Department Stores in New Zealand

PROSPECTS

Lifestyle trends characterising department stores

While traditionally positioned as exclusive shopping venues focusing on product quality and customer service, shifting consumer demand, increased competition and changing consumer preferences have seen lifestyle trends increasingly characterise departments stores. In order to stay relevant, players in the channel are expected to place an increasing focus on experiential aspects of shopping at department stores and expand product and service offerings.

Consistent growth expected during forecast period

Value growth over the forecast period is expected to be in line with that observed in 2019. The continued performance of the channel is expected to be driven by the overall performance of Farmers, with its strong brand recognition, store network and market positioning meaning the overall performance of department stores is expected to mirror that of Farmers.

Competition from e-commerce

Brands within department stores are expected to face increasing competition from online retailers over the forecast period, which is expected to be the biggest threat to growth prospects. As the channel overall is characterised by experiential and lifestyle aspects, expansion into e-commerce has not been signalled as a strategic priority by any of the major players, leaving them exposed.

COMPETITIVE LANDSCAPE

Farmers continues to lead

Local player Farmers continued to dominate department stores in New Zealand in 2019; far ahead of Smith & Caughey’s, David Jones and EziBuy. The brand’s leadership in the channel, over rivals such as Smith & Caughey’s, David Jones and EziBuy can be attributed not only to its extensive store network across all of New Zealand, but also to its ability to reposition itself to remain relevant.

David Jones opens second store

Having entered the New Zealand market in 2016 through its single Wellington store, Australian owned David Jones opened its second New Zealand in the new Westfield Newmarket Shopping Centre in Auckland in late 2019. The two-level store located at 277 Broadway in Newmarket is around 3,500 sq m per floor and home to hundreds of brands, interactive fitting rooms, a 'beauty hall', two personal shopping suites and a designer accessories area.

Smith & Caughey’s holds firm in second place

Auckland based department store retailer was ranked second in department stores in New Zealand in 2019. While ranked significantly behind leader Farmers, this should be contextualised by the fact that it has only two stores situated in central Auckland.

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