Nike deals to hit as big re­tail­ers go head to head

Hawke's Bay Today - - Business - Aimee Shaw

Big brands like Puma and Nike are set to be­come more affordable in New Zealand as ma­jor re­tail­ers en­ter the so-called “off-price mar­ket”.

This week New Zealand’s largest re­tailer The Ware­house an­nounced its own off-price ap­parel of­fer­ing, which it calls Red Rack.

Brand im­ports such as Fenty by Ri­hanna, Paul Frank, Calvin Klein and Nike are now sold on Red Rack in 47 of the re­tailer’s 92 stores at be­tween 20 and 60 per cent less than cur­rent mar­ket prices.

The dis­counted prod­uct is made up of end-of sea­son lines, over­runs and can­celled or­ders from over­seas brands and re­tail­ers. The Ware­house has ap­pointed a ded­i­cated “Red Rack buyer” to ne­go­ti­ate prices to ac­quire the stock.

Re­tail an­a­lyst Chris Wilkin­son said The Ware­house’s dive into off-price re­tail could turn around the busi­ness.

“This is a strate­gic move and re­sponds to the global trend in off­price re­tail­ing led by the TJX brands, Ross and off-shoots like Nord­strom Rack,” Wilkin­son said.

“The Ware­house will be look­ing to em­u­late this model and it is likely to be suc­cess­ful, not only in selling these prod­ucts, but also driv­ing sales of other prod­ucts in the stores. It’ll also likely help reen­gage con­sumers with the brand that may have strayed in re­cent years.”

The off-price re­tail­ing model orig­i­nated in the US and works to fre­quently add new branded prod­ucts, driv­ing foot traf­fic and reg­u­lar visi­ta­tion to stores.

Nick Grayston, group chief ex­ec­u­tive at The Ware­house Group, said Red Rack of­fered a “trea­sure hunt ex­pe­ri­ence” for con­sumers.

“We’re in­no­vat­ing in a num­ber of ways to com­pete in the rapidly chang­ing re­tail land­scape and Red Rack is just one ex­am­ple of that,” Grayston said. “Red Rack is a truly dis­rup­tive play in New Zealand for branded ap­parel and footwear, and we’re confident Ki­wis will embrace the con­cept.”

The Ware­house ex­pects other ben­e­fits from Red Rack, in­clud­ing ex­tra foot traf­fic and in­creased sales of other non-Red Rack prod­uct, as a re­sult.

The Ware­house’s move comes as big-box out­let re­tailer TK Maxx is tipped to launch in New Zealand and could open its first store — in Auck­land — as early as next year.

The Amer­i­can off-price re­tailer, which has been hugely suc­cess­ful in the UK, spe­cialises in selling branded and re­main­dered prod­ucts, such as cloth­ing, shoes, home­ware and toys, at heav­ily dis­counted prices.

TK Maxx is a sub­sidiary of TJX Com­pa­nies and is known as TJ Maxx in the US.

TK Maxx has hun­dreds of stores in the US and UK, and last year ex­panded into Aus­tralia. It is cur­rently fo­cused on ex­pan­sion Dow­nun­der.

Off-price re­tail­ing is ex­pected to be a US$33 bil­lion busi­ness, glob­ally, by 2021.

Wilkin­son said TK Maxx had re­vived re­tail in shop­ping cen­tres it had opened stores in.

He said UK prop­erty own­ers and eco­nomic lead­ers of­ten talked about the “TK Maxx ef­fect” and how the re­tailer had breathed life back into trou­bled ar­eas.

“For many ar­eas, the ar­rival of a TK Maxx has been a saviour — tak­ing space other re­tail­ers have aban­doned or don’t want,” he said.

“The stores have helped re­vi­talise tired or for­got­ten ar­eas.”

It’s not yet known when TK Maxx will open stores in New Zealand, but Wilkin­son said it would likely be sooner than later as it ramps up its Aus­tralian ex­pan­sion.

“TK Maxx moved into the Aus­tralian mar­ket re­cently and it’s likely they will also en­ter NZ when they have max­imised po­ten­tial there. We be­lieve it will be well re­ceived [here], as it has been in all other mar­kets,” he said.

Large Auck­land shop­ping cen­tres such as Sylvia Park or West­field New­mar­ket could house the large-for­mat re­tailer lo­cally, Wilkin­son said.

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