The Z Factors

Sporting goods, toys, and apparel are key categories in the highly centralized New Zealand retail market.

"There are a number of oddities about the New Zealand retail market compared with many others around the world," asserts Louise Coburn, brand and retail development manager for state broadcaster TVNZ. "The most striking is the dominance of The Warehouse." With 88 stores, The Warehouse has nearly doubled the 55 doors of its nearest rival, Farmers.

In addition, New Zealand is a highly centralized retail market, with one-third of all outlets in Auckland and 71 percent in the five main centers of population: Auckland, Waikato, Wellington, Canterbury, and Otago.

Jo Pascoe, senior manager of retail sales and marketing for Australasia, Disney Consumer Products, however, identifies several ways in which the New Zealand market is developing in line with many others. "Clear changes are evident in consumer behavior," she reports, "as the Internet and e-commerce become integrated with more traditional modes of shopping and entertainment. Also," continues Pascoe, "mass-market retailing has grown globally, and private label has grown as a subset, and New Zealand is no different."

Coburn also recognizes the growth of private labels in New Zealand, pointing to some changes that might be emerging as a result. "The Warehouse," she notes, "recently opened buying offices in several of Asia's manufacturing countries in an attempt to by-pass wholesalers, causing some to open direct-to-public stores." Although she doesn't see this move as having much impact on the licensing business in New Zealand, she does think it will hit areas such as sporting goods, which is an unusually important sector in this sports-mad country.

No industry mechanism exists for the sharing of licensing information in New Zealand, but along with sporting goods, where TVNZ recently launched SpongeBob SquarePants wet suits and life jackets, both executives put toys at the head of the products list, underlining the importance of The Warehouse, which Coburn estimates has 65 percent of the toy market, while Pascoe calls it as 60 percent. After toys, Coburn cites apparel, and Pascoe softlines and home products, possibly reflecting Disney's success with the Pooh and Disney Princess franchises, and the local Disney Channel, now in 44 percent of all homes.

Whatever the products consumers are buying, their confidence is high. The Westpac McDermott Miller Consumer Confidence Index for third quarter 2006 hit 111.7, up 5.7 points from the second quarter and the highest level it has reached since third quarter 2005. Pascoe attributes this to "accelerating wage growth and high job security."