Chairman of Smith & Caughey’s, Tony Caughey, speaks to the Herald about the announcement of proposal of the closure of Smith & Caughey's. Video / Ben Dickens
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
And then there’s the relentless rise of online retailing. Actually, there’s been the relentless rise of online everything, reshaping society at a rapid pace and a deep structural level.
Smith & Caughey’s isn’t the first victim and it won’t be the last.
The owners offered up a mixture of reasons for closing. They mentioned the economic impact of the recession and Auckland’s CBD woes.
There’s no question these things have contributed to and accelerated the demise of many businesses.
But Smith and Caughey’s survived the Spanish flu epidemic and the Great Depression. It wasn’t the cyclical economic issues that killed them.
It is the big structural change in the way people shop that is killing department stores. Unfortunately, they fall into a gap between big malls and small boutique outlets (both of which are also battling).
Department stores offer quality products and great service, they are about the shopping experience, but they struggle to compete online because they don’t have enough scale.
Online shopping has been around since the turn of the century of course, but in the past few years, it has become increasingly dominant. It was accelerated by the pandemic lockdowns. And it has been aided and abetted by the rise of AI (artificial intelligence) and ruthlessly clever social media marketing.
I’ve never bought anything from Chinese web retailer Temu, but any time I search for a product online, it always tops the list. Then, if I dare click, it sends ads relentlessly to my social media feeds for weeks.
Speaking of China, its factories have kicked back into gear with a vengeance in the past 18 months, pouring cheap consumer goods into the world.
For local retailers, it has been, as the cliche goes, been a perfect storm.
I think the shock last week was in realising that the days of the classic department stores – so much a part of 20th-century culture – are now over.
It’s that realisation that the world I grew up in is fading. Okay, part of that is just getting older... I’d better get used to it.
But so many brands, businesses and institutions that once seemed like part of the fabric of New Zealand life are falling away now.
Newshub was another huge shock – and Fair Go, a show I grew up on and which seemed embedded in the public consciousness forever.
I thought Honey Puffs were part of an iconic pantheon of Kiwi cereals that included Weet-Bix, Cornflakes and Ricies. But no, they’re gone.
Brothers Beer is the latest craft brewery and bar to go under.
Last week we learned that Brothers Beer is the latest craft brewery and bar to go under. As well as great beer, Brothers Beer offered some of the best American-style BBQ in the city.
Its exit follows a series of failures in the craft beer sector, which admittedly has had a boom-and-bust feel to it.
I fear there are plenty more closures to come in this recessionary cycle but even as the economy rebalances, businesses will be tested by the oncoming rush of technological and social change.
I haven’t even touched on what AI is threatening to do to the jobs market. It feels like the future as I imagined it as a child in the 1970s and 80s is finally arriving.
It’s taken longer than we thought to get here.
I grew up with the book 1984, the movie 2001, the TV show Space 1999 and the sci-fi comic book 2000AD. The movie Blade Runner was set in the impossibly distant 2019.
So, it’s a bit weird that, after more than 40 years of waiting for robots, flying cars and computers that can talk, it should seem so shocking now.
It strikes me, without getting too morbid about it, that we’re hardwired to think that way.
We maintain healthy cognitive dissonance about our own mortality. We know it is coming. “The future is uncertain and the end is always near,” as Jim Morrison used to sing.
But when the end does come, it is almost always a shock.
The rapid structural change sweeping through the economy may actually offer some opportunity to do things better. AI promises new efficiencies and could offer antidotes to inflation and poverty. It might help solve our energy issues and deal to climate change.
I don’t want to seem completely pessimistic about the future.
But it raises some big questions about how we want to live in the 21st century.
What will we do with our central business districts if they are no longer shopping precincts? I hope they’ll remain places to live and work and socialise.
What will our kids do for a living?
New Zealanders spend a lot of time debating the path through economic cycles. Inflation and recessions are immediate issues with immediate consequences.
We debate Budgets and economic policy like it is sport.
It’s helpful if the Government has some capacity to smooth the pain and disruption of the change that is coming.
Getting the Crown accounts in order and all that fiscal responsibility (that I’ve studiously avoided in this column) isn’t a bad idea.
But regardless of how Governments manage tax or the Reserve Bank times its interest rate cuts, we need to prepare for radical change.
If we don’t, we may find ourselves overwhelmed by much larger technological and economic forces in the coming years.
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If you have a burning question about the quirks or intricacies of economics send it to liam.dann@nzherald.co.nz or leave a message in the comments section.
