Popular Newmarket, Auckland retailers Sportscraft and Area 51 to shut up shop

Shoppers walk down Broadway in Auckland's Newmarket. The area has lost two more retailers as businesses struggle with increased costs and declining consumer demand. Photo / NZME

Auckland retail has been dealt another blow with two popular brands shutting up shop.

Sportscraft had its closing-down sale over the weekend with the clothing brand exiting from its two New Zealand stores in Newmarket and St Lukes Westfield malls.

And Area 51 has told its customers that it is closing its Newmarket store after 20 years. The brand will still have an outlet store in Wellington’s Cuba St and will continue to be available for online shoppers.

The store closures are the latest in a recent trend as retailers transition online or retreat in the face of weak consumer demand.

Last month, major department store Smith & Caughey’s said it planned to shut its Queen St and Newmarket stores early next year.

Newmarket Business Association chief executive Mark Knoff-Thomas told the Herald some retailers were facing really difficult times.

“The feedback we’re getting from retailers here, and also elsewhere [in Auckland] is it’s some of the toughest trading conditions that people have ever experienced. And we’re talking people who have been trading for something like 30, 40 years, so that says a lot really,” Knoff-Thomas said.

“I think the biggest problem really is [the] cost-of-living crisis right now off the back of what we’ve been through for the last few years.

“A lot of businesses are doing it so tough, cashflow is so tight if not non-existent.”

Knoff-Thomas said they were remaining positively optimistic, however, with talk of the Reserve Bank cutting interest rates sooner than expected and tax cuts coming through in the next few weeks.

“That’s [talk of early rate cuts] going to send a very positive message back to the wider market to give it some confidence,” he said.

“Hopefully as it gets towards the end of the year things will start to turn a corner and get a bit better.”

But for now, retailers were still battling through winter.

“I think we’re in for a few more months of very difficult trade,” Knoff-Thomas said.

“Going through winter, it’s never the best time for bricks-and-mortar retail.

“For retail, hospitality, from Cape Rēinga all the way to the Bluff, the country is really in the doldrums at the moment.”

Carolyn Young, Retail NZ chief executive, said retailers were facing difficult times alongside challenges with margins.

“While sales are declining, businesses are facing increased rents, wage pressures, rate costs, supplier issues and insurance increases. And there’s a number of those things they can’t control,” Young said.

This was squeezing margins for many, she said.

“That will be why you’re seeing some businesses making decisions about where their business is located, and are those individual stores profitable, larger businesses deciding to shut some stores and some smaller businesses just deciding to close altogether.”

‘Bleak picture’

Card spending data last week revealed the extent of the challenge facing many retailers.

Electronic card transactions for June fell a further 0.6% ($40 million) and 0.1% ($5.7m) respectively for both retail and core retail (excluding motor vehicles and fuel) industries when compared to May, Stats NZ said.

It was the fifth consecutive month in which retail spending fell.

On an annual basis, retail spending fell 4.9% and core retail spending was 3.8% lower.

ASB senior economist Kim Mundy said electronic card transactions “paint a bleak picture of private demand in New Zealand”.

“The cumulative impact of past monetary policy tightening and growing job insecurity fears are playing out clearly in the retail space.”

Westpac senior economist Satish Ranchhod said he expected spending to remain “soggy for some time yet”.

“Over the past year, households have seen their spending power squeezed by the continued rise in living costs and the related increases in interest rates,” he said.

“Even when households are spending, they are forgoing ‘nice to haves’ in favour of value for money.”

Last week iconic Auckland restaurant SPQR shut its doors after going into liquidation.

Restaurant Association of New Zealand chief executive Marisa Bidois said it was a tough time for the industry.

“Our businesses are facing increasing costs, and cost of living has hit our industry,” she said.

“We will likely see others [in the same position as SPQR].”

French beauty retailer Sephora also announced last week it would be closing its flagship Queen St store in August.

The plan was to relocate the retail team to its Newmarket or Sylvia Park stores, it said.

And the owner of a fashion business that manufactured and sold Paula Ryan clothing went into liquidation earlier this month.

Paula Apparel 2020 Ltd, trading as Paula Ryan NorthWest, owes an estimated shortfall to secured, unsecured and preferential creditors of $1.01m.

Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports. He reports on topics including retail, small business, the workplace and macroeconomics.