Editorial: Retail trade ebbs and flows but mega-malls can be rip tides

Fresh leaves on on the footpaths of Nuffield Street, and little else. Photo / Michael Craig

EDITORIAL

It's clear Westfield Newmarket has thrown some serious shade on some businesses in the area, with once-teeming thoroughfares now deserted and the precinct peppered with empty shops and "for lease" signs.

Scentre Group's newly opened $790 million redevelopment has been widely acclaimed for the world-class shopping experience it offers, while retailers across the street and down the road are less effusive.

As Aimee Shaw writes today reports, "for lease" signs and empty shops have become fixtures on Broadway, Newmarket's main shopping strip, and on side streets such as Nuffield St, which were once known for their bustling shops.

Interestingly, Nuffield St properties are also owned by Scentre Group.

One Nuffield St cafe owner estimates up to 60 per cent of foot traffic on the street has vanished following the construction and opening of Westfield Newmarket. An estimated 10 retailers have closed their shops on Nuffield St in the past six months, including Country Road, Gorman, Barkers, some moving business into the mall, others permanently closing.

One could take the dispassionate, free market, view that shoppers will vote with their feet but - with $790m spent on a big "come hither" wave - it's very hard for a retailer living on the profit/loss margin to compete with a rolling maul.

The Newmarket development was very well publicised and it should not have surprised any business in the area to find itself downstream of this shopping tsunami. Tasca cafe owner Ali Arsan noted as much when he confirmed he had downsized staff and negotiated a small rent reduction in readiness for the mall opening.

Scentre Group also says it has worked "collaboratively" to support tenants adjacent to the mall and that is to be welcomed, although the extent of the assistance is not disclosed, perhaps due to commercial sensitivities.

Retail NZ chief executive Greg Harford said the redevelopment of malls often became a short- to medium-term problem for high street retailers. "A key issue is that landlords tend to continue to demand high rents and annual rent increases, even when foot traffic and sales can be declining."

And there's the rub. Small businesses can be disproportionately buffeted by huge projects which descend from the sky with little heed of the wider impacts on "the little guy".

It's estimated small and medium enterprises make up 97 per cent of New Zealand businesses and are the backbone of our economy, contributing 28 per cent of GDP, paying taxes and employing 30 per cent of the workforce.

Dozens of Albert St businesses have been struggling under the $4.4 billion City Rail Link project, where construction has been going for more than three years and the finish line is still several years away. Victoria St retailers and restaurateurs returned from summer breaks to find their street orange-coned and cordoned into a sheep race which only a masochist would intentionally motor into. Quay St has been locked down by road works for two years.

More support for the backbone of our economy is surely warranted. Surely the Government would prefer businesses continue rather than go bust and need benefits? Surely landlords would rather premises were tenanted and providing some return? Surely councils would rather business zones were teeming with trade rather lapsing into graffiti and litter magnets?

Small retailers need to be very agile indeed to survive in the shadow of a mall or monstrous construction work and those that do, while providing good services and competitive pricing, deserve our support.