Industry Snapshot for...

Industry Snapshot for Auckland

The Retail Sector

October 2011

Prepared by:

Susan Fairgray

Economist

Social and Economic Research Team

Research, Investigations and Monitoring Unit

Auckland Council

Contents

Auckland Retail Sector in a Nutshell .......................................................................................................................1

Introduction..............................................................................................................................................................1

Definition and Data Sources ...............................................................................................................................1

Gross Regional Product…………………………………………………………………………………………………………………………………… .3

Employment ............................................................................................................................................................4

Businesses ..............................................................................................................................................................7

Growth 2000-2010...............................................................................................................................................7

Firm Size Structure..............................................................................................................................................8

Retail Sectors ........................................................................................................................................................10

Clothing, Footwear and Personal Accessories Retailing ..................................................................................12

Department Stores Retailing .............................................................................................................................14

Hardware, Building and Garden Supplies Retailing..........................................................................................14

Motor Vehicle and Parts Retailing.....................................................................................................................16

Selected Retail Sector Location ........................................................................................................................17

Spatial Location of Retail ......................................................................................................................................20

Current Distribution ...........................................................................................................................................20

Growth 2000-2010.............................................................................................................................................21

Retail and Population ............................................................................................................................................22

Output and Employment ...................................................................................................................................22

Spend ................................................................................................................................................................24

Foreign Ownership in New Zealand’s Retail Sector .............................................................................................25

Global Trends in Retail..........................................................................................................................................27

Company Structures and Retail Commodity Chains.........................................................................................27

An Increased Focus on Sustainability ...............................................................................................................27

Online Shopping................................................................................................................................................27

Future of Large Format Retail and New Retail Spaces ....................................................................................28

Economic Projections to 2031...............................................................................................................................29

Employment ......................................................................................................................................................29

Total Output and Value Added..........................................................................................................................29

Auckland Economy Growth...............................................................................................................................29

Retail in the Rest of New Zealand.....................................................................................................................29

Retail and Population ........................................................................................................................................29

Future Retail Development ...............................................................................................................................30

Conclusion.............................................................................................................................................................32

Auckland Retail Sector in a Nutshell

• Retail contributed $2,982.5 million (1995/96

prices) to Auckland’s gross regional product

(GRP) (6% of GRP), with an average output of

$41,600 per employee. Auckland’s retail sector

has one of the highest productivity premiums

among all sectors when considered against

national retail employees.

• In 2010, retail trade was Auckland’s second

largest employment sector, with 60,810

employees (9.9% of employment).

• The largest shares of retail employment were in

supermarkets and grocery stores; clothing,

footwear and personal accessories retailing; and

pharmaceutical and other store-based retailing.

• Retail grew by 6,180 employees (+11.3%) in

Auckland between 2000 and 2010, with growth

spread across a range of sectors.

• In 2010, Auckland had 11,704 retail businesses

(6.5% of businesses).

• The largest number of retail businesses were in

pharmaceuticals and other store-based retailing;

clothing, footwear and personal accessories

retailing; specialised food retailing; and

supermarkets and grocery stores.

• Auckland grew by 2,060 retail businesses

between 2000 and 2010, equating to an average

annual growth rate of 2.0%, slower than the

economy overall (2.5%).

• Approximately one-third of New Zealand’s retail

employment is within small to medium sized

enterprises (SMEs) and 51% in large firms

(100+ employees). It has become more

concentrated into large firms over the last

decade.

• Retail employment is geographically pervasive

but also has distinct concentrations of activity in

a hierarchy of centres and employment areas

across Auckland. The largest retail locations by

employment include Albany, Wairau Park,

Glenfield, Westgate, Henderson, New Lynn, St

Lukes, the CBD, Newmarket, Sylvia Park,

Botany, Manukau and the Airport.

• In 2010, over half of Auckland retail employees

were in growth centres. A further 28% of retail

employment was in business areas.

• The largest share of retail employment growth

occurred in town and sub-regional growth

centres; production and distribution and ‘other’

business areas. Generally, growth centres had a

larger quantum of growth, although grew slower

than business areas.

• The 49.1 retail employees per 1,000 Auckland

residents was below that in the rest of New

Zealand. Meanwhile, the retail GRP output of

$2,043 per capita in Auckland was above that of

the rest of New Zealand.

• On average, Auckland households spend more

than households elsewhere in New Zealand,

ranging from 2% above Wellington households

to 22% above households in the rest of the

North Island (less the Wellington and Auckland

regions).

• In 2009, 28% of New Zealand’s retail

employment was in firms with some level of

foreign ownership. There is limited evidence to

suggest this share is increasing.

• Retail employment in Auckland is forecast to

grow by 10% (+8,797) between 2007 and 2031,

occurring at a progressively slower rate.

• Productivity is forecast to increase in Auckland’s

retail sector, with value-added per employment

expected to grow by 44% to 2031. Part of this

will be enabled through Auckland’s unique

spatial structure where each worker will be able

to serve a larger share of households and

spend.

1

Introduction

The retail sector has a large impact on Auckland’s spatial

economic structure and urban form. It is a major driver of

how the city expands and influences the distribution of

activity in other sectors. Patterns of retail development

also have a large influence on households’ accessibility

to goods and services, and therefore, enablement. This

occurs through their travel and time efficiency as patterns

of retail development determine how far people have to

travel and the number of trips required to meet their

needs.

Retail is largely driven by domestic consumption and is

constantly evolving in its character and form. This is

reflected through changing retail formats, with New

Zealand generally lagging international trends by a

decade. Auckland as New Zealand’s largest market is a

key retail hub where a broad range of retail activity is

supported within a complex spatial structure.

This report1 provides a comprehensive snapshot of the

structure of Auckland’s retail sector in 2010; outlines the

forecast situation to 2031; and identifies global trends in

retail.

Definition and Data Sources

Retail trade “includes units mainly engaged in the

purchase and on-selling, commission based buying, and

commission based selling of goods, without significant

transformation, to the general public”2.

A range of data sources are used in this report. Each has

its own merits. Where possible, the most appropriate data

source was used:

1. Gross Domestic Product3 – This is taken from

Infometrics’ national and regional quarterly GDP

1 This report is a summary of information from the

technical report Auckland Council (2011). Retail in Auckland, prepared by the Retail, Investigations and Monitoring Unit, May 2011. 2 Australian Bureau of Statistics/Statistics New Zealand

(2006). Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006. 3 Gross Domestic Product is the total market value of all

final goods and services produced within a country in a given period of time (usually one year). This is also equal to the sum of the value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time.

series from 2000 to 2010 in 1995/96 constant

prices.

2. Employment and Geographic Units – The

Statistics New Zealand’s Business Demographic

Survey 2000 to 2010 is based on the Statistics

New Zealand Longitudinal Business Frame

(LBF) and gives an annual snapshot (as at

February) of the structure and characteristics of

New Zealand businesses. The series covers

economically significant individuals, private and

public sector enterprises that are engaged in the

production of goods and services in New

Zealand.

3. Economic Projections to 2031 – The

Economic Futures Model4 provides projections

of employment, value-added and total output

across 48 industry sectors in Auckland to 2031.

4. Estimated Population – The Statistics New

Zealand Sub-National Estimated Population

statistics (June 1996 to June 2010) use a 2006

base year and also account for the undercount5

within the Census Usual Residents population.

5. Retail Spend – The Statistics New Zealand

Retail Trade Survey estimates the retail trade by

category within Auckland and New Zealand.

Table 1 identifies the broad sub-sectors within the retail

sector and the activities within each sub-sector.

Differences exist between the classification systems used

for retail employment data, retail spend categories and

the activities used to categorise the retail sector as a

whole for GDP estimates.

Employment data uses the 2006 classification structure

outlined in Table 1. However, GDP and retail spend data

use the broader 1996 classification structure, which

would capture other activities across a range of other

sectors in the 2006 classification structure.

4 Market Economics Ltd and Auckland Council (2011).

Auckland Region Economic Futures Model. 5 This often includes some people overseas during the

Census and some people within groups (eg: homeless people) difficult to capture within the Census.

2

Retail sub-sector Retail activities

G391100 Car Retailing

G391200 Motor Cycle Retailing

G391300 Trailer and Other Motor Vehicle Retailing

G392100 Motor Vehicle Parts Retailing

G392200 Tyre Retailing

G400 Fuel Retailing G400000 Fuel Retailing

G411 Supermarket and Grocery Stores G411000 Supermarket and Grocery Stores

G412100 Fresh Meat, Fish and Poultry Retailing

G412200 Fruit and Vegetable Retailing

G412300 Liquor Retailing

G412900 Other Specialised Food Retailing

G421100 Furniture Retailing

G421200 Floor Coverings Retailing

G421300 Houseware Retailing

G421400 Manchester and Other Textile Goods Retailing

G422100 Electrical, Electronic and Gas Appliance Retailing

G422200 Computer and Computer Peripheral Retailing

G422900 Other Electrical and Electronic Goods Retailing

G423100 Hardware and Building Supplies Retailing

G423200 Garden Supplies Retailing

G424100 Sport and Camping Equipment Retailing

G424200 Entertainment Media Retailing

G424300 Toy and Game Retailing

G424400 Newspaper and Book Retailing

G424500 Marine Equipment Retailing

G425100 Clothing Retailing

G425200 Footwear Retailing

G425300 Watch and Jewellery Retailing

G425900 Other Personal Accessory Retailing

G426 Department Stores G426000 Department Stores

G427100 Pharmaceutical, Cosmetic and Toiletry Goods Retailing

G427200 Stationery Goods Retailing

G427300 Antique and Used Goods Retailing

G427400 Flower Retailing

G427900 Other Store-Based Retailing n.e.c.

G431 Non-Store Retailing G431000 Non-Store Retailing

G432 Retail Commission-Based Buying and/or Selling G432000 Retail Commission-Based Buying and/or Selling

G Retail Trade G Retail Trade

Souce: Statistics New Zealand, Business Demographic dataset.

G427 Pharmaceutical and Other Store-Based Retailing

G412 Specialised Food Retailing

G421 Furniture, Floor Coverings, Houseware and

Textile Goods Retailing

G422 Electrical and Electronic Goods Retailing

G423 Hardware, Building and Garden Supplies

Retailing

G424 Recreational Goods Retailing

G425 Clothing, Footwear and Personal Accessories

Retailing

G391 Motor Vehicle Retailing

G392 Motor Vehicle Parts Retailing

Table 1. Retail sub-sectors and activities within the 2006 Australia New Zealand Standard Industrial Classification System

3

$41,597

$79,292

$32,035

$66,366

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

Retail Total

Tota

l ou

tpu

t p

er

em

plo

yee

Auckland Rest of New Zealand

Source: Infometrics Ltd and Statistics New Zealand.

Gross Regional Product

In the year to June 2010, retail contributed $7,986.3

million6 (6%) of New Zealand’s GDP, making it the eighth

largest sector. Auckland contributed 37.3% of this, above

its share of national retail employment (31.5%). This

suggests Auckland retail is more productive than in the

rest of New Zealand. Part of this is due to higher

productivity in Auckland generally.

Retail contributed $2,982.5 million to Auckland’s gross

regional product (GRP) (also 6% of GRP). The average

Auckland retail employee contributed $41,600 of GRP.

This is below the Auckland average ($79,300). Yet, when

considered against retail employees nationally,

Auckland’s retail has one of the highest productivity

premiums among all sectors (29.9% above the rest of

New Zealand). Part of this occurs through the Auckland

regional effect in general, but is likely to be greater for

retail given the importance of a larger market in

supporting a greater amount and scope of retail activity.

6 This is in 1995/1996 NZD prices.

Retail GRP grew by 3.3% on average over the last 10

years, faster than the Auckland economy overall (2.6%).

This increased retail’s share of GRP, which has also

occurred in retail nationally. Retail growth broadly follows

the direction of economic growth overall. Since 2008,

Auckland retail experienced negative annual GRP

growth, in line with the rest of the economy, but becoming

less negative over the last year. In the long-term,

Auckland retail has grown more than both the Auckland

economy as a whole and retail in the rest of New

Zealand.

National productivity has increased across the last

decade and is heightened in Auckland, and even further

in Auckland’s retail sector. This is seen in faster output

per worker growth in Auckland retail than in the Auckland

and national economies overall. Retail trade has also

grown at a faster rate in New Zealand’s other main city-

regions, Wellington and Canterbury

Figure 1. Productivity differentials between Auckland and the rest of New Zealand, 2010

4

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10

An

nu

al p

erc

en

tage

ch

ange

in

GR

P

Year ended

Retail trade Total economy

Source: Infometrics Ltd and Statistics New Zealand.

Figure 2. Annual retail and total GRP growth in Auckland, 2000-2010

Employment

In 2010, retail trade was Auckland’s second largest

employment sector, with 60,810 employees (9.9% of

Auckland’s employment). Auckland contains 31% of New

Zealand’s retail employment – slightly lower that its share

of employment overall (32%).

The largest shares of retail employment were in:

• Supermarkets and grocery stores

• Clothing, footwear and personal accessories

retailing

• Pharmaceutical and other store-based retailing.

Retail in the rest of New Zealand shares the same key

retail sectors as Auckland. When supermarkets and

grocery stores are excluded, the structures become more

similar as the rest of New Zealand has a substantially

larger share of retail employment in supermarkets and

grocery stores than Auckland.

5

Retail sector

Employment ShareNet

change

Annual

average

growth

rate

%

change

Net

change

%

change

Motor vehicle retailing 2,800 5% -1,160 -3.4% -29.3% -660 -19.1%

Motor vehicle parts retailing 1,140 2% 200 1.9% 21.3% -80 -6.6%

Fuel retailing 2,240 4% -1,300 -4.5% -36.7% -510 -18.5%

Supermarket and grocery stores 14,170 23% 1,160 0.9% 8.9% -510 -3.5%

Specialised food retailing 4,310 7% 1,240 3.5% 40.4% 80 1.9%

Furniture, floor coverings, houseware and textile goods

retailing 2,780 5% 140 0.5% 5.3% -450 -13.9%

Electrical and electronic goods retailing 3,160 5% 1,310 5.5% 70.8% -290 -8.4%

Hardware, building and garden supplies retailing 4,540 7% 500 1.2% 12.4% -870 -16.1%

Recreational goods retailing 3,030 5% -230 -0.7% -7.1% -440 -12.7%

Clothing, footwear and personal accessories retailing 8,760 14% 3,020 4.3% 52.6% -810 -8.5%

Department stores 5,390 9% -390 -0.7% -6.7% -850 -13.6%

Pharmaceutical and other store-based retailing 7,740 13% 1,540 2.2% 24.8% -430 -5.3%

Non-store retailing 680 1% 150 2.5% 28.3% 90 15.3%

Retail commission-based buying and/or selling 30 0% -45 -8.8% -60.0% 5 20.0%

Retail trade total 60,810 100% 6,180 1.1% 11.3% -5,690 -8.6%

Total economy 611,510 92,590 1.7% 17.8% -33,660 -5.2%

Source: Statistics New Zealand, Business Demographic dataset, 2000, 2008 and 2010.

2010 2000-2010 2008-2010

Growth 2000-2010

Retail grew by 6,180 employees (+11.3%) in Auckland

between 2000 and 2010, equating to an average annual

growth rate of 1.1% (compared to 1.7% for the Auckland

economy overall). Growth was spread across a range of

retail sectors, with the largest contributors being clothing,

footwear and personal accessories retailing,

pharmaceutical and other store-based retailing, electrical

and electronic goods retailing, specialised food retailing

and supermarket and grocery stores. Meanwhile,

substantial employment declines occurred in fuel retailing

and motor vehicle retailing. Retail employment declined

across nearly all activity during the last two years as the

sector experienced the effects of the economic recession.

Retail grew faster in the rest of New Zealand7 (1.5%) than

Auckland (1.1%) over the last decade. However, it

declined in the last two years in both areas, and to a

greater extent in Auckland.

7 This refers to New Zealand less the Auckland region.

Table 2. Employment and employment growth by retail sub-sector in Auckland, 2000-2010

6

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Re

tail

em

plo

ym

en

t (t

ota

l)

Re

tail

em

plo

ym

en

t (b

y a

ctiv

ity

)

Supermarket and grocery stores Clothing, footwear and personal accessories retailing

Pharmaceutical and other store-based retailing Total retail trade

Source: Statistics New Zealand, Business Demographic dataset, 2000-2010.

Figure 3. Total Auckland retail trade employment and employment in largest three contributors to retail employment growth in Auckland, 2000-2010

7

0% 5% 10% 15% 20% 25%

Motor vehicle retailing

Motor vehicle parts retailing

Fuel retailing

Supermarket and grocery stores

Specialised food retailing

Furniture, floor coverings, houseware and textile goods retailing

Electrical and electronic goods retailing

Hardware, building and garden supplies retailing

Recreational goods retailing

Clothing, footwear and personal accessories retailing

Department stores

Pharmaceutical and other store-based retailing

Non-store retailing

Retail commission-based buying and/or selling

Share of retail businesses

Rest of New Zealand

Auckland

Source: Statistics New Zealand, Business Demographic dataset, 2010.

Businesses

In 2010, there were 11,704 retail businesses in Auckland,

making up 6.5% of Auckland’s businesses. This amounts

to 35% of New Zealand’s retail businesses, above its

share of businesses overall (31%). The largest number of

retail businesses were in:

• pharmaceuticals and other store-based retailing

• clothing, footwear and personal accessories

retailing

• specialised food retailing

• supermarkets and grocery stores.

Auckland’s activity structure of retail businesses is similar

to the rest of New Zealand. Other than specialised food

retailing, the rest of New Zealand shares the same key

sectors of retail businesses.

Growth 2000-2010

Auckland grew by 2,060 retail businesses between 2000

and 2010, equating to an average annual growth rate of

2.0%, slower than the economy overall (2.5%). The

largest net increases occurred in clothing, footwear and

personal accessories retailing, supermarkets and grocery

stores, specialised food retailing and pharmaceuticals

and other store-based retailing. Meanwhile, electrical and

electronic goods retailing was the fastest growing sector.

The number of retail businesses declined in the last two

years, with the largest decline in clothing, footwear and

personal accessories retailing.

The number of retail businesses grew faster in Auckland

than the rest of New Zealand over the last decade. Only

clothing, footwear and personal accessories retailing

experienced substantial growth in the rest of New

Zealand, while growth occurred across many retail

sectors in Auckland.

Figure 4. Share of retail businesses by retail activity, 2010

8

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Nu

mb

er

of

bu

sin

ess

es

Motor vehicle and motor vehicle parts retailing Fuel retailing

Food retailing Other store-based retailing

Non-store retailing and retail commission based buying and/or selling Total retail trade


Figure 5. Businesses by retail type in Auckland, 2000-2010

Firm Size Structure

Approximately one-third of New Zealand’s retail

employment is within small to medium sized enterprises

(SMEs) – similar to the economy overall. It has a larger

share in firms with 100+ employees than the economy

overall.

Supermarkets and grocery stores and department stores

account for over half of retail employment in large firms.

Other activities with a high share of their employment in

large firms include electrical and electronic goods

retailing, hardware, building and garden supplies

retailing, and clothing, footwear and personal accessories

retailing. A substantial share of activity in these sectors is

likely to be in large format retail or chain stores.

New Zealand’s retail employment has become

increasingly concentrated into larger firms8 over the last

decade. Nearly all net retail employment growth occurred

in large firms, well above the share in the economy

overall. This occurred mainly in supermarkets and

8 This includes large firms that have their employment

spread across many smaller shops. Therefore, an

increase in employment in large firms does not directly

correlate with an increase in large format retail.

grocery stores, clothing, footwear and personal

accessories retailing, hardware, building and garden

supplies retailing and electrical and electronic goods

retailing. These sectors have become more concentrated

into larger firms, along with recreational goods retailing.

However, employment in large retail firms declined faster

than in retail SMEs over the last two years.

9

Firm size (employees)2000 2010 2000 2010 Net change % change

Retail trade

0 - - 0% 0% - 0.0%

1 to 5 23,040 22,660 13% 12% 380- -1.6%

6 to 9 16,660 15,590 10% 8% 1,070- -6.4%

10 to 19 21,760 22,100 13% 11% 340 1.6% 1%

20 to 49 19,000 18,410 11% 9% 590- -3.1%

50 to 99 13,490 17,110 8% 9% 3,620 26.8% 14%

100+ 79,270 100,670 46% 51% 21,400 27.0% 84%

Total 173,230 196,540 100% 100% 23,310 13.5%

Total economy

0 - - 0% 0% - 0.0% 0%

1 to 5 193,650 225,930 12% 12% 32,280 16.7% 11%

6 to 9 122,980 141,040 8% 7% 18,060 14.7% 6%

10 to 19 179,220 213,710 11% 11% 34,490 19.2% 11%

20 to 49 225,410 249,570 14% 13% 24,160 10.7% 8%

50 to 99 144,900 170,670 9% 9% 25,770 17.8% 9%

100+ 723,560 888,980 46% 47% 165,420 22.9% 55%

Total 1,589,740 1,889,900 100% 100% 300,160 18.9% 100%

Source: Statistics New Zealand, Business Demographic dataset, 2000 and 2010.

Employment Share of employment 2000-2010 Share of net growth

across groups 2000-

2010

Table 3. National retail and total employment by enterprise size and growth, 2000-2010

10

Retail Sectors

Retail covers a range of different categories, each driven

by varying levels of consumer demand. These range from

smaller goods purchased daily from outlets such as

supermarkets and dairies, to larger comparison goods,

such as electrical appliances, that are purchased less

frequently. Consequently, there are a variety of different

store formats and range of centre sizes across which

households meet their needs.

This section investigates in greater detail some of

the key retail sectors within Auckland9.

Food Retailing

In February 2010, there were 18,480 people employed in

2,412 food retailing businesses in Auckland. Food

retailing accounts for approximately one-third of

Auckland’s retail employment (30%) and businesses

(35%). Over three-quarters of employees are in

supermarket and grocery stores, although Auckland is

over-represented in other food retail sectors (fruit and

vegetables, fresh meat, fish and poultry, and other

specialised food).

Food retailing grew by 2,840 employees between 2000

and 2008, and dropped by 430 employees since 2008.

Supermarkets and grocery stores dominated this trend,

contributing a significant share of the overall retail sectors

net growth, but other food retailing grew faster.

The rest of New Zealand has experienced similar

patterns of food retailing growth over the last decade,

although with faster growth between 2000 and 2008. This

was also driven by supermarkets and grocery stores,

while other food retailing grew slower than in Auckland.

Spend per capita on food retailing in New Zealand has

increased on a real basis by 2.2% per year on average

across the last 14 years of data. In the year to June 2010,

people spent an average of $3,877 on food. This is 36%

above the per capita spend in 1996 ($2,860) 10

.

9 These have not necessarily been selected on a basis of

size, rather, to give a good cross-section of the range of

different retail sectors. 10

These are in March 2010 dollar values and include

spend at supermarkets and grocery stores, fresh meat,

fish, poultry and fruit and vegetable, and other food

retailing. It excludes fast food, takeaways and restaurant

meals.

Approximately 90% of food spend occurs within

supermarkets and grocery stores.

If retail spend per capita continues to increase annually

on a real basis at 2.2%, then spend per capita is

expected to reach $6,119 by 2031. This is estimated at

$6,062 for Auckland as average food spend per capita is

slightly lower than in New Zealand.

Within Auckland, this translates into expected spend

increases of 111%, but only a 47% increase in food retail

employment due to productivity increases.

11

77%

8%

5% 6% 5%

85%

4%2%

5%3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Supermarket and grocery stores Fresh meat, fish and poultry

retailing

Fruit and vegetable retailing Liquor retailing Other specialised food retailing

Shar

e o

f fo

od

re

taili

ng

Auckland

Rest of New Zealand


$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Re

al

spe

nd

pe

r ca

pit

a ($

Ma

rch

20

10

)

Year ended June

New Zealand

Auckland

Source: Statistics New Zealand, Retail Trade Survey and Estimated Population statistics, 1996-2010.

Figure 6. Distribution of food retail employment, 2010

Figure 7. Retail food spend per capita in Auckland and New Zealand

12

Retail activity

Share in

sectorShare of NZ

Clothing retailing 6,250 1,462 71% 39% 1.26

Footw ear retailing 1,210 201 14% 36% 1.15

Watch and jew ellery retailing 970 216 11% 36% 1.15

Other personal accessory retailing 320 79 4% 44% 1.42

Clothing, footwear and personal accessories retailing total 8,760 1,958 100% 39% 1.24

Total retail trade 60,810 11,704 31%


Employment BusinessesEmployment Auckland

location

quotient

Clothing, Footwear and Personal

Accessories Retailing

Clothing, footwear and personal accessories retailing is

Auckland’s second largest retail sector of employment. It

contains 8,760 employees in 3,358 businesses, making

up 14% of Auckland’s retail employment and 17% of its

businesses. Nearly three-quarters of employees are in

clothing retailing, with the remainder in footwear, watch

and jewellery, and other personal accessories retailing.

This sector is over-represented in Auckland, containing

39% of New Zealand’s employment, compared to 31% of

retail employment overall in Auckland.

Clothing, footwear and personal accessories retailing has

been the largest contributor to retail employment growth

in Auckland over the last decade, with a net increase of

3,020 employees. This equated to a 53% increase in

employment, making it the second fastest growing area

of retail employment. Employment in this sector has

grown continuously between 2000 and 2008, but declined

in the last two years.

In the year to June 2010, people spent an average of

$726 each on clothing, soft goods and footwear in New

Zealand. This was 30% above that in real terms in 1998

($559), but 3.2% below that in 2007 ($750).

Over the last decade, this category has been a faster

growing area in terms of spend per capita in New

Zealand. It has grown by 22%, although has only

increased by $101 as it is a smaller area of expenditure.

Within Auckland in 2010, spend per capita on clothing,

soft goods and footwear ($786) was 8% above that in

New Zealand as a whole ($726). However, this gap has

decreased from 18% since the beginning of the data

period in 2005.

Table 4. Employment and businesses by clothing, footwear and personal accessories retailing in Auckland, 2010

13

-

2,000

4,000

6,000

8,000

10,000

12,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Em

plo

yee

s

Clothing retailing Footwear retailing

Watch and jewellery retailing Other personal accessory retailing

Clothing, footwear and personal accessories retailing total


0%

4%

8%

12%

16%

20%

24%

$600

$650

$700

$750

$800

$850

$900

2005 2006 2007 2008 2009 2010

% d

iffe

ren

ce in

sp

en

d p

er

cap

ita

be

twe

en

Au

ckla

nd

an

d N

ew

Ze

alan

d

Spe

nd

pe

r ca

pit

a (M

arch

20

10

pri

ces)

Year

New Zealand Auckland % difference between Auckland and NZ

Source: Statistics New Zealand, Retail Trade survey and Estimated Population statistics,

Figure 8. Auckland employment in clothing, footwear and personal accessories retailing ,2000-2010

Figure 9. Spend per capita on clothing, soft goods and footwear retailing in Auckland and New Zealand, 2005-2010

14

Department Stores Retailing


69 department stores in Auckland. This accounts for

8.9% of Auckland’s retail employment, and only 0.6% of

its retail businesses.

Approximately 80% of Auckland’s department stores

employment is accounted for by the key players in this

sector. These include The Warehouse Ltd, Farmers

Trading Company Ltd, Kmart Ltd and Briscoes Ltd11

.

Employment in department stores has fluctuated across

the last decade in Auckland and has been in decline for

the last four years. Overall, it experienced a net decrease

of 390 employees (-7%). This decline has meant

department stores share of Auckland’s retail employment

has dropped from 10.6% in 2000 to 8.9% in 2010.

In the year to June 2010, there was an estimated average

spend of $1,11312

per person in department and chemist

stores13

in Auckland. People in the rest of New Zealand

spent more at department and chemist stores, with a

spend 15% greater per person on average in New

Zealand as a whole ($1,278) than in Auckland.

Aucklander’s spending at department and chemist stores

has generally declined since the start of the data period in

2005. This has occurred in line with overall spend

decreases in both Auckland and New Zealand, but to a

larger extent in Auckland.

Hardware, Building and Garden Supplies Retailing


556 hardware, building and garden supplies retailing

businesses in Auckland. This amounts to 7.4% of

Auckland’s retail employment and 4.8% of its businesses.

Nearly all employees are in hardware and building

supplies retailing, with the remainder in garden supplies

retailing.

This retail sector is under-represented in Auckland, with

only 27% of the national employment in Auckland,

compared to 31% of retail overall.

11

This is an estimate based on identifying department

stores retailers within meshblocks containing

employment in the department stores retail category. 12

This is in March 2010 prices. 13

Data for the Auckland region was not available solely

for department stores.

Auckland’s employment in hardware, building and garden

supplies retailing grew by 34% (+1,370) between 2000

and 2007, which is faster than retail as a whole (+20%)

during the same period. This growth was driven mainly by

hardware and building supplies retailing. However,

employment has declined within the last three years, and

at a faster rate than retail overall.

Hardware, building and garden supplies retailing has

grown faster outside of Auckland over the last decade,

increasing the level of under-representation in Auckland.

15

Retail activity

Share in

sectorShare of NZ

Hardw are and building supplies retailing 4,050 440 89% 27% 0.88

Garden supplies retailing 480 116 11% 24% 0.75

Hardware, building and garden supplies retailing 4,530 556 100% 27% 0.86

Total retail trade 60,810 11,704 - 31% -


Employment BusinessesEmployment Auckland

location

quotient

-

1,000

2,000

3,000

4,000

5,000

6,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Em

plo

ye

es

Hardware and building supplies retailing

Garden supplies retailing

Hardware, building and garden supplies retailing total


Table 5. Employment and businesses by hardware, building and garden supplies retailing activity in Auckland, 2010

Figure 10. Employment in hardware, building and garden supplies retailing activities in Auckland, 2000-2010

16

Retail activity Auckland Rest of NZ Auckland Rest of NZ

Car retailing -1,250 -1,240 -33% -16%

Motor cycle retailing 90 360 82% 46%

Trailer and other motor vehicle retailing 0 10 0% 14%

Motor vehicle parts retailing 50 480 13% 86%

Tyre retailing 160 520 29% 36%

Motor vehicle and motor vehicle parts retailing -960 120 -20% 1%


Net change 2000-2010 % change 2000-2010

600

700

800

900

1000

1100

1200

1300

1400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Ind

ex

(ba

se:

ye

ar

20

00

= 1

00

0)

Year

Automotive vehicle retailing and services sales Motor vehicle retailing and services employment Sales per capita

Data source: Statistics New Zealand, Business Demographic dataset, Retail Trade Survey and Estimated Population statistics, 2000-2010.

Motor Vehicle and Parts Retailing

In February 2010 there were 3,950 people employed in

927 motor vehicle and motor vehicle parts retailing

businesses in Auckland. This activity accounts for 6.5%

of Auckland’s retailing employment and 7.9% of its

businesses. Nearly two-thirds of employees are in car

retailing, with a further fifth in tyre retailing.

This retail sector is under-represented in Auckland, with

only 27% of the national employment in Auckland,

compared to 31% of retail overall.

Employment in this sector has fluctuated in Auckland

between 2000 and 2006, and declined for the last four

years. Overall, it has experienced a net decrease of 960

employees, driven by declines in car retailing, which has

also declined in the rest of New Zealand.

Automotive vehicle retailing and services sales increased

in Auckland from 2000 to 2005, but have since declined.

This corresponds to employment declines in this sector

occurring since 2006. Continued population growth has

offset some of the declines in this sector, resulting in a

larger share of spend per employee and lower numbers

of employees per 1,000 residents, although, on average,

people are spending less in this area.

Sales per capita have also dropped in the rest of New

Zealand in the last two years, but to a smaller extent and

for a shorter period than in Auckland.

In 2010, the average spend per capita on automotive

vehicle retailing and services was 32% lower in Auckland

than in the rest of New Zealand. The value of sales per

employee was also 7% less in Auckland

Table 6. Change in motor vehicle and parts retail employment in Auckland and the rest of New Zealand, 2000-2011

Figure 11. Index of real spend per capita, real total sales, and employment in motor vehicle and parts retail in Auckland, 2000-2010

17

Selected Retail Sector Location

The spatial distribution of retail activity differs between

sectors. Figure 12 shows that retail employment is

geographically pervasive but also has distinct

concentrations of activity in a hierarchy of centres and

employment areas across Auckland. The largest retail

locations by employment in Auckland include Albany,

Wairau Park, Glenfield, Westgate, Henderson, New Lynn,

St Lukes, the CBD, Newmarket, Sylvia Park, Botany,

Manukau and the Airport.

The location tendencies of different retail activities to

locate in certain areas depend upon land cost and

availability and spatial patterns of household demand

(including during main travel patterns). Some sectors a

much more dispersed with outlets able to be maintained

by smaller catchments of spend, such as dairies. Other

sectors, such as appliances, are more concentrated into

larger centres, requiring demand across much larger

geographical catchments. The following maps (Figures

13 to 17) examine the differences in spatial patterns of

retail between the selected retail sectors within this

section.

Food retailing is relatively dispersed across Auckland and

has a significant presence in some of the large retail

centres. Dispersed activity consists primarily of

specialised food retailing, with supermarkets and grocery

stores accounting for most of the presence in larger

centres. It also has concentrations of employment in

areas outside of the largest centres through the location

of supermarkets, which are relatively evenly distributed

geographically to broadly capture different locations of

household demand.

Clothing, footwear and personal accessories retailing

employment is relatively dispersed across Auckland as it

is able to be sustained across a wider range of centre

sizes. It also has significant levels of concentration in

larger centres, particularly those containing shopping

malls, which are key areas for these types of retail.

Figure 12. Geographical distribution of total retail employment in Auckland, 2010

Figure 13. Geographical distribution of food retailing employment in Auckland, 2010

18

Figure 14. Geographical distribution of clothing, footwear and personal accessories retailing employment in Auckland, 2010

Department stores retailing activity is highly concentrated

into larger centres with almost no presence outside of

these areas within Auckland. This also includes stores

located in areas adjacent to these main retail centres.

Land availability, store size and the large level of

household demand required prevents these stores from

locating within smaller local retail centres or multiple sites

scattered within proximity throughout Auckland.

Employment in hardware, building and garden supplies

retailing is relatively concentrated into sites within and

alongside larger retail areas, and particularly semi-

industrial employment areas. Much of this activity is large

format retail that requires large land availability and

relatively geographically large household demand

catchments.

Other than in Manukau, motor vehicle and parts retailing

employment in Auckland has little presence in larger retail

centres. It is predominantly in semi-industrial areas such

as Wairau Valley, or following key industrial transport

corridors, particularly along Great South Road.

Figure 15. Geographical distribution of department stores retailing employment in Auckland, 2010

Figure 16. Geographical distribution of hardware, building and garden supplies retailing employment in Auckland, 2010

19

Figure 17. Geographical distribution of motor vehicle and parts retailing employment in Auckland, 2010

20

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Business areas Growth centres All other areas

Shar

e o

f re

tail

em

plo

yme

nt

Retail commission-based buying and/or selling

Non-store retailing

Pharmaceutical and other store-based retailing

Department stores

Clothing, footwear and personal accessories

retailing

Recreational goods retailing

Hardware, building and garden supplies retailing

Electrical and electronic goods retailing

Furniture, floor coverings, houseware and

textile goods retailing

Specialised food retailing

Supermarket and grocery stores

Fuel retailing

Motor vehicle parts retailing

Motor vehicle retailing

Data source: Statistics New Zealand, Business Demographic dataset, 2010; Auckland Regional Council, Regional Growth Strategy, 1999.

Spatial Location of

Retail

Current Distribution

In 2010, over half of Auckland retail employees were in

growth centres14

. Nearly half of this was in sub-regional

growth centres, with the remainder in town centres and

the CBD. A further 28% of retail employment was in

business areas.

Higher shares of growth centres retail employment are in

supermarket and grocery stores and clothing, footwear

and personal accessories retailing, and a lower share in

hardware, building and garden supplies retailing. The

opposite is true for business areas which have higher

shares in hardware, building and garden supplies retailing

and lower shares in supermarket and grocery stores and

clothing, footwear and personal accessories retailing.

This is likely to reflect a higher share of larger format

retailing favouring out of centre locations.

14

This is using the Auckland Regional Council Regional Growth Strategy (1999) land use classifications where areas are classified as either business areas (and by type), countryside living, future urban metro area, future urban rural town, greenfield, growth centre (and by type), intensive corridor (Hobsonville and Lincoln Road), outside, rural production, special area or suburban.

These patterns become more evident in the activity

distribution across different areas within each retail

sector. Supermarkets and grocery stores, recreational

goods, clothing, footwear and personal accessories

retailing, and department stores have higher shares of

their employment in growth centres than retail overall.

Department stores also have a substantial share of

employment in business areas office parks. Meanwhile,

sectors with higher shares of employment in business

areas are typically sectors with larger commodities.

Figure 18. Retail activity by land use classification in Auckland, 2010

21

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Re

tail

em

plo

ye

es

Business area total Growth centre total All other areas Total region

Data source: Statistics New Zealand, Business Demographic dataset, 2010; Auckland Regional Council, Regional Growth Strategy, 1999.

Growth 2000-2010

Auckland retail employment grew by 12% between 2000

and 2010. The largest share of this growth occurred in

town centre growth centres, sub-regional growth centres,

production and distribution business areas and ‘other’

business areas15

.

Generally, growth centres had a larger quantum of growth

than business areas, although grew slower than retail

employment in business areas. Overall, retail grew in

both areas between 2000 and 2008 and subsequently

declined (2008-2010). Growth centres share of retail

employment declined only very slightly from 2000 to

2010, while the share in business areas grew.

Retail employment in business areas grew by 18% over

the last decade. The largest net increases occurred in

Rosedale, Wairau Valley and Takanini South, with the

largest declines in St Lukes Centre, East Tamaki and

Hopetoun-Crummer.

15

This refers to the remaining area of business areas that is not classified as ‘business park’, ‘production and distribution’, ‘heavy industry’ or ‘office park’.

Sub-regional centre retail employment growth differs

across centres. The largest net increase occurred in

Albany, with smaller increases in Pukekohe, New Lynn,

Westgate16

and Newmarket. Meanwhile, retail

employment has declined in Henderson, Manukau and

Takapuna.

Town centre retail employment growth is concentrated

into the largest centres, which all have mall developments

(with the exception of Devonport where growth has

occurred largely in the supermarket and grocery stores

retail category). These include Botany, Sylvia Park, and

smaller increases in Glenfield, Onehunga and

Devonport. All other town centres have either

experienced little growth or declined, with largest declines

in Pakuranga, Browns Bay and Homai.

16

Of note, Albany, Pukekohe and Westgate include areas of additional retail land that has become available within the last decade.

Figure 19. Retail employment by land use classification in Auckland, 2000-2010

22

30

35

40

45

50

55

60

65

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Emp

loye

es

pe

r 1

,00

0 r

esi

de

nts

Year

Auckland region Wellington region Canterbury region NZ - remainder

Source: Statistics New Zealand, Business Demographic dataset and Estimated Population statistics, 2000-2010.

Retail and Population

Output and Employment

There were approximately 49.1 retail employees per

1,000 people living in Auckland in 2010, below that in

Canterbury (55.7), Wellington (52.5), and the remainder

of New Zealand (53.4). This has declined in Auckland

from 55.3 in 2008, but has mainly been below that in the

rest of New Zealand for the last decade. Meanwhile, in

2010 Auckland’s retail GRP output ($2,043 per capita) is

above Wellington ($1,781), Canterbury ($1,911) and the

remainder of New Zealand ($1,647). The combination of

these factors suggest that the density and quantum of

economic activity and population in Auckland, as well as

higher disposable incomes, means that each retail worker

is able to serve a larger number of people and spend.

Between 2000 and 2008, retail employment and output

per capita grew in Auckland, Wellington, Canterbury and

the remainder of New Zealand, with faster growth in

output. Both grew faster in the remainder of New Zealand

(outside of the key regions), and slowest in Auckland and

Wellington. Slower employment growth suggests

Auckland population growth has driven much of the

increased output of Auckland retail workers. A share retail

demand growth is absorbed through scale economies

where each Auckland retail worker serves a larger

number of people or share of spend than in other regions

where growth is met by increasing the retail employment

saturation.

In the last two years (2008-2010), retail employment and

output per capita have declined in all areas, with

tightening economic conditions. These declined to a

greater extent in Auckland, although output per retail

worker continued to grow, and at a faster rate in

Auckland. This suggests that, as spend per person

declined, retail employment in Auckland was more elastic

than elsewhere, and part of the resulting decline in

employment was taken up by increased workload on the

remaining workers.

Figure 20. Retail employees per 1,000 residents by New Zealand region, 2000-2010

23

$-

$500

$1,000

$1,500

$2,000

$2,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Re

tail

GR

P o

utp

ut

pe

r ca

pit

a (

$N

Z 1

99

5/

19

96

)

Year

Auckland region Wellington region Canterbury region NZ - remainder

Source: Statistics New Zealand, Estimated Population, 2000-2010; Infometrics Ltd, Regional GDP Model, 2010.

Figure 21. Total retail GDP output per capita by region, 2000-2010

24

Region

Estimated retail

spend (2007 $

values)

Auckland

relative to other

areas

Auckland region $455.56 -

Wellington region $448.39 102%

Rest of North Island $371.94 122%

Canterbury region $432.74 105%

Rest of South Island $428.93 106%

New Zealand total $420.60 108%

Source: Statistics New Zealand, Household Economic Survey.

800

900

1000

1100

1200

1300

1400

1500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Ind

ex

(bas

e:

ye

ar

20

00

= 1

00

0)

Year

Retail output Spend Population

Source: Statistics New Zealand, Retail Trade Survey and Estimated Population Statistics, 2000-2010; Infometrics, Regional GDP Model, 2010.

Spend

On average, Auckland households spend more than

households elsewhere in New Zealand, ranging from 2%

above Wellington households to 22% above households

in the rest of the North Island (less the Wellington and

Auckland regions).

Over much of the last decade, retail spend in Auckland

has grown faster than Auckland’s population, but slower

than the total retail GRP. However, spend has dropped in

the last three years.

Table 7. Estimated household weekly retail spend by region, 2007

Figure 22. Index of retail spend, population and retail GRP output in Auckland, 2000-2010

25

Sector and measure Less than 1% 1 to 24% 25 to 49% 50% or more

Share of employment

Wholesale trade 66% 2% 1% 31%

Retail trade 72% 6% 1% 21%

Total economy 79% 3% 1% 17%

Average enterprise size

Wholesale trade 4.3 20.4 19.8 19.6

Retail trade 5.5 185.8 43.8 163.8

Total economy 3.3 42.9 34.2 44.1


Share of overseas equity

Foreign Ownership in

New Zealand’s Retail

Sector

In 2009, 21% of New Zealand’s employees were in firms

with some level of foreign ownership and 17% in firms

with 50% or more foreign ownership. These shares were

higher for the retail sector at 28% and 21% respectively.

Within the wholesale trade sector, these shares were

even higher at 34% and 31% respectively. Firms with

foreign ownership are typically larger than those without.

In 2009, retail firms with no foreign ownership employed

on average 5.53 people. This compares to 146.68 people

in firms with some foreign ownership and 163.84 in firms

with 50% or more foreign ownership (Table 30).

There is limited evidence to suggest that New Zealand’s

retail sector is becoming more foreign owned. Between

2000 and 2009, retail firms with no foreign ownership

accounted for the largest share of employment growth,

with a net increase of 17,970 employees (Table 31).

These were followed by firms with 1 to 24% foreign

ownership (+9,440 employees) and firms with 25% to

49% foreign ownership (+1,750). Although these

categories contributed a smaller share of growth, their

percentage growth (385% and 154% respectively) was

well above that of firms with no foreign ownership (14%).

At the same time, the number of employees in firms with

greater than 50% foreign ownership declined (-2,130).

Their share of retail employment dropped from 25% in

2000 to 21% in 2009. However, as shown in Figure 42,

part of the employment changes in these categories is

likely to be from changes in the level of foreign ownership

within firms, whereby firms change between categories.

Table 8. Share of employment in firms by overseas equity and average firm size in New Zealand wholesale and retail trade sectors, 2009

26

Level of firms overseas equity 2000 2009 Net %

Less than 1% 73% 72% 17,970 14%

1 to 24% 1% 6% 9,440 385%

25 to 49% 1% 1% 1,750 154%

50% or more 25% 21% -2,130 -5%

Greater than 1% 27% 28% 9,060 19%

Total 100% 100% 27,040 16%


Share of employment Change 2000-2009

Table 9. Change in employment and distribution by overseas equity level of retail firms in New Zealand, 2000-2009

27

Global Trends in

Retail

Globally, the retail sector is continually changing ranging

from developments in company structures and retail

commodity chains, changing patterns of demand,

evolving store structures, increasing focus on

sustainability and a much greater role of information

technology. Understanding global developments in retail

is important for New Zealand as these global trends often

subsequently occur locally.

Company Structures and Retail

Commodity Chains

The retail sector is becoming increasingly global with the

global expansion of retailers, the development and

integration of global product supply and distribution

chains and the proliferation of global virtual retailers and

consumers shopping internationally. International

expansion has gone beyond trade to entering foreign

markets, through takeovers of existing or new stores.

More recently, specialised higher order retailers could be

more likely to go global than the traditionally larger mass

market retailers. The global recession incentivises US

retailers to expand globally.

There is greater complexity in supply and distribution

networks with a larger range of products through more

open economies. Greater consumer awareness

(including sustainability) has dampened the movement of

supply structures to the cheapest providers

Greater use of information technology enables retailers to

streamline supply/distribution networks and better align

themselves with consumer demand, facilitated by large-

scale global virtual retailers such as Ebay and Amazon.

An Increased Focus on Sustainability

A greater focus on sustainability is driven by consumer

demand, retail area design through planning policies,

retailer strategies, wider global economic forces and the

role of technology in generating greater awareness.

However, price premiums, confusion over the

sustainability of products and the unavailability of

sustainable alternatives for some products hinder

people’s ability to buy sustainably.

Sustainability in urban design is occurring through

planning policies that favour mixed use developments in

existing centres, with a strong public transport focus,

while discouraging car-oriented, out of centre, suburban

developments. Retailers are adjusting their formats to

reflect this.

Retailers marketing strategies increasingly reflect

consumer demand for sustainability. Wider economic

forces incentivise a reduction in raw material use, which

is likely to increase as cheap production areas (e.g.

China) demand greater environmental production

standards and resource scarcity increases.

Online Shopping

Throughout the last decade, online shopping has

accounted for a rapidly growing share of retail sales and

has been boosted by the recession in the consumers’

online search for bargains. It has shifted power to

consumers by enabling price comparison and greater

product knowledge, increasing competition for retailers.

Large consolidated online competitors such as Ebay and

Amazon also challenge retailers through greater price

flexibility and removal of symbolic value in in-store

experiences. Yet, it enables retailers to expand their

target market.

Online shopping risks eroding town centres by eliminating

the social experience from shopping and therefore, use of

other town centre services. However, limited evidence

exists and it is unclear how online shopping will impact

different retail categories. To compete, retailers and

developers have focussed on creating shopping

experiences, leading to growth of purpose built lifestyle

centres where consumers experience a high level of

services and amenity not available online. Broadband

uptake has enabled online shopping, but also retailers to

increasingly advertise through social networking sites.

28

Future of Large Format Retail and New

Retail Spaces

New patterns of retail development are emerging, driven

by a combination of planning policies, consumer demand,

changes to retail sales channels and retailers strategies.

The last two decades has seen growth in out-of-centre

large format retail, which are becoming larger with

superstores and hypermarkets17

. Many are car-oriented

standalone stores or in suburban mega centres18

with

little integration with the surrounding area. Non-bulky

goods are also increasingly locating in these large format

stores. More recently, mixed-used lifestyle centres are

emerging, with a greater amenity and place-making

focus, and local area integration. Within these,

consumers are demanding a greater mix of store formats

and multi-purpose shopping trips, where large format

stores are not necessarily the centre anchors. These are

increasing in size, with the emergence of “power towns”.

A number of large format retailers (e.g. Walmart) are

including fresh produce and groceries, using higher profit

margins on non-food merchandise to cushion lower

grocery prices and undercut supermarkets. Supermarkets

have widened their product range to include comparison

goods. Therefore, a greater share of comparison goods

retail is locating outside of centres.

Many countries town planning policies now require retail

to locate within centres, discouraging out of centre

developments, and focus on sustainability (in urban form

as well as environmental factors), higher amenity values

and local area integration. These require consistent long-

term application to gain investor confidence and

adherence. Some town centre revitalisation has occurred,

but activity has increasingly concentrated into larger

centres, while other centres decline.

New trends (and their drivers) in retail development have

also brought about change to the economic configuration

within the retail sector. In some cases, retail has become

increasingly consolidated within larger chain retailers

17

For a discussion on historic large format retailing trends, refer to Fairgray, 2007: Big Box Retailing, draft report for Auckland City Council Economic Development Group. 18

A mega centre refers to a group of large format retailers located within a complex developed to accommodate these store types. These are typically car-oriented developments where tenant stores open directly onto a large shared outdoor car parking area. They have limited amenity value and contain very limited non-retail uses.

expanding their market share. As chain stores have been

forced into centres, they have overtaken/bought out often

independent retailers resulting in a series of “clone towns”

in the UK containing the same stores.

29

Economic Projections

to 2031

Employment

Retail employment in Auckland is forecast to grow by

10% (+8,797 MECs19

) between 2007 and 2031, occurring

at a progressively slower rate. Meanwhile, the economy

overall is forecast to increase by 40%. Consequently,

retail’s share of total employment is expected to gradually

decrease. Retail employment is forecast to decrease by

6% in the rest of New Zealand out to 2031, at an

increasing rate across this period.

Total Output and Value Added

Productivity in Auckland’s retail sector is forecast to

increase across the medium to longer-term out to 2031.

Total output and value-added are each forecast to grow

by 58%, while employment is expected to grow by 10%.

This means output and value-added per employee are

forecast to grow by 44%. Part of the productivity increase

will be enabled through Auckland’s unique spatial

structure where the population density will allow retail

workers to serve a larger number of households and

spend.

Employment is expected to grow by a larger amount

(+40%) in the economy as a whole, and also increase in

productivity (16%). Consequently, retail’s share of

employment is expected to drop, but its share of output

and value-added will remain relatively similar due to

increased productivity in the sector.

Auckland Economy Growth

The Auckland economy overall is expected to perform

better than the rest of New Zealand between 2007 and

2031, driven largely by faster employment growth rather

than productivity increases. Employment is expected to

19

Modified employee counts (MECs) are Market Economics Ltd estimates of total people engaged in a sector as the Statistics New Zealand is only a partial count as they do not include non-employee working proprietors. MECs are the measure of employment that will be used throughout this section.

grow faster in Auckland than in the rest of New Zealand;

and consequently, have larger increases in total output

and value added. Therefore, Auckland’s share of New

Zealand’s employment, output and value added are

expected to increase. The similar increases expected to

occur in retail, mean that good retail performance is in

line with the rest of the Auckland economy.

Retail in the Rest of New Zealand

Retail employment in the rest of New Zealand is forecast

to drop by 6%, with lesser gains in total output and value

added than in Auckland. Retail output and value added

per employee in the rest of New Zealand are expected to

increase with larger increases in Auckland.

Retail and Population

Auckland’s population is forecast to increase faster than

retail employment out to 2031. Therefore, the ratio of

retail employees per 1,000 residents is expected to drop

from 63.4 in 2006/2007 to 49.3 in 203120

. Larger

increases in value added and output mean the average of

these per capita is expected to increase.

These changes mean that while retail employment is

expected to drop, the level of output is forecast to

increase faster than the population, meaning that retail

workers will each serve a larger share of population and

spend. This also reflects an increase in household retail

spend. Furthermore, lower ratios of retail employment to

population do not correspond with smaller increases in

floor space. This is likely to be at a rate closer to the

forecast rate of population increase.

20

These figures differ to those in sections 4 and 5 as this model uses MECs rather than employees.

30

Measure 2007 2031

Auckland region retailEmployees 86,983 95,780 10%

Total output ($2007 million) $5,494 $8,694 58%

Total value added ($2007 million) $3,146 $4,978 58%

Output per employee ($2007) $63,162 $90,771 44%

Value added per employee ($2007) $36,168 $51,973 44%

Auckland region totalEmployees 720,626 1,012,201 40%





Rest of New Zealand retailEmployees 183,099 172,028 -6%





Rest of New Zealand totalEmployees 1,501,222 1,771,903 18%





Source: Economic Futures Model, Market Economics Ltd.

% change

2007-2031

Year

Future Retail Development

It is imperative to consider the likely form and location of

retail development in Auckland. The number of large

format and mall-type retail developments in Auckland

(many in out of centre locations) has increased over the

last two decades, reflecting earlier international trends.

Several factors have contributed to this, including

consumer demand and greater mobility, lower land prices

and larger parcel sizes out of centres, retailer supply

factors, cheaper imports and a lack of enforcement of

strong planning principles. This has enabled consumer

access to a wider range of cheaper products but has

impacted urban efficiency and city form in the spatial

economic structure. The effects of a development on

other centres in Auckland plus consequent changes to

household travel patterns and amenity are becoming

increasingly understood. Furthermore, the tension is

rising between market demand and effective urban

planning.

International evidence indicates a shift toward retail

developments that are more integrated to existing retail

areas. Planning policies have facilitated new retail into

centres and areas with greater positive impact on overall

city form. Further research is required to identify retail

development types likely to occur within Auckland, and to

determine whether international emergent in-centre retail

development could occur within Auckland.

Table 10. Forecast retail and total employment, output and value added in Auckland and the rest of New Zealand, 2007 and 2031

31

0

200

400

600

800

1000

1200

1400

1600

2006/2007 2011 2016 2021 2026 2031

Ind

ex

(bas

e:

year

20

06

/20

07

= 1

00

0)

Year

Retail employees per capita Retail value-added per capita

Retail value-added per employee

Source: Statistics New Zealand, Customised Auckland Population Projections, 2011; Market Economics Ltd, Auckland Economic Futures Model, 2011.

Current Forecast

Figure 23. Index of retail employment and value-added per capita and value-added per employee in Auckland, 2006/7 - 2031

32

Conclusion

Retail will continue to be a key driver of Auckland’s

spatial economy and urban form. Forecast increases of

population and household spend reflect the demand for

additional retail floor space. The quantum of floor space

required to meet this demand means that retail will be a

key driver of new property development across Auckland.

Its spatial linkages to other sectors mean it will be a major

driver of how the city expands. As such, although retail is

a consumption-driven sector, it can impact the efficiency

of the economy in general through its influence on the

spatial structure of the economy.

The type and location of retail in Auckland are key

determinants of household travel patterns, and therefore,

sustainability of urban form. The location of retail directly

affects household amenity and accessibility to goods and

services to meet their needs, and therefore, household

enablement.

Auckland’s large market and population density mean the

retail sector can operate more efficiently and be serving

larger shares of population and spend with fewer

employees. The scale of the market also means it can

support a greater range of retail offering, with a number of

more specialised stores.

Retail activity is geographically pervasive and is scattered

across Auckland. It typically follows patterns of household

demand and travel patterns. A hierarchy of retail centres

exists within this where households meet their needs

across a range of different centre types and sizes.

International trends in retail are often reflected a decade

later within New Zealand’s retail scene. Increased

technology and global connectedness has enabled

greater complexity of international retail logistical

operations and global sourcing allowing retailers to

become more competitive and responsive to consumer

demand. It has also enabled consumers to exercise more

power in comparison shopping and product information,

putting competitive pressure on retailers, also with online

stores. This greater awareness of product origins has

also boosted demand for sustainable products.

Trends in store formats have differed internationally

depending on the level of planning controls and

enforcement. They range from in-centre, more integrated

developments in the United Kingdom, to the development

of new retail areas such as power towns or lifestyle

centres, and increasingly larger stores, often in out of

centre locations. The urban form outcomes are often

strongly linked to the strength and consistent

enforcement of planning policies.

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