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Shopping mall not topped by online sales - yet

Sarah Putt. 15 January 2019, 5:18 pm

Online shopping hasn't quite delivered the killer blow to bricks and mortar retail, if the rise in building consents for commercial buildings such as shopping malls is any indication.

Statistics NZ says the value of building consents issues for shops, restaurants, and bars, social and cultural buildings, factories; and farm buildings all increased between $100 million and $300 million in the year ended November 2018.

"An increase in the intention to build more shops and social buildings was partly due to large consents for Auckland and Christchurch convention centres, and shopping malls in Auckland," says construction statistics manager Melissa McKenzie.

"Construction costs rise each year, but even accounting for price rises, there was a significant increase in the value of shops and social buildings consented."

The amount of coverage that IKEA received last week showed just how popular the in-store experience remains. Visiting CEO Jesper Brodin only announced that the company intends to open a store here - no details on where or when, just that it thinks it will and when it does meatballs will be served - but it generated a huge amount of coverage.

So just how prevalent is online retail in New Zealand?

Last year a report by NZ Post - which is understandably keen to talk up virtual retail - stated that online shopping accounts for 8.1% of retail in this country, and that puts us in the middle of the pack globally.

China has the largest percentage of online shopping, accounting for 23.1% of all retail, surpassing the US and making that country an example of where thing may be heading in the virtual shopping mall. This includes the move to greater personalisation, which depends on people's willingness to give up their data for a better shopping experience. A PwC report claims 61% of Chinese consumers are comfortable with retailers monitoring their shopping habits.

Globally, online shopping is estimated to make up 17.5% of all retail spending by 2021 or, put another way, 82.5% of purchasing will still be in-store (unless there is entirely different retail experience I'm missing) in two years.

While this is good news for those investing in building new retail spaces, and for CEOs of large international retailers paying a visit down under, it doesn't mean that retailers should shun online. Ideally they should invest in a presence in the virtual and the real world, as Retail NZ General Manger of Public Affairs Greg Harford told Stuff: "They are both channels to market. It is important retailers are across both of them."



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