Versace will soon open in Auckland. Photo / Getty Images
Versace will soon open in Auckland. Photo / Getty Images
More than 15 international brands have opened their first stores in this country this year, and there are more set to arrive before Christmas.
Culture Kings, SC Luxury, Alexander McQueen, Burberry and Costco are just some of the companies that have already opened.
The wait is now on for the likes of Costco, Versace and Ikea to follow suit in the near future, marking a major expansion in the country's retail options.
But why have all these brands decided to pull the trigger on New Zealand stores now, given that many have already been in operation for decades?
Bodo Lang, an associate professor of marketing at the University of Auckland, tells the Front Page podcast that with Covid more under control many companies are now preparing for the return of tourists.
"We're slowly seeing the return of international but also domestic tourists and particularly cruise ships," says Lang.
"This is one driver for these international brands, but the other one is obviously that New Zealanders are also coming out of hibernation a little bit."
While fans have been calling for these brands to come to the local market, they do arrive after a tough few years for local retailers that have been toiling away under shifting Government restrictions over the course of the pandemic.
Lang says that some of the brands entering the market will undoubtedly make things harder for local retailers by increasing competition.
"Large brands like Ikea and Costco will have an impact on the competitors in the New Zealand market ... Companies retailing furniture in the localities where Ikea has a physical presence will be impacted. But if you're tucked away in the South Island in Invercargill or Dunedin, there will be a lesser impact."
The impact also won't be equal across all brands entering the local market.
"The impact of a company like Versace will be much more limited. They really aim at a different market, which is still very, very small, so their impact on New Zealand retailers or even manufacturers of luxury goods will be much, much smaller."
New Zealand already has a range of luxury stores, often centralised in certain areas where they sit alongside other high-end brands.
Asked whether there's even enough business available in New Zealand's low-wage economy for these brands to make enough money, Lang says that making a profit often isn't their only objective.
"I often wonder about how many luxury items you would need to sell just to make the rent on Queen Street or wherever you're located," says Lang.
"I wouldn't be surprised if they're not running at large profits - certainly over the last two years when it would've been really hard to sell anything in the luxury segment."
Lang says that as tourists return, these fortunes might turn around. However, the stores are still serving a valuable purpose in the meantime.
"Sometimes brands are sufficiently motivated just to be present, and it comes down to who else is in the market already."
These brands don't like to see their competitors occupy the limelight alone and therefore ensure that they're also present in the same areas.
International brands might be flocking to New Zealand, but there's no guarantee that they'll all survive.
Major brands like Planet Hollywood and Hard Rock Cafe have historically tried to establish a foothold in the local market but ended up failing here.
Lang says that the success of companies in the local market will largely depend on how well the brand is suited to the local target market.
"When I look at brands like Planet Hollywood and Hard Rock Cafe, they've got a brand identity that clearly reflects their origin. And I just don't think there's a sufficiently large target market in New Zealand. There aren't enough consumers desperate for these sorts of brands."
Lang says the added problem is that everything these companies offer Kiwis could get elsewhere.
"Yes, there's a bit of extra decoration in these types of stores, but ultimately they'll fulfil the aims of many other similar chains."
Looking at the brands that have entered the market in the last year, Lang says survival will ultimately depend on how well they integrate into the local market.
"I think brands like Costco and Ikea will integrate quite nicely into New Zealand, but other brands might find a limited target market and some just don't have a unique selling proposition."
The question now is which ones survive and which follow other failed stories out of the country.
• The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am.
