What does the future of housing mean for the future of retail

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Where we live is a critical factor in determining where and how we shop, therefore the future of retail and the future of housing are inextricably linked. For many years now price and demand has been pushing people further away from the city centre, how will this affect retailers in the years to come? This article, the next in Retail NZ's Future of Retail series, considers opportunities for retailers in the outer suburbs of our cities.

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The affordability of housing in New Zealand is now widely accepted to be at crisis point. House prices have risen steadily for many years, outstripping wage and price inflation, meaning that getting on the housing ladder is increasingly difficult for everyday New Zealanders. Auckland is the starkest example, with the median house price breaking the $1 million mark in November, but strain is being felt all over New Zealand.

For New Zealanders intent on buying their own home a long commute into the city centre is increasingly the reality. Price pressures near to the city, or even outlying suburbs, mean they are out of reach for first home buyers. The pressure is being felt by renters too, with rent prices in our major city centres sky rocketing. People are being forced to look for housing further away from the city centre, and development also means there are jobs in the suburbs too. Increasingly people are working outside the central business districts too. Only about 23 per cent of Aucklanders, for example, commute to central Auckland - the rest work elsewhere in our biggest city.


We need hubs for local people to meet, eat and shop


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To accommodate large populations living away from city centres we need good infrastructure, like roads and rail. We also need suburban centres that provide hubs for local people to meet, eat and shop. As we've seen in big cities all over the world, as populations move to settle outer suburbs these places can become trendy and exciting in their own right. This presents huge opportunities for retailers in developing suburban settings, or even in areas that were once considered rural. Big investments are being made right now in new housing and infrastructure to meet this demand, and if we fast forward 10 years our cities and suburbs might look quite different. In the Wellington region, for example, out of the way Wainuiomata, often seen as being in need of a facelift, is increasingly being seen as a key location for new suburban housing development. Towns like Featherston in the Wairarapa, and Huntly in the Waikato, will become increasingly gentrified as they are seen as being within practical commuting distance. The renaissance of run-down suburbs and towns will ultimately drive local retail development and other businesses.

The fact is that people love to get out and about where they live, if you've commuted into the city five days a week a stroll down to the local bookshop, cafe or dairy on a Saturday morning is a welcome change. But it's not just our everyday conveniences that we buy locally. As our suburbs grow there will be less and less need to go into the city centre at all. Suburban retail will have an important role to play in the future. Consulting firm McKinsey estimates that in 2020 around 80 per cent of US retail purchases are still expected to happen in a physical store.


Shops together create a buzz of activity


A successful suburban retail hub needs a range of shops together that create a hub and buzz of activity. Councils can help by ensuring adequate parking, and allowing retailers and developers to build premises that really work for retail, and attract the right mix of tenants. For bricks and mortar retailers in the suburbs, the future holds new opportunities but it might means doing things a little differently.

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First, retailers should embrace their role in the community and the things that make their location special and unique. People feel great pride in where they have decided to live and retailers should too. They are an important part of local communities and shouldn't be afraid to create a community feel instore that will keep locals coming back. This may mean changing stock more regularly to keep things interesting for return customers. The community feel can be carried through marketing and social media too.

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Secondly, suburban retailers shouldn't feel limited by the area where they are located. They have an advantage because they are easier to get to and don't involve the inevitable traffic and parking problems of city centres. This means that they can be destinations for shoppers from a wider area, not just those living nearby. This presents opportunities for boutique suppliers, or cafes and restaurants, that people don't mind travelling to to get a unique product or experience.

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Thirdly, suburban retailers can do things a bit differently, making the most of being further away from the city and all that it has to offer and embrace their difference. For example, showcasing local artisans or designers and help them tell their story to shoppers. Change opening hours to best suit local people or offer something different in the customer experience. Think laterally about how to make a suburban store an interesting and a genuinely pleasant place to be.


Be everywhere


Finally, and this is harking back to a previous Future of Retail article, but it can't be said often enough - be everywhere. You might have ticked all the boxes but unless people can find you, it won't be enough and this is particularly true for suburban retailers. Being everywhere means ensuring you come up on every google search and on every platform shopper might be looking. Tap into community groups to spread the message and be visible to the local community and to the whole world online.

Suburban retail might increasingly be used as a first step to bricks and mortar for online only retailers that want a relatively low overhead way for allowing customers to see and feel their products. Similarly bricks and mortar retailers in the suburbs may have additional space and capacity during quieter time of the day to fulfil online orders and build a presence online.

As our cities and suburbs change so to do retailers and the way we shop. Keeping pace with these changes will ensure retailers of today are successful into the future.



by Scott Fisher, Retail NZ CEO

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