Auckland price win when Ikea moves in

Big international chains arriving in New Zealand might help Aucklanders get a better deal on clothing and furniture, but they’re doing nothing for other parts of New Zealand, one analyst says.

Big players have entered the market in recent years, including H&M, Zara, Mecca and now Ikea.

Jonathan Elms, the Sir Stephen Tindall chair in retail management at Massey University, said those brands brought their international prices with them.

‘‘Looking at Zara, their pricing structure is exactly the same as in Australia. It’s about 10 per cent cheaper here than in Singapore.’’

H&M was similar and Ikea would need to be, too, he said. That put pressure on the rest of New Zealand’s retail market to drive down prices, while retaining quality.

Retail NZ spokesman Greg Harford said the online influence meant New Zealand retail markets were not insulated in the same way they were 30 years ago. ‘‘But a big new entrant coming into the market will certainly apply more competitive pressure on retailers.’’

He said many Australian companies used price points that factored in the cost of shipping and currency costs. So New Zealand prices might not be a straight currency conversion.

‘‘It may be Ikea’s pricing [in New Zealand] is slightly higher than Australia’s.’’

Economist Shamubeel Eaqub said the price pressure would not be felt equally across the country.

‘‘Where these shops go – it’s not Eketahuna or Dunedin. It’s the big cities, so they bring lower prices and scale to places that already have them.’’

He said the New Zealand market did not have the scale to sustain a very big operation, and did not turn over the volumes needed for very low-margin goods.

Elms said New Zealand’s geographical location would also mean prices were a bit higher for some goods sold here.