It's called showrooming. Brent Cooper reckons he sees it at least once a day in his shop in the Albany mall, where fashion-conscious 20-somethings come in to try on a trendy Superdry T-shirt, which he sells for about $69.
Once they've chosen a style and checked their size, they walk out and buy it up to 30 per cent cheaper online.
It's one of the main reasons Cooper will close his doors tomorrow afternoon after more than 30 years in the rag trade and nine years running his family-owned Jet brand.
"Some of them are blatant enough to tell us," says the 53-year-old. "It's gut-wrenching. We're the ones paying the rent and the wages. We're not providing a service and a showroom for you to go and buy from someone overseas."
Cooper closed his other store in Sylvia Park last year. He pays close to $250,000 a year to lease his shop at Westfield's Albany mall. It didn't help that his Australian wholesaling partner went under, forcing him to pay more for stock, but he says the growth of internet shopping has had a huge effect.
Six years ago, he says, his store was the only place to buy fashionable brands like Superdry but now they are everywhere online.
"So we've become that showroom for the kids to come to. They've got 100 different options now to buy with the click of a mouse and it's the cool thing to do."
The competition doesn't come only from the big overseas sites. Cooper says two young women whose shop in the mall went under now sell the same clothes on a Facebook site from a garage. "They're buying brands and product that we're buying from Australia and because they've got no overheads, they just undercut us."
Other local retailers have also given up. Last month, wedding dress designer Sera Lilly shut down, saying she could not compete with online shopping and cheap imports from China. National children's clothing chain JK Kids went under in November, with the loss of 125 jobs at its 22 stores and online operation. Owner Ben Sproat said he could not compete as younger mothers bought their children's clothes freight-free online from Britain and America.
The closure prompted First NZ Capital retail analyst Sarndra Urlich to wonder aloud about the future of clothing stores.
"I have thought for a long time that their business is structurally under threat from the internet, mostly because I see young women in their 20s or teenagers buying stuff from (online retailers) Asos or Boohoo or whatever and circumventing the likes of Glassons," she told NBR. "Unless you have got a strong international brand, I think that whole physical store concept is very much under threat."
The damage is already widespread outside New Zealand's big cities, where traditional shops have been battered by shopping malls and the economic downturn. Whangarei-based web design consultant Dave Smyth blogged last year that he had been trying to warn local retailers of "the approaching online shopping tsunami" for the past 14 years but very few were prepared to bring their business online. He knew of two stores that had closed and an importer-wholesaler who had started selling direct to the public online because local shops didn't move his stock fast enough.
Smyth says small retailers have to start selling online and get more realistic about their prices. "To give you an example, there was a local boutique shoe store that recently closed after being a well-known presence for many years ... My wife liked a pair of boots in this store but they were $520. Choking on my lunch, I told her that the boots were overpriced for the brand and she should try online ... An hour later, she had purchased the same pair of boots from an online store in the UK for $85."
For fashion-conscious young New Zealanders who have grown up with the internet, shopping online is already a no-brainer. As Alex Gray, a 25-year-old Auckland public relations manager puts it: "Every single one of my friends shops online ... Why would I pay this price for a product in New Zealand when I know without even checking that I'll get something better online?"
Online shopping in
New Zealand can be measured in different ways. If you include electronic downloads, such as movies and music, it could be worth about $5.5 billion a year, according to the Retailers Association. Under the more conventional measure of physical goods, it has jumped in the past five years, from just over $2 billion a year in 2009 to $3.7 billion by the end of last year
That's still only about 7 per cent of overall retail spending but the clincher for industry watchers is the growth rate.
Online spending is increasing at about 15 per cent each year, compared with 3 per cent for traditional shops or "bricks and mortar". Spending on overseas websites is lower than local sites (40 per cent to 60 per cent) but growing much faster (21 per cent to 7 per cent). Overseas goods under $400 are GST-free and look likely to stay that way - despite claims of unfairness by the Retailers Association - as the Government has pushed a review out beyond the next election.
In January, a Forsyth Barr report, Online Retail; What makes Kiwis click?, predicted online spending would rise to 9 per cent of all purchases by 2016. Author Chelsea Leadbetter says online spending will continue to outpace stores, thanks to growing local and international competition, the continued strength of the New Zealand dollar, increased use of mobile phones and the introduction of high-resolution imagery that allows consumers to see products much more clearly.
She says consumers are becoming more comfortable with security issues and reliable delivery, partly because of innovations such as "click and collect" (ordering online and collecting from a local store) and the introduction of pick-up kiosks or lockers to avoid the frustration of a missed home delivery.
Another breakthrough is NZ Post's YouShop service, which gives shoppers a British or American delivery address for websites that don't ship to New Zealand. NZ Post then arranges delivery from the US or British address.
The growth of online shopping led to fears of a "High Street Armageddon" in Britain, where online spending has hit 12 per cent of all spending and is forecast to reach 22 per cent by 2018. In May last year Britain's Centre for Retail Research predicted this increase would force one in five shops to close. In the US, where online shopping take-up is just ahead of NZ at 8 per cent, store closures have already begun. Sears department store announced in January it was closing its flagship store in downtown Chicago, the latest in about 300 store closures since 2010.
America's problem is worse because stores overexpanded in the boom leading up to the 2008 crash. But this has only highlighted a long-term trend towards fewer and smaller stores as shoppers head online. Shopping centre mogul Rick Caruso even predicted in January that traditional malls could soon become extinct, as no major indoor mall has been built in the US since 2006.
Commercial property analysts here say the outlook for New Zealand shops is brighter. Retail Consulting Group director Paul Keane, who thinks online sales have been vastly overstated, says the most likely effect on shopping malls is lower rents, as landlords realise their tenants have other options.
Metro Commercial director Nathan Male believes New Zealand will cope better than Britain because our centrally owned shopping malls can respond more decisively and Auckland, in particular, needs more shops for a growing population.
Independent shops in provincial centres are a different story. "They have to change their business model to survive."
He predicts many fashion stores will retreat to the best and biggest shopping centres and be replaced by fast-expanding takeaway food chains.
Leadbetter thinks some New Zealand companies will benefit from online sales growth. She cites Kathmandu, which is expanding in Britain using only three stores to showroom its products and drive internet sales.
Leadbetter believes some fashion chains are most at risk from internet retail giants like Asos, the British-based operation that has become the most-visited clothing website in Australia and New Zealand. It has features no local retailer can hope to match - all stock held in one place and sold globally (avoiding the losses from unseasonal weather patterns and fashion misses that plague the New Zealand industry), about 65,000 items for sale including its own labels and almost 1,000 other brands, and £35 million ($70 million) invested in technology to make its website and customer service world class. It even has a new add-on, which allows customers to compare the fit of a garment to something they already own.
Leadbetter says New Zealand retailers have to mix online and physical stores - known as "omnichannel" - to give customers what they want. She cites The Warehouse, which has launched or taken stakes in several clothing, sports and beauty sites, as a fast learner.
Richard Bush and Simon Furness run Hyperdrive, which sells car accessories and Hyperride, which sells mainly surf, skateboard and snowboard gear. The pair have converted a large chunk of their Penrose store into a warehouse for Hyperride gear - which customers collect from the front counter after ordering online - plus a dispatch centre for courier deliveries four times a day. But the Hyperdrive showroom in the middle of the shop allows customers to physically inspect tyres and mags before buying them and car stereos still have to be installed out the back.
Bush firmly backs the omnichannel model as the future of shopping. He says the company has spent millions of dollars on its website, including tens of thousands of dollars a month on new features. Half their business is now online and virtually all their customers decide what they want from the website before visiting the store.
"The consumer expectation in NZ is way ahead of what the retailers actually offer. The consumer expects to be able to go on their website, see every single item they've got in stock, photographed professionally, with a description, then hop in their car and drive down to that store, pick it up off the shelf and take it to the counter and fork out. Or order online and get it delivered."
Bush says many customers "walk in pretty much with their iPhone in their hand" and check products against overseas websites as he talks to them. He's has had his share of showroomers too, as snowboarding gear can sell for a third cheaper on US sites.
"People will come in and try on six pairs of snowboard boots for about an hour and then say, 'okay, I'll go away and think about it'. And you know exactly what they're doing."
Bush and Furness offer a global price match (excluding GST and freight), which makes them unpopular with some suppliers. But Furness maintains local retailers and wholesalers can no longer "make up" their profit margins in a transparent worldwide market.
As an example, he picks up a skateboard helmet with a $90 price tag. "Maybe you could sell this for $70 - but sell 20, not 10."
Brent Cooper is starting a new career in the horse racing industry.
He believes chain stores that have their own clothing brands - and therefore make a much bigger margin on what they sell - will survive the next few years. He used to run a wholesale division but closed it because half his retail customers shut down. He mentions a well-known independent retailer in a prime Auckland location. "I don't see how long he can stay there ... He's finding the same sort of issues."
And yes, he does understand that online shopping has been great for the average New Zealander. "That's fine. It's never going to go away and I can't do anything to stop it, but all I'd say to those consumers is, 'Don't expect the best of both worlds'."
*January figures released yesterday differ slightly but show the same trends.
Wardrobe by mouse click
Alex Gray spends up to $300 a month buying clothes online. He reckons that's not a huge amount when gets so much more for his money.
"If I bought a pair of chinos from (United States-based menswear site) topman.com, I can get that pair for $60, whereas I could look to pay upwards of $120 to $130 in a standard shop from a New Zealand label."
The 25-year-old public relations executive - described by friends as New Zealand's "number one online shopper" - knows his fashion trends and clothing quality inside out. He shrugs off concerns about getting the right fit, saying it doesn't take long to learn your size on a few favourite sites. If you get it wrong, it's cheap to return goods or even get them tailored here at a cheaper overall cost than the New Zealand price.
He is also scathing about high price mark-ups and poor quality in local stores.
While price and product range are obvious drawcards, Gray also raves about the convenience and customer-friendly attitudes, especially from British-based Asos, where no one grumbles if you send clothes back. "So many shops question you so much on why you want to return it and you have to have an instore credit. It makes you so much more hesitant to buy in the first place if there's so much risk involved."
Gray occasionally misses the social experience of shopping but overall prefers to spend the time at the beach instead of spending hours in a mall. "Six years ago we did it because we had to but now there's no need to." He thinks New Zealand retailers need to change fast if they want to survive. Otherwise he predicts the clothing business will go the way of video and music stores, which are fighting to survive the combined impact of illegal downloads and legal services such as Netflix and Spotify.
The trend setters
• Asos: The new Amazon of the online fashion world. Cheap prices, huge up-to-date range (65,000 items), free worldwide delivery and a four-hour turnaround time for all customer inquiries. A New Zealand retailer's nightmare.
• Boohoo: Smaller, trendier. Focused on female fashion but developing a men's line. About to launch on the British sharemarket and aiming to beat Asos at its own game.
• The Iconic: Sydney-based online fashion store, with a growing following on both sides of the Ditch.