Shoppers at a Westgate supermarket on the first full day of Auckland's second lockdown. Photo / Sylvie Whinray
Delegates paid up to $770 each to attend New Zealand's largest one-day conference of the year for property consultants, bankers, lawyers, landlords, syndicators and real estate agents.
Around 300 people gathered yesterday for the Property Council's annual retail conference at the Aotea Centre, where big-gun speakers held forth.
Council members paid $458-$539 and non-members $645-$770 to listen to Costco Australia and New Zealand managing director Patrick Noone, ASX-listed Accent Group chief executive Daniel Agostinelli, ex-Reserve Bank governor Dr Alan Bollard and Dr Figen Ulgen, head of marketing and insights at Woolworths, Kiwi Property chief executive Clive Mackenzie and a team who worked on the new $1 billion Commercial Bay.
That lineup was chosen by the council headed by Leonie Freeman at the event run by the Council of Retail Property, whose chairman is Campbell Barbour.
Speakers were picked for their experience, expertise and insights and they didn't fail to deliver, taking the audience into the future to see what's coming in retail and the pandemic's possible longer-term impacts.
Christian Hawkesby, Reserve Bank assistant governor, said it was unusual to hold a conference of that size because in many other countries, that would not be possible due to the pandemic.
Delegates came from CBRE, ASB Bank, Simpson Grierson, Kiwi Property, Stride, Oyster, NZ Retail Property Group, Bunnings, Barfoot & Thompson, Scentre Group, Tinline Property, Colliers International, Stride, BSA Law, Buchan Group, Tauranga Crossing, AMP Capital, Match Realty and RCG.
So, what did all those delegates hear?
Costco's Noone revealed how the world's second-largest retailer after Walmart wouldn't open next year, as he said last June. Instead "first half of 2022, before June 30" was the new target date.
He also revealed precisely what Costco looked for when it hunted for property, the formula behind its success, further plans to expand within New Zealand and Australia and talked about Covid's influence.
Accent Group was introduced as having annual sales of around A$1b with a big network of shops here and in Australia. Agostinelli, beamed in digitally from Australia, said: "We've gone from zero stores 13 years ago to now over 550 stores, approaching 600 and employing 6000 team members so it's been a hell of a ride."
Timberland, The Athlete's Foot, The CAT, The Trybe, Pivot, Platypus, Skechers, Hype DC, Vans and Dr Martens are some of Accent's big names.
Market capitalisation of the company stands at around A$1b "and we hope that will continue. We're very happy with our progress in New Zealand and we've put in a general manager which is a first for us," Agostinelli said.
He recounted buying Stylerunner and said it was "no secret" that it had been in trouble "and we've had the business for seven months but happy to share we're already profitable and we'll be opening stores very soon".
A new Melbourne store is due to open soon, Agostinelli told the conference. Aspirations were to grow the women's sportswear and activewear specialist.
Hype DC was also expanding in New Zealand and Agostinelli also cited children's store The Trybe as another focus for growth: "We're starting to see good signs. There's a worldwide trend for kids dressing up more and mum and dad wanting kids to wear brands which are well known."
Pivot also had growth opportunities in New Zealand "and we will open 15 of these stores in Australia by June 30 because we can grow this rapidly".
Accent's digital arm had a standalone team dedicated to online sales "and we see enormous growth. We invested here early. This business allows us to maintain share and grow a true omnichannel."
A strong infrastructure had been built to achieve growth and the current database had around seven million people: around five million were active, having spent money in the last six months and the other two million "we're working on to continue to engage".
The Hero application for digital sales had been introduced with seven features for staff and customers to interact directly. It showed what customers had been browsing through, product cards and invited customers into stores, Agostinelli said.
It also showed the business what customers were looking at and was "innovative and had been tested for three to four months in Australia".
Accent was moving to accelerate its digital sales: "We're very optimistic about the future and what we can do to move forward."
Asked whether he saw retail or digital growing, he said both were key to Accent's future. Asked about the lockdown and opening stores, he said 23 new stores were opened during Covid.
Asked if Accent was using more warehouse space, Agostinelli said "definitely".
Auckland University's Dr Johnny Chan from the business school's Department of Information Systems and Operations Management gave all a glimpse into the future where cars, roads, buses and hospitals were "smart", leaving people to relax more by not having to drive their vehicles but at the same time enjoying more access to information.
Perhaps the most important "smart" device of all, he indicated, was a transparent toilet which gave an on-the-spot analysis of all its user needed to know.
Woolworth's Dr Figen Ulgen told how marketing had changed over the years from leaflets, television and print to the age of big data and digital marketing.
By 2025, worldwide data is forecast to grow 65 per cent to 175 zettabytes with as much data residing in the cloud as in data centres, she said.
She cited Uber as a retailer harnessing big data, saying it had eight million users, 1b Uber trips and operating in 66 countries and 449 cities. Big data analytics for Uber could detect surge pricing, fake rides, fake cards, fake ratings, estimated fares and driver ratings, Ulgen said.
Uber had been "born in the cloud" and she cited UberFresh, UberRush and UberChopper as new businesses.
Starbucks was her second example, "not born in the cloud" but enjoying 100 million transactions a week in 31,000 stores globally. Starbucks was an example of a business harnessing big data with eight million rewards members. Starbucks chose store locations based on predicting success and she noted corner sites.
Her third example was Ikea as a business "harnessing big data" and again not born in the cloud. Customers could try a piece of furniture in their homes without buying it via 3D scanning and the use of Apple's augmented reality tool, she noted.
Nike was her fourth example, which she said was again "not born in the cloud" but was harnessing big data, selling popular products using predictive analytics startup Celect, consumer data analytics firm Zodiac and computer vision company Invertex.
Targeted data "mashups" was another marketing trend, Ulgen said, citing information from a weather channel for customers of hair product Pantene.
Around 70 per cent of retail buying decisions were made before people entered a store, Ulgen said. The buyer journey took the path from to awareness to consideration and then decide.
Ulgen warned that with big data came big responsibility and said "private should mean private", big data holders needed to be transparent "and tell customers what they were going to do with the data", should not cross boundaries and be creepy or nosey and ensure underlying data was not biased on for example gender or race.
Dr Alan Bollard, former Reserve Bank governor and now Infrastructure Commission chairman, told delegates it was too early to tell about Covid's effects on consumer spending patterns.
The pandemic had a big effect on retailing, with a lot of consumer spending now being poured into home renovations, landscaping and elective surgery, "a significant change in consumption".
The impact on CBDs and for owners of commercial property could be big, especially office attached to retail, Bollard warned.
"Occupiers are now working on the assumption of much less space required," he said.
Some businesses could cut space by up to 30 per cent, he said.
Financial pressures might hit the housing and mortgage market, some small and larger businesses might not be able to service loans "and we need to realise it will take some time to come through", he said citing leases of five to 10 years.
"Ultimately there will be a drop in demand for leases," he said of physical space needs. People will buy more services "less things".
Are we going to see more Amazon-type vertical integrated" businesses "and direct delivery systems?" he asked. "What changes could this mean for housing and urban location?"
The Reserve Bank's Christian Hawkesby said New Zealand "was very fortunate this big shock hit us when we were well-positioned" with inflation in the target range and the economy stable.
Covid was unlike other crises in this country's history because it was primarily a health crisis with government officials in the lead "and the key response was to put our economy into recession to survive. That's something none of us has experienced in our lifetimes".
Globally, central banks had said forecasting was too difficult and the best they could do is outline scenarios of how economies could track.
Alternative monetary policy tools could be introduced to keep interest rates low, Hawkesby said.
"We're in the 'not as bad as our worst fears' scenarios."
The economy had contracted by 12 per cent, the biggest movement in 160 years but not as bad as the 20 per cent economists picked in March this year, Hawkesby said.
"The fact we've got a big room here not social distancing is unique internationally. There's nowhere else in the world this is happening. Things are starting to feel normal," Hawkesby said, citing strong economic indicators emerging.
Yet New Zealand's economy remained difficult to read. Spending was switching from overseas holidays to home improvements. Up to 150,000 extra people were here during the winter months, unable to leave New Zealand. And they spent money all during that time, he said.
Around 1.5 million people received wage subsidies and tens of thousands got mortgage deferrals, he noted.
Sectors like agriculture were suffering labour supply difficulties and risks to the economy included a second or third Covid wave sweeping other countries, particularly our trading partners, Hawkesby warned.
"We're in the mindset of getting prepared for other ways we can continue to support the economy," he said, citing lower cost of funds for banks so they could lower lending rates for homes and businesses to ensure steady credit flows.
Clive Mackenzie of Kiwi Property talked about global retail trends, saying the pandemic had accelerated the rate of change.
Our retail sector was better placed than many overseas to weather Covid-19, he said.
Many of the top-performing shopping destinations have bounced back and remained buoyant, he said. Nor is this country oversupplied with shops, having only a quarter of the retail area per head of population compared to the United States and half Australia's.
"There are opportunities out there for everybody if you're brave enough to take them."
Nicola McArthur of Precinct Properties, Georgie Clatworthy of Match Realty and Marion Emmanuelle of AvroKO talked about Commercial Bay and its aim to be a world-class waterfront destination on a par with the best gateway cities in the world.
The vision was to push boundaries, particularly with design, so public spaces have no doors, no centre court, conference-goers heard.
The Property Council's next event is its national awards, which should have been announced by now. But in a theme all too familiar at yesterday's conference, they are also delayed because of Covid.
The awards will be announced on November 12.
Demand for bonds may well stay strong, but there's a catch.