Big Movers:

Motor Cycle Retailing Motor Vehicle Parts Retailing Liquor Retailing Other Specialised Food Outlets Clothing Retailing Footwear Retailing Floor Coverings Housewares Retailing Electrical/electronic/gas appliances Computer/computer Equipment Stationery Goods Retailing Sport & Camping Equipment Watch & Jewellery Retailing Toy & Game Retailing 156 246 676 649 2,570 480 358 208 997 254 249 836 505 172 260 344 941 964 3,910 601 482 280 1,149 405 365 1,177 584 223 +67 +40 +39 +49 +52 +25 +35 +35 +15 +59 +47 +41 +16 +19
The Big Losers:

Fuel Retailing Fresh Meat /Poultry /Fish Retailing Fruit & Vege Retailing Newspapers & Book Retailing Antique & Used Goods Retailing 1,643 764 546 941 1,174 1,182 660 484 642 910 -28 -14 -11 -32 -22
2.2 Retail Sector Sales Performance & Growth

Source: Statistics New Zealand
Long Term Trend

12 Months Total Retail Sales % Change on Prior Index (year 2005 = 1,000) Ending $m Year Dec 2012 70,300 +3.7 1,255 2011 67,800 +4.1 1,211 2010 65,100 +3.7 1,162 2009 62,800 -0.8 1,121 2008 63,300 +0.3 1,130 2007 63,100 +6.2 1,127 2006 59,400 +6.1 1,061 2005 56,000 +6.5 1,000 Note: The above includes all retail categories, including the motor vehicle sector, cafes and restaurants, hotels, accommodation etc.
Comments
1 Over the eight-year period retail sales grew by $14.3b or 25.5% (around 3.5% p.a.).
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Over this same period the All Groups consumer price index demonstrated the following:
Movement In CPI All Groups Year on Year

12 Months Ending Dec 2012 2011 2010 2009 2008 2007 2006 2005 Index % +0.9 +1.8 +4.0 +2.0 +3.4 +3.2 +2.6 +3.2
(2004 = 1,000)
1,194 1,183 1,161 1,116 1,095 1,059 1,026 1,000
Thus, over this period, retail sales have grown in dollar terms by nearly 26% compared with general price rises of just over 19%. The 4% increase in CPI in 2010 includes the increase in GST. How have the various regions of the country performed over the last year or so? Has there been much variability from north to south? 12 Months Ending December 2012 $m 23,848 7,250 7,560 14,206 52,864 9,503 7,936 17,439 70,303 12 Months Ending December 2011 $m 22,976 6,452 7,452 14,283 51,162 8,956 7,697 16,653 67,815
% Change +3.8 +12.4 +1.4 -0.5 +3.3 +6.1 +3.1 +4.7 +3.7
Auckland Regional Council Waikato Regional Council Wellington Regional Council Remainder of North Island Total North Island Canterbury Regional Council Remainder of South Island Total South Island Total New Zealand
Comments
The Waikato and Auckland regions have performed reasonably. Christchurch is making a steady comeback after the earthquakes. Wellington and the remainder of the North Island have been very sluggish.
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Retail Sales - By Sector

12 Months ending December
Category 2012 $m
Supermarket & Grocery Stores Specialised Food Liquor Non Store & Commission Based Department Stores Furniture/Floor Coverings/ Houseware/Textiles Hardware/Building/Garden Supplies Recreational Goods Clothing/Footwear/Accessories Electrical & Electronic Goods Pharmaceutical & Other Store Based Retailing
2011 % 23.7 2.0 1.9 1.2 5.4 2.7 6.9 2.7 5.0 3.8 6.8 62.2 3.9 10.1 14.0 13.0 10.8 23.8 100 $m 16,563 1,329 1,266 837 3,682 1,726 4,553 1,905 3,544 2,704 4,522 42,631 2,672 6,881 9,553 8,207 7,425 15,632 67,815 % 24.4 2.0 1.9 1.2 5.4 2.5 6.7 2.8 5.2 4.0 6.7 62.9 3.9 10.2 14.1 12.1 10.9 23.0 100
16,693 1,378 1,354 851 3,809 1,873 4,859 1,908 3,545 2,643 4,786 43,699
% Change 2012 vs 2011 +0.8 +3.7 +7.0 +1.7 +3.4 +8.5 +6.7 +0.2 n/c -2.3 +5.8 +2.5 +2.4 +3.3 +3.1 +11.3 +2.6 +7.2 +3.7
Accommodation Food & Beverage Service
2,736 7,111 9,847 9,138 7,619 16,757 70,303
Motor Vehicles & Parts Fuel
Total
In the latest year the growth slowed a little (3.7%) compared with what was achieved in 2011 relative to 2010 (5.5%). Last year we had a lift from the Rugby World Cup. Across the various store types there is considerable variability electrical and electronic goods went backwards (-2.3%) but this is likely to be the result of deflation in this store type. The supermarket sector showed only modest growth (+0.8%) and this no doubt reflects the competitiveness of these stores. The focus in the short to medium term is going to be margin management. Retailers will need to retain their competiveness but take every opportunity to improve margin. The necessity for this is underscored by the margin analysis that follows later in this document. The store type classifications used in this analysis are based on the ANZSIC 2006 codes. For the first time we see the appearance of non-store sales as a specific category. This will include all pure play online retailers but it will not include the online sales achieved by retailers with a bricks and mortar presence. Note 1 There are some minor differences in some totals this is due to rounding at the subcategory level. 2 An outline of what stores are in each category follows in Appendix 1.
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2.3 Retail Stock Trends

We have seen how the sales levels have changed over time but how good is the stock management? How have retail stocks varied relative to change in sales performance?
Category Sales 12 Months Ending December 2012 vs. 2011 % +0.8 +3.7 +7.0 +1.7 +3.4 +8.5 +6.7 +0.2 n/c -2.3 +5.8 +2.4 +3.3 +11.3 +2.6 +3.7 Stock % Change End Dec 2012 vs. 2011 % +8.1 +23.4 +1.1 +17.9 +3.1 +6.3 n/c -2.6 +5.3 -4.8 +4.8 -3.3 +0.8 +12.5 +7.8 +5.0
Supermarket & Grocery Sales Specialised Food Liquor Retailing Non Store & Commission Based Retailing Department Stores Furniture, Floor Coverings, Houseware, Textiles Hardware, Building, Garden Supplies Recreational Goods Clothing, Footwear, Accessories Electrical & Electronic Goods Pharmaceutical & Other Store Based Retailing Accommodation Food & Beverage Sales Motor Vehicles & Parts Fuel Total
Comments
In the main, retailers have managed their stocks reasonably well. The increase in stock was slightly ahead of the increase in sales and in fact, was more in line with the sales growth of the previous year. This may have reflected a degree more optimism than the market delivered. There was some variability by store type.
2.4 Business Performance

Statistics New Zealand conducts an annual survey of business performance (Annual Enterprise Survey). The latest results available are for the 2011 year (gathered during 2012). Note:
Some retail categories are not available due to issues of confidentiality. For example, specific data for supermarkets and department stores is not available. Data is, in general, at a level lower than that normally reported by Statistics New Zealand, therefore the details shown must be treated with caution. Definitions of terms used are as follows:a Sales: Closing Stock This is a crude measure of stock turn based on stock valued at cost. For example: Liquor retailing showed total sales of $1,149m and stock at the end of the period of $145m. The ratio calculated is 7.9. Salaries & Wages/Sales - This is the total cost of salaries and wages, including that paid to working proprietors, divided by total income. New Zealand Retailers Association May 2013
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Gross Margin This has been calculated on the basis of sale of goods not further processed, minus purchase of goods for re-sale, divided by sale of goods not further processed. Employee Count Is Based On RME Rolling, monthly employee count. This replaces full-time equivalents (FTE) which has been used in the past. Surplus Before Income Tax - Total income less total expenditure (excluding salaries and wages paid to working proprietors) divided by total income.
d e
The figures are derived from a specific survey. Therefore, the turnover figures will not necessarily be the same as those derived from the retail sales series.
Business Performance Retail Trade and Accommodation

2011 Sales: Closing Stock (stock turn) Salaries/Wages % Sales (%) Gross Margin (%) Income Per Employer ($000) Surplus Per Employer ($000) Return on Equity (%) Return on Total (%) Assets Net Margin (before tax and excluding salaries and wages paid to working proprietors) 10.4 13.3% 26.2 208.2 6.2 17.6% 6.0% 3.0 2010 10.4 13.2% 26.2% 202.0 5.9 17.4% 6.0% 2.9 2009 10.5 13.2% 26.2% 193.9 3.9 12.7% 4.3% 2.0 2008 10.1 12.7% 26.6% 195.4 5.9 19.1% 6.7 3.0
Comments
Over the four years under review, performance across the whole industry has been reasonably consistent. On some measures the 2009 performance was below 2008 but it would appear the necessary corrections have been made in 2010 and this has been sustained in 2011. However, when we look at the bottom line achieved year by year for the last eight years we see the impact of the competitive price driven market:
Net Profit Before Tax As % of Total Income

2011 2010 2009 2008 2007 2006 2005 2004 2003 Margin erosion has been significant. New Zealand Retailers Association May 2013 15 3.0 2.9 2.0 3.5 4.1 4.2 5.2 5.5 6.3
Analysis for 2010 (data gathered during 2011) Sector Sales: Closing Stock (a) Ratio 23.7 21.5 9.9 7.8 5.0 13.1 6.0 4.7 7.3 11.7 6.3 6.7 4.0 5.3 4.4 5.2 5.0 2.8 12.4 7.2 15.7 6.7 12.6 10.4 Salaries & Wages % to Sales (b) % 14.1 11.6 7.0 18.8 16.0 12.2 19.7 22.0 11.5 10.4 12.3 19.5 15.3 12.0 15.2 16.7 18.2 14.6 17.9 16.1 18.1 19.2 13.4 13.3 Gross Margin (c) % 27.7 20.6 20.4 25.8 33.0 29.0 43.3 31.8 21.8 26.9 27.1 36.2 39.0 40.0 45.1 48.9 50.2 48.2 34.9 34.4 45.6 36.1 46.5 26.2 Income Per RME (d) $000 209.7 216.4 463.9 134.4 245.4 400.5 143.6 165.1 326.2 371.8 306.9 157.4 221.9 221.6 161.3 156.7 145.1 227.6 201.2 220.0 160.1 170.1 323.5 208.2 Surplus Per RME (d) $000 0.5 2.8 7.4 (-2.8) (-9.1) 8.8 (-13.6) (-11.1) 2.8 18.7 6.0 2.7 8.9 5.3 6.6 5.3 5.3 50.2 12.4 8.7 16.1 2.3 22.1 6.2
Fresh Meat/Fish/ Poultry Retailing Fruit/Veg Retailing Liquor Retailing Other Specialised Food Retailing Furniture Retailing Floor Coverings Retailing Houseware Retailing Manchester Other Textile Goods Retailing Electrical/ Electric/Gas Appliance Retailing Computer & Computer Peripheral Retailing Hardware & Building Supplies Retailing Garden Supplies Retailing Sport & Camping Equipment Retailing Entertainment & Media Retailing Newspaper/Book Retailing Clothing Retailing Footwear Retailing Watch & Jewellery Retailing Pharmaceutical/ Cosmetics/ Toiletry Goods Retailing Stationery Goods Retailing Flower Retailing Antique & Used Goods Non Store Retailing
Total Retail
Note:
For reasons of confidentiality, supermarket and department store data is combined. These two sectors account for some 46% of regular retail and nearly 30% of all retail. Their absence has a marked impact on the total retail figure above and the comparison with other sectors.
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Net Profit Before Tax As % Of Total Income

Sector Fresh Meat/ Fish/ Poultry Retailing Fruit & Vegetable Retailing Liquor Retailing Other Specialised Food Retailing Furniture Retailing Floor Coverings Retailing Houseware Retailing Manchester and Other Textile Goods Electrical/Electronic/Gas Appliances Computer & Computer Peripheral Retailing Hardware & Building Supplies Retailing Garden Supplies Retailing Sports & Camping Equipment Retailing Entertainment Media/Toys/Games Newspaper Book Retailing Clothing Retailing Footwear Retailing Watch & Jewellery Retailing Pharmaceuticals/cosmetics/Toiletry Goods Retailing Stationery Goods Retailing Flowers Retailing Antique & Used Goods Non Store Retailing Total All Retail Note: * = less than 0.5% (*) = less than -0.5% BE = Break Even 2011 % 0.2 1.3 1.6 (-2.1) (-3.8) 2.2 (-9.1) (-6.6) 0.9 5.2 1.9 1.7 4.0 2.3 4.2 3.4 3.6 22.4 6.2 4.0 9.5 1.3 6.8 3.0 2010 % 2.1 * 0.8 (-2.3) (-3.8) 2.2 (-4.4) 2.7 0.9 3.0 1.4 0.3 6.1 3.1 5.5 1.8 3.0 16.4 6.7 2.5 3.6 2.8 4.7 2.9 2009 % 1.4 1.6 2.4 1.2 (-2.4) 0.8 (-8.1) 1.2 0.5 2.2 (*) (-1.8) 3.8 (-0.9) 2.9 1.3 1.7 9.9 5.9 1.0 * 2.8 4.8 2.0 2008 % 0.9 2.9 3.2 1.7 (-2.3) 0.3 2.6 3.6 4.7 10.4 4.3 BE 0.5 (-1.3) 4.1 3.0 4.8 9.4 5.6 3.4 (-4.4) 3.0 5.1 3.0
Comments
This analysis has been taken to a detailed level and the output should be viewed with caution. The numbers are indicative only and due to small base sizes the sampling error is, in some cases, quite large. The numbers should not be relied upon for any significant decisions. The net profit calculation excludes salaries and wages to working proprietors from the cost side of the equation. Across the past decade we have seen the margin available in the sector shrink. From 6.3% in 2003 we are now down to 3%. The latest year (2011) was slightly better than 2010 which in turn showed a little improvement over 2009 lets hope this is an indicator of improvements to come.
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2.5 Staffing in the Retail Sector Geographic Distribution of Retail Staff

Note: The table below is based on ANZSIC 2006 and ties back into the outlet analysis in an earlier section.
2012
Share Of Outlet Numbers % 3.4 36.4 9.1 6.4 0.8 3.3 2.4 4.7 10.2 76.7 0.8 12.2 5.1 2.0 1.0 1.3 0.9 23.3 100 Staff Numbers 000s 6,120 61,010 17,370 12,220 1,680 6,820 5,060 10,630 21,680 142,590 1,600 27,000 10,820 4,880 2,060 2,950 2,250 51,560 194,150 Share Of Staff Numbers % 3.1 31.4 8.9 6.3 0.9 3.5 2.6 5.5 11.2 73.4 0.8 13.9 5.6 2.5 1.1 1.5 1.2 26.6 100
Northland Auckland Waikato Bay Of Plenty Gisborne Hawkes Bay Taranaki Manawatu/Wanganui Wellington Total North Island West Coast Canterbury Otago Southland Tasman Nelson Malborough Total South Island Total NZ
Comments
Auckland accounts for over 36% of the store numbers but only 31% of staff. This could be a reflection of bigger stores leading to economies of scale or it could simply be greater cost awareness in Auckland leading to fewer staff. Wellington is the reverse of this 11.2% of staff vs 10.2% of store numbers. So if thats the geographic spread how does the staffing level compare with store numbers at a store type level? Once again, this analysis has been undertaken on the basis of the 2006 ANZSIC codes see section 2.1 Store Numbers for the definitions.
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Staff Numbers by Store Type February 2012

Share of Outlet Numbers %
Supermarket/Grocery Stores Fresh Meat, Fish, Poultry Fruit & Vegetable Retailing Liquor Retailing Other Specialised Food Retailing Department Stores Clothing Retailing Footwear Retailing Other Personal Accessory Retailing Manchester and Other Textile Good Retailing Furniture Retailing Floor Covering Retailing Houseware Retailing Electrical/Electronic & Gas Appliance Retailing Computer & Computer Peripheral Retailing Other Electrical & Electrical Goods Retailing Sports & Camping Equipment Retailing Toy & Game Retailing Newspaper & Book Retailing Stationery Goods Retailing Entertainment Media Retailing Marine Equipment Retailing Pharmaceutical, Cosmetic, Toiletries Retailing Antique & Used Goods Retailing Hardware & Builders Supplies Garden Centre Retailing Flower Retailing Watch & Jewellery Retailing Car Retailing Motor Cycle Retailing Trailer & Caravan Retailing Motor Vehicle Parts Retailing Fuel Retailing Tyre Retailing Non-store Retailing Commission-Based Buying and / or Selling Other Store Brand Retailing, n.e.c. Total Number 10.1 2.0 1.5 2.9 2.9 0.9 11.9 1.8 0.6 1.5 2.2 1.4 0.8 3.5 1.2 0.6 3.6 0.7 1.9 1.1 0.4 0.9 3.9 2.7 4.4 1.3 1.4 1.8 5.0 0.8 0.3 1.0 3.6 2.0 4.5 0.8 12.1 100
Staff Numbers 000s

53.6 2.8 2.0 3.2 2.6 17.3 15.7 3.3 0.7 2.1 2.4 1.9 1.1 6.5 1.1 0.5 4.6 0.4 3.1 2.0 0.5 0.7 9.6 1.4 15.9 1.8 0.7 2.5 9.0 1.3 0.1 1.4 8.5 2.6 2.4 * 8.6 194.2
Share Of Staff Numbers %

27.6 1.4 1.0 1.6 1.3 8.9 8.1 1.7 0.4 1.1 1.2 1.0 0.6 3.3 0.6 0.3 2.4 0.2 1.6 1.0 0.3 0.4 4.9 0.7 8.2 0.9 0.4 1.3 4.6 0.7 0.1 0.7 4.4 1.3 1.2 * 4.4 100
Average/ Store (Employee Count)

16.2 4.2 4.1 3.4 2.7 60.9 4.0 5.5 3.8 4.2 3.3 3.9 3.9 5.7 2.7 2.3 3.9 1.8 4.8 5.5 4.2 2.4 7.6 1.5 11.0 4.1 1.5 4.3 5.5 5.0 1.0 4.1 7.2 4.0 1.6 * 2.2 5.9
Note:
* = less than 0.5%
Comments:
Over a quarter of all staff who work in the retail sector do so in the supermarket/grocery store type which numerically accounts for less than 10% of all outlets. The average per
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store in this store type, at 17.4, is low due to the impact of dairies and small grocery stores.
Department stores account for nearly9% of all staff but less than 1% of store numbers.
So what can all of this data tell us? How can we paint a picture of a sector of the market with these numbers? Set out below is a statistical portrait of the clothing retail sector. In reviewing this it needs to be realised that we are not considering all sales of clothing but rather sales through clothing stores. This does not account for clothing sales through outlets such as department stores, sports stores etc.
2.6 Clothing Stores in New Zealand A Case Study(2012 Version)

It is realised that this same case study has been run for the last few years in this document. We have decided to stay with it as it clearly demonstrates how publicly available data can be used to paint a picture of a market. A similar analysis could be done for any other sector.
2.6.1
Numbers of stores / growth

Year Ending Feb 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Number of Clothing Stores 3,910 3,910 3,874 3,938 3,901 3,690 3,518 3,338 3,086 2,811 2,669 2,558 2,570 % Change Year on Year n/c +0.9 -1.6 +0.5 +5.7 +4.9 +5.4 +8.2 +9.8 +5.3 +4.3 -0.5 N/A
From the turn of the century (2000) the number of specialist clothing stores in New Zealand increased from 2,570 to 3,910 an overall increase of 52%. Over this same period total retail outlets (based on the new ANZSIC 2006 classifications) increased from 30,076 to 32,978 an increase of only 10%. (and it should be noted that this is only specialty clothing stores it does not take account of stores selling clothing as part ( less than 50%) of their overall range.)
2.6.2 Number of Stores / Location

We have seen really significant growth in this store type over the past twelve years. Has this growth been uniform across the country or has there been regional concentration?
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Clothing Outlets By Region

% Population 2012 Est No of Stores 94 1,501 349 237 30 120 89 149 430 2,999 19 60 30 23 470 242 67 911 3,910 2012 % Total 2.4 38.4 8.9 6.1 0.8 3.1 2.3 3.8 11.0 76.7 0.5 1.5 0.8 0.6 12.0 6.2 1.7 23.3 100 No of stores 78 906 222 163 15 99 57 116 277 1,933 20 31 24 18 347 142 56 638 2,571 2000 % Total 3.0 35.2 8.6 6.3 0.6 3.9 2.2 4.5 10.8 75.1 0.8 1.2 0.9 0.7 13.6 5.5 2.2 24.9 100 20.5 65.7 57.2 45.4 100.0 21.2 56.5 28.4 55.2 55.2 (-5.0) 93.5 25.0 27.7 35.4 70.4 19.6 42.8 52.1 % Growth 2012 v 2000
Northland Auckland Waikato BOP Gisborne Hawkes Bay Taranaki Manawatu/Wanganui Wellington Total North Island West Coast Nelson Tasman Malborough Canterbury Otago Southland Total South Island Total New Zealand
3.6 34.0 9.4 6.3 1.1 3.5 2.5 5.2 11.1 76.6 0.7 1.1 1.1 1.0 12.6 4.8 2.1 23.4 100
In terms of percentage growth in the number of clothing stores, Auckland leads the way with an increase in store numbers of over 65% over the period ( except for the smallish areas of Gisborne and Nelson). In a region that accounts for 34% of the population, the number of clothing stores has increased from 906 to 1,501. The only area to show negative growth in store numbers was the West Coast, which lost a net one store over the period - from 20 down to 19.
2.6.3 Clothing Stores Retail Sales

In considering the performance of the clothing sector over recent years we have compared it with what we earlier termed regular retail, that is, the retail sector excluding the hospitality and vehicle elements. So how has the clothing sector performed? Note: Under the new classifications, clothing stores are included with footwear and accessory stores. However, as clothing would account for 85% of the category, the movement shown will reflect what is happening with clothing.
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Clothing Stores Retail Sales

Category Clothing/Footwear/Accessories 12 Months Ending: December 2012 December 2000 % Increase Clothing/Footwear/ Accessories $m 3,545.0 1,967.7 80% Regular Retail * $m 43,699.0 25,429.0 72%
(*Total retail excluding accommodation, hospitality, vehicles and vehicle parts and fuel.) The clothing sector has grown a little faster than the total market. When one includes the assumed increase in share of clothing held by department stores etc. clothing, in total, has been a strong performer. With the growth in store numbers over the same period being 52%, the available market per store has improved.
2.6.4 Clothing Stores Staffing

In the year ending February 2012 there were 15,700 staff employed in the specialty clothing sector of the New Zealand retail market. These people accounted for 8.1% of all staff employed in retail (compared with store numbers at 11.9% of the total).
2.6.5 Clothing Stores Benchmarks (2011)

Obviously this is a very competitive market, so what are the key indicators showing? What type of performance is the norm in this sector and how does that compare with the total retail sales? a) Sales: Closing Stock The clothing retail sector ratio was 5.2 essentially this is a crude measure of annual stock turn. This compared with the footwear sector at 5.0 and watch and jewellery retailing at 2.8. Across the whole of the retail sector (including accommodation) the sales: closing stock ratio was 10.4. Salaries/Wages % to Sales In years past we used to consider a staff cost to sales ratio of 10% was appropriate (before the owners drawings). In the 2011 Annual Enterprise Survey clothing stores showed a proportion of sales being spent on wages of 16.7%. This was relatively high compared with the overall retail sector of around 13%. c) d) Gross Margin At 48.9% the gross margin achieved by these stores was very good compared with many other store type categories. Profitability However, in spite of this relatively strong gross margin, the higher staff costs (and higher staff numbers) saw the gross income and surplus per employee fall below market averages. This was reflected further in the net profit to sales achieved. Clothing Stores $000 Income per RME* $156.7 Surplus per RME $5.3 (*RME = Rolling Monthly Employee Count) All Retail $000 $208.0 $6.2
b)
At the net profit to sales level the clothing store sector managed a result of 3.4% This was an improvement on the previous year of 1.9%.
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Section 3 The Consumer
3.1 Introduction - The Two Perspectives

We can look at the consumer from two different perspectives: 1 Who they are, where they live, what they do, the shape of their family, how much they earn etc? All these kinds of details are available from the 2006 Census of Population (Statistics New Zealand). The census will be updated this year (it was originally scheduled for 2011 but was delayed for two years due to the Christchurch earthquake). Some details have been projected forward by Stats NZ and these are used in the analysis below. The second perspective is their shopping habits what they buy, how many buy it and how often do they buy? This data is available from the Household Economic Survey conducted every three years by Statistics New Zealand.
We will have a brief look at both of these data sets so that readers gain an understanding of what is available. Both data sets are too big and too comprehensive to enable any detailed analysis here.
3.2 The 2006 Census

The official Census of Population and Dwellings is conducted by Statistics New Zealand every five years. The most recent data relates to the 2006 census. (Note - 2011 census was postponed because of the Christchurch earthquakes. It will now be held this year) The Census is a complete count of population and dwellings and includes such variables as: Age and sex Ethnicity Marital status Education Work Income Families and households Access to telephones, internet, fax Access to motor vehicles All of this data is available by region Regional Council area or down to Territorial Authority Area. This data is tremendously valuable for identifying the make up of an area. - Who are my catchment area customers and what do they look like? If the target market for a particular store can be clearly stated it is possible to identify how many of these people would live within a reasonable distance from the store location. How much would each of these people need to spend to make the store viable? Do we need to get 80% of the available customers spending 80% of their expenditure on the category? Unlikely - the statistics will give us a test of reasonableness for our business objectives.
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The Association is happy to work with members on the analysis of census data (visit www.stats.govt.nz). In between the census years Statistics New Zealand produce estimates and projections which are valuable for forward planning. There are a series of assumptions and conditions under which these projections are calculated we dont propose to go into the detail here but they are available for those who are interested. We have set out below a few thoughts based on the latest projections. If any member wants to go into more detail we are more than happy to give what guidance we can.
3.3 Population Projections:

Over the 20 year period from 2011 to 2031 the total population of New Zealand is expected to increase from 4,405,200 to 5,194,600. This is an increase of nearly 800,000 people or 18%. Considering the time period this is not huge growth. Therefore, it is important that we look at the data by the other variables available. How will the numbers change by age group? Age Group 0 -14 years 15-39 years 40-64 years 65 years and over 2011 894,500 1,499,000 1,424,700 587,100 2031 934,800 1,669,200 1,483,800 1,106,700 % Change +4.5% +11.3% +4.1% +88.5%
This is a dramatic shift in the population composition. If we look at it another way the shift becomes even more apparent: Age Group 0 - 14years 15 -39 years 4064 years 65 years and over Total 2011 % 20.3 34.0 32.3 13.4 100% 2031 % 18.0 32.1 28.6 21.3 100%
These movements are really significant the much talked about aging population is a reality. By 2031 over one person in five will be 65 or older. What will this do to our target market? Where are these people located now and where are they projected to be in 20 years time? The table below considers this question: % Population 65 years+ Northland Auckland Waikato Bay of Plenty Gisborne Hawkes Bay Taranaki Manawatu-Wanganui Wellington Tasman Nelson Marlborough 2011 % 16.3 10.6 13.7 16.2 12.6 15.3 16.0 15.5 12.5 16.0 15.6 18.8 2031% 27.7 16.9 22.2 25.4 23.0 25.6 26.2 25.1 20.2 29.1 26.4 31.6
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West Coast Canterbury Otago Southland Total New Zealand
15.8 15.1 14.5 15.2 13.3
28.8 24.5 22.5 25.4 21.3
Across the whole country the 65 and over group accounts for 13.3% of the population currently and in 20 years time this group will represent 21.3% of the population. While this is quite dramatic in itself some areas will see an even more pronounced impact Marlborough will have nearly a third of its population in the 65+ group whereas in Auckland it will only be half this level. This has a significant impact on planning where do we need what outlets in 10 20 years time? While these numbers reflect the proportion of each areas population that will be in this senior age group what about the absolute numbers? Area Northland Auckland Waikato Bay of Plenty Gisborne Hawkes Bay Taranaki Manawatu Wanganui Wellington Tasman Nelson Marlborough West Coast Canterbury Otago Southland Total 2011 % 4.4 26.8 9.7 7.6 1.0 4.0 3.0 6.1 10.4 1.3 1.2 1.5 0.9 14.4 5.2 2.5 100% % of 65+ age group 2013 % 4.3 30.1 9.5 7.3 1.0 3.7 2.6 5.4 9.9 1.4 1.2 1.4 0.9 14.5 4.6 2.2 100%
When we view the analysis this way we see another impact at play the shift in total population. While Auckland only has 16.9% of its population in the 65+age bracket in 2031, this city still accounts for over 30% of the total group. This simply reflects that Auckland overall is growing at a faster rate than the rest of the country. We need to look at these figures closely and determine what exactly these changes will mean for our business. There is no one size fits all analysis of population we need to understand our target population and look closely at what is happening to them within our catchment area. Population change will have more impact on a retail business than any other economic variable. When the results from the 2013 Census are published we will be able to get down to much greater detail not only will we be able to look at age by area by population but we will also be able to consider family structure, income, ethnicity etc. We are more than happy to assist with detailed analysis of specific areas.
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3.4
Household Economic Survey (June 2010)

In addition to the census, Statistics NZ also conducts a survey every three years which looks at the expenditure habits of New Zealand households. The most recent Household Economic Survey was conducted in 2009/10. The 2012/13 survey is currently in the field and results from the expenditure side will be available in November this year. (Field work started in July 2012 and will be completed by June 2013). This is a significant base of information as it tells us, on average, how many customers we are likely to have. For example, there might be 20,000 people (say 8,000 households) in our area. The Household Economic Survey will tell us the proportion of these likely to be buying in our category each week. Example: Area = 8,000 homes % buying each week = 20% = 1,602 homes Average weekly expenditure on category = $40 Our maximum market is $(1,600 x 40) per week = $64,000 per week
What proportion of this would we need to make our business viable? Some examples of categories are as follows:
% Homes Reporting Expenditure % 92 99 99 31 50 42 18 97 28 45 74 Average Weekly Household Expenditure $ 20.30 77.50 177.70 7.00 25.20 3.20 3.40 37.30 5.50 6.00 6.30
Fruit & Vegetables Grocery food Total all food Beer Clothing Newspapers/magazines Books Electricity Plants, flowers & garden supplies Pharmaceutical products Cleaning products & other household supplies
These are just a few examples of the data types available. While some individual categories have relatively high sampling error, the data does give some indication of market size. To project to total market values we calculate as follows: e.g. Fresh Fruit & Vegetables Total Homes % Homes Buying In An Average Week Average Weekly Expenditure Total Weekly Expenditure 1.5 million 92% = 1.380 million $20.30 ($20.30 x 1.338m) = $28.0m/week
Further details are available on request or go to www.stats.govt.nz/people/workincome/household-economic-survey.
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Section 4 Key Retail Chains by Sector

Who Is Who In New Zealand Retail?
Set out below is a listing of the key companies in each on the major sectors of retail. It is not exhaustive but we believe it covers the major players: Supermarkets Farro Fresh Food Foodstuffs (Auckland) Foodstuffs (Wellington) New World, PAKnSAVE, 4 Square Foodstuffs (South Island) Fruit World Moore Wilson Ltd Nosh Foodmarket Progressive Enterprises Ltd } Countdown, Supervalue Arthur Barnett Ballantynes Farmers H & J Smith Kirkcaldie and Stains Smith and Caughey 3 Wise Men Amazon Annah Stretton Baby City Baby Factory Ballentynes Fashion Central Barkers Bendon Billabong Bras N Things Calvin Klein Jeans Caroline Eve Charlie & Me City Chic Cotton On Group Country Road Cue International David Lawrence Decjuba Dotti Esprit Ezibuy Forever New Glassons Gregory Hallensteins Hartleys Identity J K Kids Gear Jacqui E Jay Jays Jean Jones Jeans West Just Jeans K & K Fashions New Zealand Retailers Association May 2013 Kimberleys Kookai Kooky Fashion Lippy Louis Vuitton Marcs Merric Max Fashions Meccano Menswear Millers Retail Munns Menswear Nicholas Jerymn North Beach Pagani Clothing Paris Texas Peter Alexander Portmans Postie Plus Pumpkin Patch Ricochet Rip Curl Rodd & Gunn Ruby Shanton Staxs Supr Suzanne Grae T & T Childrenswear Tarocash Temt The Department Store Untouched World Valley Girl Veronika Maine Vincent 27
Department Stores
Clothing Retailers
Karen Walker Kate Sylvester Kathmandu Keith Matheson General Merchandise Briscoes Farmers K Mart The Warehouse
Witchery Working Style Zambesi Zebrano
Footwear Retailers Andrea Biani Athletes Foot Banks Group Dowsons Ecco Footlocker Footloose Hannahs Hush Puppies Novo Shoes Furniture Retailing Bedpost Beds R Us Big Save Danske Mobler Early Settler Freedom Furniture Furniture City Furniture Court Floor Covering Retailing Carpet Court Harrisons Carpert One Flooring First Domestic Hardware and Housewear Acquisitions BM Pacific Briscoes Bunnings Carters Colourplus Guthrie Bowron HomePlus ITM Lighting Direct Lighting Plus Living and Giving Mastertrade Mico Mitre 10 Nood Placemakers Plumbing Plus Plumbing World Redcurrent Resene Paints Stevens Homewares Storage Box Tile Warehouse Toolshed Flooring Xtra Forhomes The Design Store Harvey Norman Hazelwoods Norman Ross McKenzie and Willis North & South Group Smith City Target Mi Piaci Number One Shoes Overland Rubi Shoes Scarpa Shoe Clinic Shoe Connection Smiths Sports Shoes Wildpair Ziera
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Fabrics/ Softgoods Arthur Toye Fabrics Bed Bath and Beyond Bed Bath and Table Curtain Studio Harvey Furnishings Domestic Appliances/Electronics/Phones 2 Degrees Appliance Connexion Appliance Network Dick Smith Electronics EB Games Godfreys Harvey Norman J B Hi Fi L.V. Martin & Sons Sport and Camping Equipment Avanti Plus Bike Barn Bivouac Outdoors Canoe & Kayak Champions of the World Cheapskates Ltd Dwights FCO Hamills NZ Toy and Game Retailing Educational Experience Stores Toyworld Newspaper, Books and Stationery Retailing Kikki K NZ Post Office Max Office Products Depot Paper Plus Photographic Stores Camera House Kodak Express Pharmaceutical, Cosmetic and Toiletry Retailing Amcal Care Chemists Hardys Health 2000 Healtheries LOccitane New Zealand Retailers Association May 2013 Life Pharmacy Lush Pharmacy Brands Radius The Body Shop Unichem 29 Photo Warehouse Smiggle Take Note Typo Warehouse Stationery Whitcoulls Group Hunting and Fishing Macpac NZ Pro Fishing and Shooting Rebel Sport Sportspower Sportsworld Stirling Sports The Golf Warehouse Jaycar Electronics Leading Edge Communications Newbolds Noel Leeming Group Norman Ross Smiths City Telecom Retail Stores The Good Guys Vodafone Household Linens Knit World Lewiss Spotlight The Linen Cupboard
Watch & Jewellery Retailing Christies Jewellers Michael Hill Jewellers Nationwide Jewellers Pascoes Partridge Jewellers Flower Retailing Interflora Automotive Fuel BP Caltex Gull Tyre Retailing Beaurepairs Bridgestone Firestone Other Food Retailers Burger King Carl Jr Dominos Foodco NZ Hollywood Bakery McDonalds Restaurants Pita pit Liquor Retailing Glengarrys Lion Nathan Liquor King Vehicle Parts Repco Super Cheap Auto Optical OPSM Specsavers Visique Mag &Turbo Warehouse Liquorland Super Liquor The Mill Liquor Save Restaurant Brands Retail Food Group Robert Harris Subway The Mad Butcher Wendys Goodyear Tonys Tyre Service Mobil Z Energy Teleflora Stewart Dawsons Silvermoon Showcase Jewellers Walker & Hall
Rural Combined Rural Traders PGG Wrightson Costume Jewellery Bling Diva Equip Lovisa RD1
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Accessories Strand Bags Sunglass Hut Pets Animates CareVets Four Seasons Pet Essentials Sunglass Style
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Section 5 Global Powers of Retailing Top 250 Highlights

Source: Deloittes publication: Global Powers Of Retailing 2013
Retail industry rebounds in 2011/12

Despite difficult economic conditions, the global retail industry continued to grow, building on the rebound in growth that started in 2010.Sales-weighted,currency-adjusted,retail revenue rose 5.1% to US$4.271 trillion for the worlds Top 250 retailers in fiscal 2011, building on the previous years 5.3% growth. More than 80% of the Top 250 retailers (204 companies) posted an increase in retail revenue. Most of the companies experiencing declining sales were in that position due to sale of the business or restructuring rather than a deterioration of their core business. The Top 250 maintained a healthy 3.8% composite net profit margin in 2011, matching the industrys 2010 result. Nearly all of the companies who disclosed their bottom line results (181 /194 reporting companies) operated at a profit in 2011. However, fewer companies saw an increase in net profit margin in 2011 following 2010s improvement in profitability. Composite return on assets was up slightly to 5.9% from 5.8% in 2010. The average size of the Top 250 in 2011, as measured by retail revenue, topped US$17B. The threshold to join the Top 250 in 2011 was US$3.7 billion. From a global perspective, in the past year we have seen the economies of United States, China, Japan, India, and Brazil slow down as the impact of the European crisis has reached across the globe. There continues to be considerable uncertainty in these economies as we head into 2013.
Top 250 quick stats, 2011

$4.271 trillion aggregate sales of Top 250 $17.085 billion average Top 250 retailers $3.721 billion minimum sales required to be on Top 250 list in 2010 5.1% - composite year-over-year retail sales growth 5.4% - 2006-2011 composite compound annual growth rate in retail sales 3.8% - composite net profit margin 5.9% - composite return on assets 23.8% - percent of Top 250 retail sales from foreign operations
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Economic Concentration of Top 10 Retailers 2010

Top 250 rank 2011 retail sales (US $m) 2011 retail sales growth 2011 net profit margin 2011 return on assets
Company
County of Origin
No. of Countries
1 Wal-Mart 2 Carrefour 3 Tesco 4 Metro 5 Kroger 6 Costco 7 Schwarz 8 Aldi 9 Walgreen Co 10 Home Depot Top 10* Top 250*
US France UK Germany US US Germany Germany US US
446,950 113,297 101,574 92,905 90,374 88,915 87,841 73,375 72,184 70,395 1,237,719 4,271,171 29%
6.0% -9.8% 5.8% -0.8% 10.0% 14.1% 5.8% 3.7% 7.1% 3.5% 4.4% 5.1%
3.7% 0.5% 4.4% 1.1% 0.7% 1.7% n/a n/a 3.8% 5.5% 2.9% 3.8%
8.5% 0.8% 5.5% 2.2% 2.5% 5.8% n/a n/a 9.9% 9.6% 6.2% 5.9%
28 33 13 33 1 9 26 17 2 5 16.7 9
Top 10 share of total
Walmart now has more than 10% of the total revenue of the Top 250. Carrefour managed to hold onto the No 2 slot in spite of a decline in sales. Similarly, Metro held No 4 spot in spite of a sales decline. Costco moved into position 6 and Aldi took position 8. The Top 10 now account for 29% of the revenue of the Top 250.
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2012 Global Retail Industry Trends

1) We are in the middle of a consumer revolution. The collision of the physical and virtual worlds is fundamentally changing consumers purchasing behaviour. Consumers are seeking an integrated shopping experience across all channels. Failure to deliver puts the retailer at risk of becoming irrelevant. Mobile devices (phones and tablets) are the game changers. 2) The retail paradigm has shifted from a single, physical connection point to a multipronged approach that crosses both physical and digital channels. 3) To stay competitive in this ever-evolving landscape it is imperative for retailers to deliver a seamless customer experience across all channels and provide the right service and product at the same time. Specifically, a retailer must develop an integrated strategy that aligns talent, physical space, processes, marketing and merchandising to meet consumer demands. 4) A robust strategy must include a) A strong vision of the experience the customer desires across all channels. b) A nimble operating model that can adapt as the retail environment changes. c) A deep understanding of how to support the vision through inventive digital solutions and retail technologies such as playbooks to operationalize the omni-channel strategy. 5) Mobile commerce is an important tool for many retailers. It must be extended beyond being an online sales tool to a tool that drives meaningful connections between the brand and the consumer. 6) Retailers must align the business with the customer and not the technology flexibility is key. 7) If retailers are to innovate they should start with three key areas. a) New Talent Strategies..position talent as brand ambassadors, equip them with smart phones and teach them to be technology savvy, empower them to use Facebook, Twitter, or text messaging to connect with customers. b) Change The Physical Space.. evolve the physical space from being the primary point of contact to one of many points of contact, embrace the virtual environment as a connection point to the brand from anywhere at any time, transform the physical space to a compelling customer experience instead of a place to transact, and evaluate the real estate strategy as the need for large physical space may be minimised by the influence of virtual. c) Emerging Solutions embrace technology and be an early adopter, embrace the customer experience and support sales associates in delivering desired service models, use retail time data to provide relevant, real-time promotion to further personalise the shopping experience. 8) Continually evaluate all of the above and be prepare to change to meet the changing consumer. The consumer has become a pre-purchase researcher and a post-purchase commentator. The consumer and the market will continue to evolve.
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Section 6 The Tourism Market

Summary results - 2012 (Stats NZ)
Tourism plays a significant role in the New Zealand economy in terms of the production of goods and services and the creation of employment opportunities. Tourism expenditure includes spending by all travellers, whether they are international, resident householders, or business and government travellers. International tourism expenditure includes spending by foreign students studying in New Zealand for less than 12 months. Key results for the year ended March 2012 are: Total tourism expenditure was $23.4 billion, an increase of 2.4 percent from the previous year. International tourism expenditure increased 1.6 percent ($149 million) to $9.6 billion and contributed 15.4 percent to New Zealands total exports of goods and services. Domestic tourism expenditure increased 3.0 percent ($397 million) to $13.8 billion. Tourism generated a direct contribution to GDP of $6.2 billion, or 3.3 percent of GDP. The indirect value added of industries supporting tourism generated an additional $9.7 billion for tourism, or 5.2 percent of GDP. The tourism industry directly employed 119,800 full-time equivalents (FTEs) (or 6.2 percent of total employment in New Zealand), a decrease of 0.7 percent from the previous year. Tourists generated $1.3 billion in goods and services tax (GST) revenue. Overseas visitor arrivals to New Zealand increased 4.4 percent in the year ended March 2012, driven largely by visitors to the 2011 Rugby World Cup. Key events that influenced tourism activity in the year ended March 2012 included the hosting of the 2011 Rugby World Cup, the impact of the devastating February 2011 earthquake in Christchurch, ash from the Chilean volcano disrupting air travel, and the ongoing effects of the global financial crisis. Tourism Satellite Account: 2012 does not separately identify the impact on tourism expenditure at both a domestic and international level for these events. Tourism Satellite Account: 2012 incorporates the new industry classification, Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06), which better represents the current economy. This has resulted in a change in the composition of tourism industries and commodities, and has led to revisions to expenditure and employment measures throughout the official time series back to 1999.
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Tourism Expenditure by Type of Product:

In the year ending March 2012 total tourism expenditure reached $23.4b which was an increase of just under 3% compared with the previous year. The composition of the expenditure was as follows:
Accommodation Services Food and Beverage Serving Services Air Passenger Transport Other Passenger Transport Retail Sales fuel and other automotive products Retail Sales other Education Services Other Tourism Products GST Paid On Purchases By Tourists Total Tourism Expenditure
2012 $m 2,064 2,900 4,165 2,400 2,744 5,119 662 2,039 1,302 23,394
2011 $m 2,053 2,813 4,033 2,422 2,571 5,020 645 2,002 1,290 22,848
If we combine fuel, automotive and other retail sales together we reach a total of $7.9b or just over a third of the expenditure by tourists (both domestic and overseas tourists). It is really important that everyone in the retail sector understands the role played by retailers in the tourism market it is not just about the jet boats and bungy jumping activities shopping is still a critical part of the tourists activities. The retailers strategy needs to incorporate the domestic and overseas tourist both groups offer long term opportunities. Obviously, the domestic tourist is close by but we shouldnt overlook the long term possibilities of the overseas tourist. If we get it right here there are future prospects from our website after the tourist returns home. These people now offer the potential for repeat business. A supplementary report will be published later in the year highlighting the specific categories of retail that contribute most to these retail figures. As a strategic initiative it makes total sense for retailers and other providers of tourism goods and services to work together. When one thinks of the American theme park that has a real focus on merchandise why cant we do that here via business co-operation?
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Section 7 Top Retail Trends 2012

From a variety of sources we have identified a number of trends that retailers need to consider as part of their planning. This is not an exhaustive list but it does highlight a number of issues that keep recurring across a range of material. 1 The Consumer Has Changed and, we believe, changed forever. 1.1 The consumer has lost his/her appetite for debt and is now living much more within their means. There has been a reduction in credit card debt and hire purchase debt (and fewer finance companies to borrow from). The consumers have been enticed to improve their savings activity KiwiSaver. The consumer is a little unsure of the future and where everything is heading. Will I need some cover for a rainy day?
1.2 1.3
All of this has resulted in a much more risk averse consumer with better managed spending and savings habits. They have re-balanced their household balance sheet and in the foreseeable future we will have a more restrained consumer. 2 Price vs Value There appears to be a move from straight price offers to price offers linked to brands. That is, the offer is becoming more about value and less about cheap. We expect this to continue. Retailers will need to give real thought to the brands they offer. Brands will need to match the aspirations of the stores target market. Exclusivity of brands will give the retailer a point of difference and will limit the consumers opportunity to undertake price comparisons across competing stores and channels. 3 Technology smart phones, tablets, and whatever comes next We are seeing significant changes in consumer behaviour, linked to developments in mobile technology in particular. In the coming years we will see this trend accelerate. Already we have a whole range of applications available (not necessarily in New Zealand). e.g a) Price comparisons it is now possible to read the bar code on a product and see what prices are being charged for that product by a range of outlets in the local vicinity. Credit/debit card on the phone - trials are already underway using near field communication to process contactless transactions on the phone rather than a contactless card. Using either bar codes or QR codes we can now assemble an order (as a consumer) send it to a retailer, pay for it on-line and wait for the order to be delivered. Peer Review we can now try on clothes at the retail store, take 360 photographs, send them via phone to a friend and get a second opinion.
b)
c)
d)
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These are some of the future technology applications. Butwhat of the on-line channel itself? What is likely to eventuate? Currently the on-line market accounts for around 5% of retail sales in New Zealand. This compares with nearly 6% in Australia, nearly 8% in the US and over 9% in the UK. It is easy to be dismissive of this on the basis that if only 5% is on-line, 95% must still be with the traditional bricks and mortar channel. The key statistic is that nearly half of New Zealand adults made at least one on-line purchase in the last year and, on average, they purchased through this channel three times. How hard would it be to imagine this average of three purchases per year shifting to six (still only once every two months)? This could take the share of market from 5% to 10%. Are we at a tipping point? We are of the view that the on-line channel is a critically important part of the future retail market. All retailers must seriously consider this possibility as part of their strategic review. One commentator identified the following eight critical trends: 1 2 3 4 5 6 7 8 Global competition will drive up service standards. Companies must maintain service standards in the face of the need for speed. Firms must learn to use the increased transparency brought by social media to their advantage. Companies must use new sources and types of data to rethink the way they track and personalise their service. Good employees will remain fundamental to good service but with technology as an enabler. More firms will outsource aspects of customer service to new kinds of specialists. The rise of the mass affluent and other customer segments will force customers to find new product or service niches. Customers expectations, including the purpose of the store, are evolving with new technology.
(Source: A BDO Global Report capturing the views of 479 Business Leaders worldwide).
No matter which trend theories you subscribe to there are a few facts that are inescapable: The customer has changed and is more risk averse. Technology is going to change consumer behaviour: social media phone applications consumer connectivity the on-line channel Significant points of difference that are valued by the customer will be critical if you dont want to be fixed in the price end of the market. More than ever before you must know and understand your customers and deliver what they want. It is their shop, not yours.
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For those of you who are really observant you will have realised that these last couple of pages are the same as those in last years publication. It is our view that the key trends havent changed the thing that has changed is the speed with which change is occurring. The online market is now at closer to 6% (from 5%) and the rate of growth of this channel is outstripping traditional retail. We are waiting for a couple of new reports to be published and once this data is to hand we will produce a report that has its focus on the online channel.
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Appendix 1 - Industry Descriptions

ANZSIC06 Retail Classifications
An entity is included in an industry based on its predominant activity in terms of sales. For example, a petrol station will sell petrol and diesel, but it may also sell car parts and grocery items. The store will be classified to the fuel retailing industry if most of its sales come from the sale of fuel. Data published for 15 industries, which are defined as follows:
ANZSIC06 industries, class codes, and descriptions for the Retail Trade Survey (RTS) RTS industry and description used in published ANZSIC06 class and description tables G1110 Motor vehicle and parts G391100 Car retailing G391200 Motor cycle retailing G391300 Trailer and other motor vehicle retailing G329100 Motor vehicle parts retailing G392200 Tyre retailing G1120 Fuel G400000 Fuel retailing G1210 Supermarket an grocery stores G411000 Supermarkets and grocery stores G412100 Fresh meat, fish and poultry G1221 Specialised food retailing G412200 Fruit and vegetable retailing G412900 Other specialised food retailing G1222 Liquor G412300 Liquor retailing G1311 Furniture, floor coverings, houseware, textiles G421100 Furniture retailing G421200 Floor coverings retailing G421300 Houseware retailing G421400 Manchester and other textile goods retailing G422100 Electrical, electronic, and gas G1312 Electrical and electronic goods appliance retailing G422200 Computer and computer peripheral retailing G422900 Other electrical and electronic goods retailing G423100 Hardware and building supplies G1313 Hardware, building, and garden supplies retailing G423200 Garden supplies retailing G424100 Sport and camping equipment G1321 Recreational goods retailing G424200 Entertainment media retailing G424300 Toy and game retailing G424400 Newspaper and book retailing G424500 Marine equipment retailing G1322 Clothing, footwear, and accessories G425100 Clothing retailers G425200 Footwear retailing G425300 Watch and jewellery retailing G425900 Other personal accessory retailing G1330 Department stores G426000 Department stores G427100 Pharmaceutical, cosmetic, and G1340 Pharmaceutical and other store-based retailing toiletry retailing G427200 Stationery goods retailing G427300 Antique and used goods retailing G427400 Flower retailing G427900 Other store-based retailing nec
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G1350 Non-store and commission-based retailing
H2110 Accommodation H2120 Food and beverage services
G431000 Non-store retailing G432000 Retail commission-based buying/selling H440000 Accommodation H451100 Cafes and restaurants H451200 Takeaway food services H451300 Catering services H452000 Pubs, taverns, and bars H453000 Clubs (hospitality)
Note: Nec = not elsewhere classified
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Appendix 2 ANZSIC 2006 vs ANZIC 1996 reconciliation
Categories in 1996 but not 2006

Bakeries & cake kitchens Take-away food outlets Automotive repairs Household appliance repairs Footwear repairs Panel beaters Milk vending
Categories not in 1996 but in 2006

Hardware stores Those previously classified as wholesalers are now included as retailers.
Non-store retailing Commission-based buying and/or selling
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2013 Retail Market in NZ

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2013 Retail Market in NZ

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The Retail Market in New Zealand An Analysis 2013

Pre p a re d by John Alber t so n , C EO New Zealand Ret ailer s As s o c i a t i on

promoting excellence in retailing

The Retail Market in New Zealand - An Analysis

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

Deloitte/National Retail Federation

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

Section 1 The New Zealand Economy

Section 2 The Retail Market

Section 3 The Consumer

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

Section 1 The New Zealand Economy

Highest Average Lowest

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

% Change in Inflation (CPI)

Highest Average Lowest

Labour Cost Index

Highest Average Lowest

Unemployment (Household Labour Force Survey)

Highest Average Lowest

Interest Rates (90 Day Bills)

Highest Average Lowest

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

Highest Average Lowest b) US dollar

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

Section 2 The Retail Market

The Retail Market in New Zealand - An Analysis

Outlet Types By Region (selected outlets only)

Number of Outlets by Region

56 775 166 132 17 77 50 96 213 1,582 12 24 16 15 232 83 39 421

9 219 55 35 4 16 17 17 80 452 5 11 4 6 80 32 11 149

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

Retail Outlets By Store Type

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

The Big Movers:

The Big Losers:

2.2 Retail Sector Sales Performance & Growth

Long Term Trend

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

Movement In CPI All Groups Year on Year

1,194 1,183 1,161 1,116 1,095 1,059 1,026 1,000

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

Retail Sales - By Sector

Accommodation Food & Beverage Service

2,736 7,111 9,847 9,138 7,619 16,757 70,303

Motor Vehicles & Parts Fuel

New Zealand Retailers Association May 2013

The Retail Market in New Zealand - An Analysis

2.3 Retail Stock Trends

2.4 Business Performance

The Retail Market in New Zealand - An Analysis

Business Performance Retail Trade and Accommodation