International retailers continued to set-up stores in New Zealand, as they looked to expand beyond their local markets. The strong economy and the growing population, fuelled by positive net migration, especially in cities such as Auckland and Wellington CBD attracted international companies to expand into the region. In 2016, department store chain David Jones launched its first store outside of Australia in Wellington, investing approximately NZD20 million in refurbishing the store after it took over the lease of the former Kirkcaldie & Stains. International apparel and footwear specialist retailers such as H&M and Zara experienced the highest number of new entrants in the last five years. However, it was observed in 2016 that retailers also entered the New Zealand market in other channels, such as beauty specialist retailer Sephora, initially selling products to local consumers via its online shop, followed by luxury goods specialists such as Tiffany & Co and Chanel.
Despite the already crowded and competitive retail environment, international retailers are expected to continue to enter New Zealand. For example, Top Retail Group with Topshop and Topman is scheduled to open its Christchurch store in early 2017, and mass merchandiser Kmart is also opening its second Wellington store in 2017. Hence, domestic retailers are expected to continue to face increasing competition and challenges such as rising rents over the forecast period.
The launch of department store David Jones in 2016 led to an increase in demand for outlets in the prime area of Lambton Quay, Wellington, hence causing rent rises around the area. As a result, retailers are expected to continue moving away from city areas due to rising rents, especially low-end to middle-market retailers, which might not be able to cope with the pressure of rent rises, giving rise to more out-of-town shopping centres.