BEFORE THE HAMILTON CITY COUNCIL · I am also Chairman for Hamilton Riverview Hotel Limited, which owns the Novotel-Tainui and Ibis-Tainui hotels in the Hamilton CBD. 1.5 I have good

1

BEFORE THE HAMILTON CITY COUNCIL

IN THE MATTER of the Resource Management Act 1991

AND

IN THE MATTER submissions and further submissions lodged by

Tainui Group Holdings Limited to the Proposed

Hamilton City District Plan.

STATEMENT OF EVIDENCE OF NATHAN JAMES YORK

ADDRESSING CHAPTER 6: Business 1-7 Zones

For Tainui Group Holdings Limited

Submitter Ref 1199

Further Submitter Ref 246

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1. Introduction

1.1 My name is Nathan James York of Hamilton.

1.2 I am the General Manager, Property of Tainui Group Holdings Limited (TGH). This role is

responsible for a significant property portfolio currently valued over $600 million. I have

held this position since 2003.

1.3 My qualifications include a Masters of Business Administration; Post Graduate Diploma in

Management; and a Bachelor of Management Studies, all from the University of Waikato.

1.4 I have over 18 years commercial property experience and at least 13 specific years local

experience in the Hamilton and Waikato markets. I am currently an Executive Member of

the Waikato branch of the New Zealand Property Council. I am also Chairman for Hamilton

Riverview Hotel Limited, which owns the Novotel-Tainui and Ibis-Tainui hotels in the

Hamilton CBD.

1.5 I have good familiarity and working knowledge within the Hamilton property and retail

markets, particularly from a practitioner perspective with actual development and

management experience.

2.0 The Role of Tainui Group Holdings

2.1 TGH is the commercial arm and wholly owned subsidiary of Waikato-Tainui Te Kauhanganui

Incorporated (Te Kauhanganui), which is the governing body for the Waikato-Tainui iwi

(tribe). TGH’s role is to own and operate the commercial assets on behalf of, and for the

enduring benefit of, Waikato-Tainui.

2.2 Earnings generated by TGH are enablers, which are distributed to Te Kauhanganui to be used

for charitable purposes to invest in education, welfare, health, marae, social and/or cultural

facilities and activities, for the benefit of the 64,000 Waikato-Tainui members. These

charitable activities are generally domiciled in the greater Waikato area.

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2.3 The property portfolio under TGH management includes over 150 individual properties and

300 tenancy arrangements. The TGH property portfolio is now valued in excess of $600

million and covers a wide range of property interests including commercial, retail, industrial,

farms (dairy and dry-stock), residential, forestry, education, hotels and public sector assets.

2.4 The location of the various TGH properties are very much Waikato and Hamilton centric,

with over 90% of the property sited in the greater Waikato region. In terms of the Hamilton

CBD alone, TGH has 34 specific properties including its own head office, and the head office

of Te Kauhanganui.

2.5 TGH has also been one of the most active private property developers and investors in

Hamilton of recent times. TGH has been involved in numerous Hamilton CBD projects,

including various retail developments along Victoria Street, five specific office projects

located in Bryce, Alma and London Streets, a casino in Victoria Street, and two prominent

hotel developments in Alma Street.

2.6 Including a significant large scale residential subdivision (655 section project) in Huntington,

Hamilton North and The Base, now New Zealand’s largest integrated retail centre, the

economic contribution to Hamilton from TGH has been immense.

2.7 TGH is also one of the most substantial private investors in the Hamilton City with assets

valued in excess of $549.9 million under management, of which $128.6 million of assets are

specifically domiciled in the Hamilton CBD.

2.8 TGH’s continued investment into Hamilton City also remains significant. This feature is

evidenced by the Ruakura project, a proposed multi-billion dollar development, currently in

the planning phase.

2.9 TGH is an inter-generational investor with a long-term focus, and requires consistent and

well regarded planning frameworks to work within, in order to deliver quality projects with

long lead timeframes. The future outlook for the entire Hamilton City is therefore very

important to TGH and Waikato-Tainui.

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2.10 Waikato-Tainui is inextricably linked to Hamilton. Waikato-Tainui are Treaty partners and

Tangata Whenua, with a connection to the wider community, which is demonstrated

through its representation and on-going contribution to the growth of Hamilton City.

2.11 As Tangata Whenua, Waikato-Tainui is also acknowledged in the Future Proof Sub-Regional

Growth Strategy (Future Proof) as a key partner. In particular, the tribal vision document

Whakatupuranga Waikato-Tainui 2050 (W2050) is a formal reference point of Future Proof.

2.12 The Future Proof Implementation Plan recognises that Future Proof needs to align with

current Tangata Whenua documents and strategies and in particular includes documents

such as W2050. [Refer to Attachment 1: Whakatupuranga Waikato-Tainui 2050]

2.13 W2050 is the blueprint for cultural, social and economic advancement for Waikato-Tainui.

W2050 is a fifty-year development approach to building the capacity of iwi, hapuu and

marae interests. W2050 is an inter-generational platform for the future.

2.14 TGH and its investment strategies are vital for the delivery of W2050.

3.0 The Base

3.1 The land on which The Base is established was returned to Waikato-Tainui as part of the

settlement of the Raupatu claim with the Crown in 1995. In fact the land was one of the first

parcels of land to transfer back to Waikato-Tainui. In this regard the land has particularly

special meaning and is therefore one of only a few land parcels that were vested in the title

of Pootatau Te Wherowhero, the first Maaori King, a very unique land title for and on behalf

of, and for the long term benefit of all Waikato-Tainui. The land is effectively inalienable and

will always be owned by Waikato-Tainui.

3.2 The Base is currently the most significant commercial asset of Waikato-Tainui and its

continued success is vitally important for the wellbeing and advancement of Waikato-Tainui.

The Base presently represents the key investment vehicle for TGH to empower Waikato-

Tainui to continue to advance these charitable activities specifically noted in paragraph 2.2.

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3.3 The Base is approximately 30 hectares in total and can be found in the northern gateway

into Hamilton. The land is of regular rectangular shape and the area borders State Highway 1

Te Rapa Road, Avalon Drive, Te Kowhai Road, and the North Island Main Trunk railway line.

3.4 The Base is located approximately 6.7 km drive from the Hamilton CBD and 5.2 km drive

from the Chartwell area, the other two main retail centres in the region. The main

observations are the reasonable travel distance between the centres, and the closer

proximity of The Base and Chartwell to the Northern residential areas of Hamilton City, in

comparison to that of the CBD. [Refer to Attachment 2: Hamilton City Centres Map]

3.5 Following the transfer and consolidation of The Base property to Waikato-Tainui in 1995,

TGH sought rezoning of the land with the support of Hamilton City Council (HCC), to enable

future development to occur. After Environment Court and the resultant appeals notably

from Kiwi Income Property Trust (Kiwi) and Westfield NZ Limited (Westfield) to the High

Court were resolved, the rezoning was confirmed, and physical development of The Base

began in earnest in 2004. The first tenancies commenced trading in 2005, approximately 10

years after the land was transferred to Waikato-Tainui.

3.6 The Base has been progressively under physical development for the last 10 years. Over

$275.2 million of capital works alone has been invested by TGH into The Base project with

significant investment in the development maintained through a period of economic

constraint. In addition to the obvious retail, food and entertainment tenancy improvements,

these development works have included internal roading and pathways, underground

infrastructure, landscaping, signage, lighting, security systems, and supporting amenities.

This significant private investment has also been made to set in place a platform for the

planned future development activity at The Base.

3.7 TGH has also heavily invested in surrounding public infrastructure around The Base property.

These works includes the partial 4-laning of Te Rapa Road, 2-lane roundabout at The Base

Parade/Eagle Way/Te Rapa Road, 10,000m2 landscape strip adjacent Te Rapa Road, single

lane roundabout at Te Kowhai Road, relocated bus terminal, and partial 4-laning of Wairere

Drive. TGH has also committed the major contribution to a signalisation project on Te Rapa

Road, which was completed in 2012. These works amounted to circa $5.0m of private

investment in largely public infrastructure. There are also a number of future investments in

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public infrastructure planned including a pedestrian bridge over the main trunk railway line

to the planned Rotokauri Public Transport Hub and further signalisation of The Base Parade

and Maahanga Drive Roundabout.

3.8 TGH has also observed that significant public investment has been made to infrastructure in

the immediate area, mainly in the form of roading that surrounds and/or connects into The

Base, by the New Zealand Transport Agency and HCC, including the Te Rapa bypass, Te Rapa

Road intersections, and Wairere and Avalon Drive improvements.

3.9 TGH has developed a master-plan of The Base, which recognises its current operating

environment and outlines the proposed future activities of the centre. [Refer to Attachment

3: The Base Master-plan]. This master-plan has been formally endorsed by HCC through a

development agreement recognising its scale and the integration of the current and future

activities at The Base.

3.10 This significant investment (i.e. $275.2 million) made by TGH in The Base has been

established to ensure the vision and market position of The Base is established, sustained

and enhanced, and so it can continue to meet the needs of its customers, community and

the market at large, by providing access to goods and services in a high quality development.

3.11 In 2009-2010, The Base was subject to a proposed plan change by HCC, Variation 21, which

had significant potential ramifications but was specifically designed to limit the development

progress of The Base, in preference for priority of the Hamilton CBD. The High Court held

that Variation 21 did not follow proper process, was unlawful, and of no effect, and ordered

that Variation 21 be quashed. The PDP is a regurgitation of similar policies that were

proposed in Variation 21.

3.12 The Base has clearly been the subject of much historical intervention, but has emerged with

a resourced, well designed, heavily frequented and effective operating facility that has size

and function of a national scale. The ability for The Base to continue to grow and evolve in

future should not be unnecessarily hindered by a new retail hierarchy and restrictive rules,

following the significant investment and planning commitments previously made by TGH.

3.13 The investment made by TGH into The Base has not been without considerable exposure to

the commercial risk and uncertainty, and that future planning policies should reflect fair-

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mindedness in acknowledging the ongoing and material investment in The Base and its

surrounds over the last decade, and planned in the future for which consents have been

granted for.

3.14 The Base has a number of unique points of difference to anywhere in the Waikato region.

The Base is the largest retail centre in New Zealand by floor area and contains an integrated

large format (big box) retail, specialty retail in a mall environment, significant types of food

and hospitality, an outlet centre, a large Homeware/DIY offer, and leisure offers such as

cinemas. This entire mix creates a hybrid retail development of significant scale that is

contained in one clearly defined site and designed accordingly - making The Base a unique

proposition in New Zealand terms.

3.15 There are currently 32 tenants at The Base that are exclusive to the Waikato region (which is

approximately one sixth of the 193 tenants currently at The Base).

3.16 These exclusive tenant numbers have reduced over the last 12 months, down from 53. I note

that tenants such as Acquisitions, Hoyts, Red Rat, Mozaik, Temt, Valley Girl, Factorie, Hobby

Trend, 2 Degrees, Seedling, and Pita Pit are examples of tenants who have been confirmed,

or now also operate out of the CBD as well. These tenants entered the Hamilton market

through the opportunity provided by The Base and have now responded to the opportunities

offered by recent investment in the CBD by establishing additional outlets in the CBD,

demonstrating market forces at play and the growing tendency for retail tenants to locate in

multiple centres.

3.17 The customer catchment area for The Base is far reaching. Based on figures supplied by

Marketview for the year ended 30 September 2013, 48% of the customers at The Base come

from within Hamilton City. Therefore 52% of The Base customers come from outside the city

and from other areas including Waikato, Waipa, Matamata-Piako, Auckland, Thames-

Coromandel, South Waikato, Bay of Plenty and a small but growing tourist custom. [Refer to

Attachment 4: Marketview Statistics].

3.18 The two other main retail centres in Hamilton, Hamilton CBD and the Chartwell area, do not

experience this level of customer reach.

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3.19 The Base because of its large scale size (i.e. greater than 81,500 square metres of gross

lettable area), number of anchor tenants (5 in total), a deeper and wider selection of

merchandise on offer in a single location, and its ability to draw from a larger inter-regional

population base, it is classed as, at a minimum, a regional centre when you apply standards

used by Australasian and International Shopping Centre organisations.

3.20 Regional centres by definition are also fully integrated in nature, well-planned, design-

consistent, under one management structure, and typically associated with a single

ownership entity.

3.21 The Base is further enhanced when taking into account the recent resource consents

granted for the establishment of comprehensive healthcare services (Whaanau Ora), office

activities, service amenities, and further retail as outlined in The Base master-plan. A hotel is

also planned for the future. The Base has evolved from a retail centre into a regional centre

with other complementary functions.

3.22 The current master-plan for The Base (approved by HCC) details a floor area of

approximately 145,000m2 of mixed-use activity. It is important to note that 57% of this total

area has already been developed by TGH and is now trading. The introduction of a health

facility, offices, service amenities and a hotel operation, complement the strong

representation of retail activities that currently exist.

3.23 In particular, the comprehensive health facility, known as ‘Whaanau Ora’ is a holistic

approach to the delivery of health services. Whaanau Ora aims to provide accessible services

that cover primary and secondary healthcare, social services, education, and lifestyle

activities in an integrated manner. These health services are expected to draw on a large

population catchment.

3.24 The depth, scale and variety of retail and related activity at The Base differentiates itself

significantly from the Chartwell centre, and therefore The Base should be defined correctly

as a regional centre. It is also worth noting that HCC retail analyst Tim Heath (Property

Economics) also makes the clear distinction in his Hamilton retail mapping (Page 14, Figure

2) under the HCC Section 42A Hearing Report (S42A) of The Base and the Te AWA mall as a

regional centre and Chartwell as a lower order sub-regional centre. The delineation of The

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Base also does not refer to additional land holdings in Te Rapa area as being part of The

Base.

3.25 These surrounding lands exterior to The Base are currently a combination of Industrial (64%)

and Large Format Retail (36%) lands, but it is my understanding there has been no Section 32

analysis justifying the expansion of Large Format Retail through the proposed Business 4

Zone outside of The Base, as outlined in the notified PDP.

3.26 It is important to note that The Base is also a significant employment provider. The Base

currently has over 1,700 combined full-time and part-time equivalent employees. This

number is expected to double at the completion of The Base development, reinforcing The

Base as a key commercial and employment node for Hamilton City located close to the

expanding labour force of the Northern and Eastern suburbs. These on-site jobs do not

include the significant development and construction jobs that have been employed at The

Base over the last year. A preliminary assessment approximates these jobs including

construction, consultants, and development advisors to The Base are in the order of 3,000

roles.

3.27 The HCC planning framework must recognise the last decade of development and

investment in The Base, and its current market position and ongoing performance as a

primary retail centre for Hamilton and the Waikato. With its positive role and function, The

Base will continue to stimulate economic and social well-being for the community, and

provide a unique grouping of amenities and offerings that cannot be replicated in the

Waikato.

3.28 The Base is also looking to make the most of the investment in public infrastructure and new

residential growth in the north of Hamilton (currently in development), especially the areas

of Rototuna and Rotokauri. The Base is well served by public transport with key and regular

bus routes connecting into The Base and new public transport initiatives planned adjacent

The Base off Tasman Road. The fundamentals are in place for The Base to continue to grow

in a sustainable manner in its role as a regional centre for Hamilton and the Waikato.

3.29 Whilst the future development plans for The Base have been designed and consented, the

final layout of The Base will ultimately be driven by market and tenant drivers. Key areas of

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tenant decision-making considerations can include store orientation and profile, size, access

to car-parks, clustering with other like-minded tenants, back of house serviceability, signage

options, and security.

3.30 It is vital that The Base be afforded a single purpose zone that reflects the depth and

integrated nature of its current activities, however is flexible in nature to meet future market

requirements within an existing framework of activities.

3.31 Taking account of the activities and amenities on offer at The Base, its close proximity of new

residential growth and employment catchments in the North of Hamilton and strong major

roading connectivity which also promote ease of access and a strong ‘live-work-play’

situation being an important theme outlined in the PDP Strategic Framework (2.2.1b iii).

3.32 The Base has received numerous national and international retail development awards. Over

7 million visitors frequent The Base annually, demonstrates the high profile and relationship

The Base has with the Hamilton and wider inter-regional community.

3.33 In closing The Base and Te AWA mall also reflects strong tribal references and uniqueness.

The establishment of key pou (carved post) and whakairo (carvings) and application of tribal

designs such as the niho taniwha (sometimes considered a metaphor for collective

sustainability) are essential tribal identifiers. With the addition of bi-lingual signage, all these

elements become strong symbolism for Waikato-Tainui.

4.0 Market Overview

4.1 For the most part, I will refer to the TGH experts to comment on the various elements of the

Proposed District Plan (PDP), its submitters and associated evidence, however I do wish to

make specific comments on NZ CBD environments especially Hamilton, address elements of

the Kiwi submissions and evidence regarding the Strategic Framework chapter of the PDP,

and provide further comments on the retail evidence submitted by Property Economics

outlined in the HCC S42A report.

5.0 CBD Vacancy Trends

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5.1 As demonstrated in Figure One below, the retail vacancies in the Hamilton CBD rose in 2006

and have remained relatively constant since (fluctuating between 9.5% and 14.8%). In the

past year (since June 2012) a drop in Hamilton CBD retail vacancies of 4.1% (13.7% down to

9.6%, a five year low) has occurred, providing further indication that the Hamilton CBD retail

market is improving. It is also important to note these metrics are in advance of the Centre-

place mall opening on 17 October 2013, which would likely further reduce the retail vacancy

levels. According to Tim Heath (HCC retail analyst) during his PDP presentation of evidence

made on 22 October 2013, he specifically regarded 10.0% as an acceptable level of retail

vacancy.

Figure One

Source: CBRE Hamilton Retail Occupancy Surveys

5.2 In terms of a comparison to other metropolitan cities in New Zealand, Hamilton CBD retail

vacancies show an overall higher percentage than Auckland and Wellington. However since

2010 Hamilton’s vacancy levels have trended down while the other two cities both trended

up indicating the Hamilton market is relatively improving against Wellington and Auckland.

These trends are depicted in Figure Two below.

Figure Two

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

%

Hamilton CBD Retail Vacancies

Hamilton

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Sources: Colliers International Research and CBRE Hamilton Retail Occupancy Surveys

5.3 The grade (or quality) of retail type vacancies in the Hamilton CBD also show varying results.

Not surprisingly, the highest vacancy percentage is tertiary retail (lower quality product).

However all three categories have demonstrated a reduction in vacancy levels in the most

recent 12 months, further highlighting an improving retail market, despite re-development

activity (and associated disturbance) occurring in the prime category with the on-going re-

development of the Centre-place mall. These overall trends are outlined in Figure Three

below.

Figure Three

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

%

NZ CBD Retail Vacancies

Hamilton

Auckland

Wellington

0.0

5.0

10.0

15.0

20.0

25.0

30.0

%

Hamilton CBD Retail Vacancies by Grade

Prime

Secondary

Tertiary

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Source: CBRE Hamilton Retail Occupancy Surveys

5.4 In terms of analysing office vacancies, we can note that Hamilton CBD office vacancy levels

have eased over the past three years from 12.2% in 2010 down to 9.2% in 2013 which

demonstrates an improvement in the CBD office market conditions. These vacancies are at

lower levels than both Auckland and Wellington over the same period. Figure Four below

further illustrates that Hamilton has been better off over this same period than these other

cities.

Figure Four

Sources: Colliers International Research and CBRE Hamilton Office Occupancy Surveys

5.5 Outlined in Figure Five below, and with similar trends to the retail vacancy rates, the lowest

office quality type with by far the highest vacancy percentage for Hamilton CBD office space

is the lowest ‘E Grade’. Excluding this ‘E Grade’ category, the other four office categories

have recorded vacancy levels around or under 10.0%.

Figure Five

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

%

NZ CBD Office Vacancies

Auckland

Wellington

Hamilton

14

Source: CBRE Hamilton Office Occupancy Surveys

5.6 The various graphs outlined in Figures 1 to 5, clearly demonstrate that vacancies levels for

CBD offices, continue to trend downwards and with relative comparison to the nuances of

Auckland and Wellington, fairs very well. These vacancy facts are somewhat contrary to the

suggestions that the Hamilton CBD is in decline, and certainly these market outcomes have

occurred in advance of any interventionist planning policies.

6.0 Kiwi Income Property Trust Evidence and Submissions

6.1 In turning to Kiwi’s evidence on the Strategic Framework Chapter for the PDP and more

particularly Ivan Bartley’s Statement of Evidence, I submit that it is important to further

explore in more detail, add further context, clarify some facts, and dispel a few myths to his

commentary.

6.2 Kiwi have failed to specifically comment on the reinvigorated hospitality precinct of the

Hamilton CBD, which I observe as largely being based around Hood Street, and has seen a

revitalisation of food and beverage establishments cluster together in this general area. This

area represents a high pedestrian area, reflects the evolving nature of the Hamilton CBD and

demonstrates an area of positive regeneration.

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

%

Hamilton CBD Office Vacancies by Grade

Overall

A

B

C

D

E

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6.3 Kiwi, HCC and their associated evidence have conveniently failed to consider other possible

influences on retail sales performance in areas of Hamilton.

i. For example the Global Financial Crisis that emerged in 2007/2008 and whose

effects still resonate, has had negative impacts to global economies, austerity

measures and discretionary spend, labour market, credit and solvency issues, and

investment confidence. New Zealand retail was not immune to these effects. Figure

Six below shows the NZ Retail Sales Volumes, Values and Deflator graph from 2005

2013, which clearly demonstrate fluctuating retail sales trends across NZ.

Figure Six

Source: Statistics NZ, The Treasury

ii. According to the BNZ research, online shopping is transforming the retail landscape

and continues to grow at pace. Online sales have been equivalent to 6% of reported

retail sales, 9.5% if you exclude groceries and liquor. [Refer to Attachment 5: BNZ

Online Retail Sales Index]. Clearly this market dynamic has had an effect on retail

sales.

iii. It is also noted that within the Hamilton CBD environment there has been

considerable construction activity occurring in the CBD over the last 6 or so years.

This activity has included roading and pathway upgrades of Hood Street, Victoria

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Street, Garden Place, Ward Street, Bryce Street, Worley Place and other City Heart

projects. Coupled with the development projects such as the Centreplace mall,

Wintec atrium building, Citygate offices, and Quest apartments would result in

reasonable construction disturbance impact to the pedestrian access and provision

quality amenity space of the Hamilton CBD, through the various construction phases.

iv. A review of the latest census results assess where population growth has occurred in

Hamilton between 2006 and 2013 and outlines that 68% of Hamilton’s population

growth has been in the North East of the city. [Refer to Attachment 6: Hamilton

Residential Census Data]. Furthermore the new growth cell of Rotokauri is likely to

emerge with new residential activity to the North West of Hamilton. The location of

both The Base and Chartwell are more conveniently placed to serve these local and

growing population catchments in the North. The effects of spatial population trends

would have an influence on retail spend for customers in Hamilton City and the CBD.

As outlined previously under paragraph 3.4, the distance between the Northern

centres of The Base and Chartwell and to that of the CBD are reasonably variable to

the Northern population catchments of Hamilton.

6.4 As one of the most substantial developers and investors in the Hamilton CBD, TGH does not

share the views (nor observe any empirical evidence) of Kiwi and HCC, insofar as with the

proposed policy framework in the PDP, will be an instrumental factor to future investment

decisions for the CBD environment for developers. Clearly TGH has undertaken considerable

development activity (refer to paragraph 2.4) without the need of proposed policy

intervention. The irony is also not lost when Kiwi themselves have invested in Centre-place

mall ahead of any of the PDP polices, and for further investment examples I note that the

new Mighty River Power offices currently under construction and the proposed Sky City 120

room hotel to be developed in the CBD, have shown similar behaviour.

6.5 It is my observation that the strong Kiwi views on CBD retail hierarchy in Hamilton are more

tempered in Auckland, where it is noted their flagship investment in Sylvia Park, a regional

retail centre, is an out of CBD centre, as are other recent investments such as Lynn mall.

6.6 While stated otherwise by Kiwi, I also have personal reservations that their intentions as

outlined in their submissions do not include trade competition tendencies.

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7.0 HCC Section 42A Report Evidence

7.1 Focus my commentary in relation to the evidence submitted by Tim Heath (Property

Economics) outlined in the HCC S42A Report.

7.2 The approach taken by Mr Heath in focussing on the proportionate spend analysis rather

than actual annual sales quantum is narrow and somewhat dramatic, and doesn’t take

account of the significant total market spend increases and the positive contribution

resulting from an increased and continuing retail spend across the whole city. The changes

in retail percentages for the CBD, the rest of Hamilton and Te Rapa ought to be expected

when a planned centre such as The Base develops from no sales baseline in 2005 to

becoming part of the mix of spending in Hamilton City.

7.3 Mr Heath in his own verbal submission on 24-October-2014, acknowledged the CBD area

was too big and quote ‘a relic of the past’ and should be reduced and focused on increased

effectiveness in a smaller footprint. This position would appear inconsistent therefore with

expansion of retail outside of the CBD and known major centres such as The Base. I note in

particular the proposed surrounds outside of The Base bears no relationship or integration

with The Base.

7.4 It is difficult to also understand the logic of Mr Heath in suggesting that the CBD as a central

location that can service the Hamilton market. As mentioned previously in paragraph 3.4

there are variable differences to travel between the major centres, and for those population

catchments, especially those of growth in Hamilton. [Refer to Attachment 2: Hamilton City

Centres Map and Attachment 6: Hamilton Residential Census Data]. The Base is also well

catered for in terms of roading accessibility, other infrastructure, public amenity, and public

transport and is well placed to continue to service parts of the Hamilton market.

7.5 In defining the CBD hierarchy it is important to make the distinction that the hierarchy

reflects all CBD activities such as commercial, civic, and social collectively as a whole.

However with respect to retail activities, both the CBD and The Base are primary nodes given

their scale and depth of offerings, customer catchment reach, and popularity.

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7.6 We note that HCC S42A Report refers to the annual retail inflows of 40% from outside of

Hamilton City (including The Base) as at March 2013. We also note that the retail inflows

specifically for The Base are materially different and register 52% annual retail come from

outside of Hamilton City as at September 2013 [Refer to Attachment 4: Marketview

Statistics].

7.7 We note the estimated average leakage for the entire Hamilton City catchment is 16.74% for

the last 12 months [Refer to Attachment 4: Marketview Statistics], which is a 1.26%

difference, less than the 18% noted in the HCC S42A report. While the percentage change

may seem relatively minor, if you calculate the percentage across the total annual sales of

say $1.557 billion (S42A Report) for the city you arrive at a quantum of $19.62 million, which

is far from immaterial. The implication is that the share of spending from outside Hamilton in

other Hamilton centres, including the CBD, is somewhat lower than The Base. This is not

surprising, given the scale and range of retailing at The Base, its position in the North of the

city where it can access the growing catchments of the Northern part of the Waikato region.

The ease movement to what is a comprehensively planned and integrated centre make it a

natural attraction for out of town visitors. In this way, it contributes significantly to the city’s

appeal and adds to its productivity.

7.8 On a final matter HCC (public) investment in CBD has been significant and this level of

contribution has not been enjoyed by other major centres within their environments. For

example roading, pathway, landscaping and amenity space re-development (including Hood

Street, Victoria Street, Garden Place, Ward Street, Bryce Street, Worley Place and other City

Heart projects) are good examples. The CBD environs also enjoy a commercial rates

differential, a HCC funded CBD association, development contribution relief, and investment

and access to car-parking.

8.0 In Summary

8.1 In summary of my submission, I would like to reinforce:

i. The inter-generational significance of The Base to Waikato-Tainui;

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ii. The positive contribution The Base makes to Hamilton and the region in terms of

compelling economic and employment outputs, providing a comprehensive social

amenity, and offers a completely unique experience;

iii. There is no clear factual evidence to establishing a decline of the CBD, more so there

are actual signs of growth;

iv. Interventionist planning policy to preserve one area without regard or at the

expense of others is flawed; and

v. The Base is a regional centre and a primary retail node for Hamilton.

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Attachments

1. Whakatupuranga Waikato-Tainui 2050

2. Hamilton City Major Centres Map

3. The Base Master-plan

4. Marketview Statistics

5. BNZ Online Retail Sales Index

6. Hamilton Residential Census Data

Whakatupuranga Waikato-Tainui 2050

Whakatupuranga Waikato-Tainui 2050 is the blueprint for cultural,

social and economic advancement for our people.

It’s a fifty-year long development approach to building the capacity of our iwi, hapuu and

marae. Whakatupuranga 2050 will be our legacy for those who come after us.

In the changing global environment the world our future generations live in will be significantly

different to ours. So our approach for moving forward is one that embraces change and

focuses on developing our people. With this in mind, there are three critical elements

fundamental to equipping our generations with the capacity to shape their own future:

1. A pride and commitment to uphold their tribal identity & integrity;

2. A diligence to succeed in education and beyond; and

3. A self-determination for socio-economic independence.

The first element recognises the importance of our tribal history, maatauranga, reo and tikanga.

With a secure sense of identity and cultural integrity, our future generations will be proud

and confident in all walks of life.

Creating a culture for success generates opportunities and choices. Hence the focus of the second element is to promote a diligence

among tribal members of all ages to pursue success in all their endeavours.

This enables personal growth, contributes to building the capacity of our people, and

provides opportunities to utilise that growth and capacity for the collective benefit of our

marae, hapuu, and iwi.

Determination to develop and grow our tribal assets is the focus of the third element. This is consistent with the time honoured Vision we

inherited from Kiingi Taawhiao “Maaku anoo e hanga i tooku nei whare…” - to build our own

house in order to face the challenges of the future; and including our Mission “Kia tupu,

kia hua, kia puaawai” - to grow, prosper and sustain.

Underpinning the Values that shape us as a people, are the unifying ‘Principles of

Kiingitanga.’ Reinforcing these principles is timely not just for Tainui, but ngaa Iwi katoa

o te motu, as we celebrate 150 years of Kiingitanga, under Kiingi Tuheitia. Kiingitanga

is our history and our heritage.

In recognising that our Vision, Mission and Values will engender different ways of being,

knowing and doing with each generation, the Executive-Board has identified four broad and

inextricably linked Goals, upon which our 2050 Strategic Objectives, 5-Year Strategic Plan, and

Annual Plan(s) are founded. We are pleased to announce our Strategic Direction to the Iwi with “Whakatupuranga Waikato Tainui 2050”

as the primary motivating force to achieving all our tribal aspirations.

Te AratauraTE KAUHANGANUI O WAIKATO INC.

FOREWORD

�

WHAKATUPURANGA WAIKATO-TAINUI 2050

Whakatupuranga Waikato-Tainui 2050

STRATEGIC DIRECTION

�


Maaku anoo e hanga i tooku nei whareKo ngaa pou oo roto he maahoe, he patete

Ko te taahuhu, he hiinauMe whakatupu ki te hua o te rengarenga

Me whakapakari ki te hua o te kawariki

I shall fashion my own houseThe support posts shall be of maahoe, patete

The ridgepole of hiinauThe inhabitants shall be raised on rengarenga

and nurtured on kawariki

Kiingi Taawhiao

Kia tupu he iwi whai hua, whai ora, whai tikanga taakiri ngaakau, taakiri hinengaro

To grow a prosperous, healthy, vibrant, innovative and culturally strong iwi

TE WHAKAKITENGAVision

Kia tupu, kia hua, kia puaawaiTo grow, prosper and sustain

TE AHUNGAMission

NGAA TIKANGAValues

WhakaitiWhakapono

ArohaRangimaarie

ManaakitangaKotahitanga

Mahitahi

HumilityTrust and Faith

Love and RespectPeace and Calm

CaringUnity

Collaboration

Underpinned by the unifying Principles of Kiingitanga

Kia tiaki i te Kiingitanga

Kia mau i ngaa taonga tuku iho

Kia eke ki ngaa taumata tiketike

Kia whai i too taatou mana motuhake

NGAA WHAAINGA MATUAPrimary Goals

STRATEGIC OBJECTIVES


�

KIINGITANGA“Whaiaa ko te mana motuhake”

The King Movement is the unifying korowai of Maaori. Kiingitanga was established in 1858 to unite all tribes under the leadership of Pootatau Te Wherowhero. Its primary goals were to cease the sale

of land to Paakehaa, stop inter-tribal warfare, and provide a springboard for the preservation of Maaori culture in the face of Paakehaa colonization. As it has done for the past 150 years, the role of

Kiingitanga will still be the unifying thread of all Iwi, under the seventh monarch, Kiingi Tuheitia.

1. To retain our historical role as Kaitiaki o te Kiingitanga2. To ensure Kiingitanga remains an eternal symbol of unity

TRIBAL IDENTITY & INTEGRITY“Ko Tainui te waka, ko Taupiri te maunga, ko Waikato te awa, ko Pootatau te

tangataWaikato taniwharau, he piko he taniwha, he piko he tanwiwha”

Our strategic direction charts a course of significant developments to protect our tribal identity and integrity. The development of a core strategy designed to provide maximum support for our kau-maatua, the caretakers of our maatauranga, and experts of our reo and tikanga, is a key priority. Our whenua, rivers, lakes and other waterways are living embodiments of our tribal identity. The neces-sity to forge a partnership with the Crown is vital to the preservation and protection of ’te taiao’, our

environment.

3. To preserve our tribal heritage, reo and tikanga4. To grow our tribal estate and manage our natural resources

TRIBAL SUCCESS“Ki te moemoeaa ahau ko ahau anake; ki te moemoeaa taatou ka taea e taatou”

Priorities in this context are focused on building capacity in all our endeavours at all levels. Coupled with research as a key priority to keep the tribe abreast of all local and global shifts and develop-ments, generations hereafter will be well equipped to enjoy success in all sectors of society. There is recognition however, that success is short term without succession, so growing leaders through

succession planning and mentoring programmes are key priorities.

5. To succeed in all forms of education and training6. To be global leaders in research excellence

7. To grow leaders

�


TRIBAL SOCIAL & ECONOMIC WELLBEING“Kia niwha te ngaakau ki te whakauu, ki te atawhai i te iwi”

Priorities in this context are focused on building capacity in all our endeavours at all levels. Coupled with research as a key priority to keep the tribe abreast of all local and global shifts and develop-ments, generations hereafter will be well equipped to enjoy success in all sectors of society. There is recognition however, that success is short term without succession, so growing leaders through

succession planning and mentoring programmes are key priorities.

8. To develop self-sufficient marae9. To advance the social development of our people

10. To develop and sustain our economic capacity

5 -YEAR STRATEGIC PLAN 2007- 2012


�

KIINGITANGA1. To retain our historical role as ‘Kaitiaki o te Kiingitanga’

1.1 To establish and provide maximum support to the office of Kiingitanga.

1.2 To maintain our traditional tribal hui, i.e. Koroneihana and Poukai, and traditional tribal entities, e.g. Ngaa Marae Toopuu.

1.3 To upgrade culturally historic sites and buildings of importance to the Kiingitanga movement, e.g. Mahinaarangi, Tuurongo, etc.

2. To ensure Kiingitanga remains an eternal symbol of unity

2.1 To facilitate Kiingitanga waananga.

2.2 To support local, national and international initiatives that promote the ’principles of Kiingitanga.

2.3 To coordinate projects and events to celebrate 150 years of Kiingitanga (May 08 - May 09).

TRIBAL IDENTITY AND INTEGRITY3. To preserve our tribal heritage, reo and tikanga

3.1 To establish a core group of kaumaatua and kuia, to share their tribal knowledge and expertise through a series of waananga maatauranga, reo, tikanga, haka and waiata.

3.2 To build a Tribal Knowledge Centre at Hopuhopu with an efficient, innovative and technology-based system designed to ensure appropriate storage and access to all tribal archival information, tribal reo and tikanga resources, and other important tribal information through all media.

3.3 To establish a Tribal Reo/Language Commission to develop strategies that promote and enhance the use of our tribal reo.

3.4 To hold a bi-annual Tainui Festival that reinforces our tribal identity, celebrates our culture, successes and achievements.

4. To grow our tribal estate and manage our natural resources

4.1 To establish the Land Acquisition Unit - to identify, purchase and increase our tribal estate.

4.2 To resolve all outstanding claims and ensure maximum, ongoing support to the Claims Negotiating Team.

4.3 To promote through our Tribal Environmental Unit, the Iwi Resource Management Plan.

TRIBAL SUCCESS5. To succeed in all forms of education and training

5.1 To develop an integrated Tribal Education Strategy that supports educational achievement in Maaori and mainstream education across all sectors, and at all levels, i.e. Te Koohanga Reo/Early Childhood, Kura Kaupapa/Primary, Wharekura/Secondary, and Ngaa Waananga/Tertiary.

5.2 To review and maintain an effective educational scholarships and grants programme that enables tribal students to utilise their knowledge, skills and experience through tribal/marae capacity building and development programmes.

5.3 To recognise success in all forms of education and training through establishing tribal achievement awards and initiatives in education, sports, arts, music, culture and business.

�


TRIBAL SUCCESS CONT…

6. To be global leaders in research excellence

6.1 To ensure the Waikato Tainui Endowed College is sufficiently staffed and resourced to:§ Effectively meet all the research needs of the tribe, through all tribal business units,

etc;§ Keep the tribe abreast of all local, national, and international developments likely to

have an impact on tribal development culturally, socially, and economically; § Offer quality research support and mentoring;§ Build strategic partnerships with selected tertiary institutions, research centres and

organisations at the national and international level;§ Develop and maintain extensive inter-tribal and indigenous research networks and

alliances; and§ Be the intellectual powerhouse for tribal research and development.

7. To grow leaders

7.1 To provide maximum support for leadership, succession, and mentoring planning initiatives for our rangatahi within and beyond our tribal organisation, through:§ Waananga with our kaumaatua and kuia in the Tribal Knowledge Centre, as well

as marae-based waananga;§ Developing and facilitating a paepae succession planning programme;§ Facilitating tribal rangatahi leadership forums;§ Apprenticeship/Career planning initiatives within all our governance entities - tribal

and commercial arms;§ Internal succession planning and work experience type programmes within the

tribal infrastructure, i.e. managements units, etc;§ Establishing and facilitating inter-tribal rangatahi leadership forums; and§ Tribal rangatahi participation in international indigenous leadership forums and

programmes.

TRIBAL SOCIAL AND ECONOMIC WELLBEING8. To develop self-sufficient marae

8.1 To develop and implement an effective Marae Development Strategy with objectives focused on: § promoting marae based waananga;§ supporting marae leadership/succession planning hui;§ ensuring the provision of maximum support for building/upgrading marae facilities;

and§ creating economically sustainable opportunities for marae enterprise.

9. To advance the social development of our people

9.1 To develop a new face tribal infrastructure through the establishment of tribal authorities equipped to:§ Reaffirm our treaty relationship with the Crown;§ Address social issues of Education, Health, Employment, Housing, etc;§ Co-manage with government agencies the allocation and delivery of resources and

services in our rohe; and§ Review and monitor the effectiveness of service provision to our people.

5 -YEAR STRATEGIC PLAN 2007- 2012


�

9.2 To establish Hopuhopu as the administrative, social, recreational and tribal knowledge ‘hub’ of Tainui, by building:§ A tribal administration building;§ A tribal knowledge centre;§ A sports & recreation centre;§ An events and conference centre;§ A retirement village for kaumaatua; and§ A super clinic / mini hospital.

9.3 To develop a core kaumaatua strategy that:§ Annually celebrates their role and ongoing contributions to the tribe;§ Provides targeted health and general care services for their physical wellbeing;§ Develops opportunities for wide participation in tribal activities and attendance to

local and national hui; and§ Advocates and supports kaumaatua waananga, forums and tribal-wide recreational

initiatives.

9.4 To develop a Tainui Sports, Arts & Recreational Strategy that caters appropriately for:§ Ensuring ongoing support for the annual Tainui Sports Awards & Scholarships;§ Enabling tribal members of all ages to participate in local, national, and

international sports, arts, and recreational activities and initiatives;§ Efficient coordination of a bi-annual Tainui Festival with inter-marae sports and

recreational activities;§ Supporting other tribal events and entities, e.g. Regatta, waka ama, etc; and§ Maximising the tribal sports and recreational facilities at Hopuhopu as a centre of

sporting excellence, by promoting its use to local and international sporting codes.

10. To develop and sustain our economic capacity

10.1 To establish an effective tribal savings, homeownership and financial planning/budgeting scheme.

10.2 To ensure a durable tribal organisational structure through:§ Effective tribal and corporate governance;§ Efficient and innovative management of our development and commercial arms;

and§ Establishing and maintaining an effective tribal communications unit that oversees

all internal communications right across our organisation, as well as external communications to our iwi and all key stakeholders through an innovative strategy.

10.3 To establish strong cultural, social and commercial relationships with other iwi.

10.4 To grow and enhance cultural, social and economic partnerships with Pacific Island nations.

10.5 To grow and enhance cultural, social and economic partnerships with First Nations peoples.

TRIBAL SOCIAL AND ECONOMIC WELLBEING CONT...

L O C A T I O N P L A N H A M I L T O N

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BNZ Online Retail Sales Index 17 October 2013

Bank of New Zealand P a g e | 1

Introducing the new index….

Online shopping is transforming the retail landscape and continues to grow at pace, but there is very little concrete information around the value and trends in this sector. To improve market information, we have worked with Marketview (specialists in managing and analysing transactional data) to develop the monthly BNZ Online Retail Sales Index.

The Index, and related analysis, draws on data from millions of monthly card transactions, scaled up to represent the broader New Zealand economy.

We include online purchases from New Zealand retailers, and online purchases made by New Zealanders at overseas sites.

Our goal is to provide important insights into purchases made at both domestic and international merchants. Future reports will expand the analysis to cover other aspects such as age, demographic and retail category trends in more detail.

Our initial focus is on retail goods, which can be benchmarked against Statistics New Zealand’s Retail Trade Survey (RTS). The index includes purchases of groceries, liquor, clothing, footwear, hardware, electronic goods, homewares and recreational goods, among other store types (a full list is included on page 6). In time we may expand the scope of this report to cover analysis of wider ecommerce industry categories.

Annual value estimated at $2.7 billion, with $1.0 billion at overseas merchants

For the 12 months to 30 September 2013, online retail sales across the categories we monitor* were estimated to be $2.7 billion (excl GST).

Close to 60% of online retail purchases were made at domestic retailers. However, purchases from offshore sites are growing at a faster rate. The growing market share of overseas retailers is illustrated in the second chart.

“Online spending is both an opportunity and threat for NZ retailers. This report fills a major knowledge gap in this rapidly changing market place.”

Stephen Bridle, Marketview

Online Index vs index of traditional retail sales* 1Q 2010 = 100^

80

100

120

140

160

180

200

220

Sep-09 Sep-10 Sep-11 Sep-12 Sep-13

Online Index (rebased)

Statistics New Zealand Retail Sales* (rebased)

^The base online index value throughout the report is usually Jan 2010 = 100. However, in this chart we use figures adjusted so that the March 2010 quarter = 100, to facilitate a comparison with Statistics New Zealand figures, which are quarterly.

Share of NZ online retail sales by retail location (Monthly)

25%

35%

45%

55%

65%

75%


Online purchases from domestic NZ retailers

Online purchases by NZer's from international merchants

Domestic

International

Annual growth versus same period prior year

12 months ended 3 months ended

Jul-13 Aug-13 Sep-13 Jul-13 Aug-13 Sep-13

Online Index

18% 18% 18% 17% 18% 15%

Domestic sales

16% 16% 15% 13% 13% 11%

International sales

22% 22% 21% 23% 24% 21%

*Data notes: Online sales data is produced by Marketview. Traditional retail sales data is from Statistics New Zealand quarterly releases.

For both data sets, the figures we use in this report correspond to Statistics New Zealand’s ANZSIC Division G (Retail Trade) excluding fuel, motor vehicles and parts, and marine. The annual value of official retail sales in the categories we monitor is approx. $44 billion.

BNZ Online Retail Sales Index October 2013

P a g e | 2

September growth rate double digit, but slightly lower than recent months

Online sales have more than doubled over the past four years and the September quarter showed further strong growth.

For the three months ending September 2013 spending was up by 15% on the same time last year. In comparison, traditional retail sales have recorded much weaker growth rates, with the latest June quarter up by 3% on the same quarter last year.

The latest quarter shows something of a slowdown, however, as the online growth rate had been running at around 17-19% p.a. (3 monthly average compared with the same period in the prior year).

Online sales equivalent to 6% of reported retail sales; 9.5% if we remove groceries and liquor

Comparing with latest figures reported in Statistics New Zealand’s RTS, online retail spending for the 12 months ended 30 June 2013 was equivalent to 6.0% of reported retail sales.

The grocery and liquor sectors comprise approximately 45% of traditional retail sales in categories we monitor, but only about 12% of online sales.

Excluding the grocery and liquor sectors from both the RTS and our Index, we estimate the remaining online spending equivalent to around 9.5% of traditional retail sales.

Following a similar growth trend to Australia

Growth in New Zealand’s online retail sales is tracking very similar to that of Australia’s, as measured using the NAB Online Retail Sales Index. (The NAB index incorporates a very similar retail category set to that used in our Index.)

For the 3 months ended August 2013, the NAB index was up 13% on the same period a year earlier. This compares with corresponding NZ figures of 18% for August and 15% for September.

Australian online retail sales for the 12 months ended August 2013 were at a level equivalent to 6.3% of officially reported retail spending. For the 12 months ending June 2013, the Australian figure was 6.2%, compared to our estimate of 6.0% for New Zealand in the same period.

Growth in online sales vs reported retail sales* (3 month average compared to same period in prior year)

0%

10%

20%

30%

40%

Sep-10 Sep-11 Sep-12 Sep-13

Online Index Statistics New Zealand Retail Sales*

Official retail sales statistics are sourced from Statistics New Zealand

Online as a % of reported retail sales* Online retail sales / Traditional retail sales

2%

3%

4%

5%

6%

7%


Quarterly Annual

Official retail sales statistics are sourced from Statistics New Zealand

NZ vs Australia^ online growth rates (3 month average compared to same period in prior year)

0%

10%

20%

30%

40%

Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13

New Zealand Australia

* Please refer earlier notes and the detailed notes on page 6 for a description of what store categories are included in the analysis.

^Australian figures are calculated using index figures supplied by National Australia Bank Limited.


P a g e | 3

Growth in international purchases continues to outpace domestic

Although the growth rate gap converged in mid-2012, international purchases have grown at much faster rates than domestic purchases, particularly over 2011.

Online purchases made by New Zealanders at international merchants are currently growing approximately 10% pa faster than online purchases at domestic merchants.

After January this year we have seen the rate of growth in sales at domestic online merchants slow, whereas the rate of growth in purchases at international merchants has increased.

High NZD a likely contributor to stronger growth in online purchases from overseas merchants

The NZD has appreciated against the USD since mid-2010. The exchange rate of 0.81 at the end of September 2013 was 17% higher than the level of 0.69 prevailing at the end of June 2010.

The strong NZD reduces the costs of overseas goods and is likely to have been a factor contributing to international retailers increasing their share of New Zealand online spending.

We’d note that marketing tactics, such as free or low-cost shipping and no obligation returns, which are now offered by many international sites, are also likely to have been a factor in the increase in spending with international retailers.

International purchases tend to peak in November

The seasonal pattern for international online purchases tends to show a peak in November. This would be consistent with people placing overseas orders well in advance of Christmas to allow for international shipping times.

Purchases online at domestic retailers tend to peak in December, although build up throughout November. Greater certainty around local delivery is likely to be a factor in the later seasonal peak for domestic purchases compared to international.

Growth in online sales by retail location (3 month average compared to same period in prior year)

0%

10%

20%

30%

40%

50%

60%




Domestic

International

International share of online vs NZD/USD

0.60

0.70

0.80

0.90

20%

30%

40%

50%


International merchants' share of NZ online sales (LHS)

NZD/USD Exchange Rate (RHS)

NZD/USD values are as at month end and are sourced from the Reserve Bank of New

Zealand. Figures for the international share of total NZ online spending are on a monthly

basis.

Online Index by retail location (monthly) January 2010 = 100

50

100

150

200

250

300




International

Domestic


P a g e | 4

Composition of online sales significantly different from traditional

The composition of New Zealanders’ online retail sales differs significantly from traditionally reported retail sales.

In particular, the Groceries and Liquor category accounts for 12% of online sales but 45% of reported retail sales, across the categories we monitor.

Please note that the Groceries and Liquor category includes “Other specialised food”, which is where Statistics New Zealand categorises many health food supplements (a popular online category).

The report will evolve into more granular analysis over time.

Growth rates have varied across sectors, although most have now converged into the 10-20% pa range

The uptick in electronic sales (yellow line) in the second quarter of 2011 coincides with the release of a range of new flagship tablets. A similar lift in this category was seen in late 2012 when Apple released a suite of products.

The recreation/books/media category (dark blue line) enjoyed exceptionally strong growth over 2011.

Metro regions have a higher per-capita online spend than the country average

The bottom chart shows provisional analysis into online spending, looking at the region of the shopper.

The regions dominated by New Zealand’s largest cities – Auckland, Wellington and Canterbury – demonstrate higher than average online retail spending per capita. (Their share of online spending is higher than their share of the population.)

This may partly reflect different age compositions across regions, rather than a “metro” effect (e.g. amongst the age groups, 35-54 year olds have the highest level of online spending per capita). We will look into this in more detail in future reports.

Share of Online Spending by Sector Composition of online spend for the 12 months to 30 Sep 2013

12%

20%

12%

16%

40%

Groceries & Liquor

Home, Furniture, Appliances, Electronics

Recreation, Toys, Games, Entertainment media, Books

Fashion, Cosmetics, Personal

Department, Variety, Daily Deals and Other

Note: “Other” includes unclassified stores and specialty stores that don’t neatly fit into defined ANZSIC categories. Unclassified Trade Me spending (estimated retail component) is included with Department Store spending.

Growth in online spending by sector (3 month average compared to same period in prior year)

0%

10%

20%

30%

40%

50%

60%

70%


Groceries & Liquor

Home, Furniture, Appliances, Electronics

Recreation, Toys, Games, Entertainment media, Books

Fashion, Cosmetics, Personal

Department, Variety, Daily Deals and Other

Share of annual online spending, by region

0%

10%

20%

30%

40%

Au

ckla

nd

Wel

lingt

on

Res

t o

f N

I

Can

terb

ury

Res

t o

f SI

Share of online spending by region of buyer

Share of the NZ population in region

% of

Share of spending is for the 12 months ended 30 September 2013. Population figures are derived from Statistics New Zealand data and are as at June 2012.


P a g e | 5

Quake effect?

The broad regions of New Zealand shown in the adjacent chart have generally followed similar growth paths.

A salient exception is the very strong increase in growth in online spending in the Canterbury region following the Christchurch earthquake in February 2011.

In January 2011, online retail sales in the Canterbury region were around 20%* higher than a year earlier. By July 2011, Canterbury online retail sales were 40%* higher than a year earlier.

While the rates of growth in other regions also rose after January 2011, none rose to the same extent as Canterbury.

* Growth rate measured as the 3 month moving average compared with the same period a year earlier.

Growth in online spending by region of shopper (3 month average compared to same period in prior year)

0%

10%

20%

30%

40%

50%


Auckland Rest of North Island

Wellington Rest of South Island

Canterbury

Summary points

New monthly index to track New Zealand online retail sales.

Measures online sales at NZ retailers and online purchases made by New Zealanders at overseas merchants.

Close to 60% of New Zealand online retail sales are from domestic merchants, but offshore merchants have been gaining market share.

Online retail sales, in the categories monitored, were equivalent to 6% of traditional sales over the 12 months to 30 June 2013.

Similar online sales growth trend to that observed in Australia.

“We’re a billion dollar export market for international online retailers. It’s worthy of attention, hence the increasing number of sites offering free or low-cost shipping and no-questions-asked returns.”

Stephen Bridle, Marketview


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Technical Notes and Q&A

How often will you publish the Online Index?

We plan on publishing the index monthly in a 1 to 2 page note, with more detailed reports on a quarterly basis.

Will you be providing more detailed analysis in future issues?

Certainly. More detailed breakdowns by age and spend category will be added in a few months. We will sometimes take a closer look at topical items of interest, and also review feedback regarding data requests. We don’t expect future reports will cover highly detailed market segment or market share analysis, but this can be supplied by Marketview on a bespoke basis.

What retail categories are covered by the report?

Our benchmark when assigning industry categories to retail stores is the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006. This classification system was developed by Statistics New Zealand and the Australian Bureau of Statistics and more details about it are available on their respective websites. We focus on stores in ANZSIC Division G (“Retail Trade”) and exclude fuel, motor vehicles and vehicle parts. We also exclude marine equipment retailing (annual sales of just over $300m, according to figures we commissioned from Statistics New Zealand), purely to facilitate like-for-like comparisons with Australian statistics.

All remaining Division G categories are included. These account for annual retail sales of approximately $44 billion (excluding GST) and include the following categories: supermarket and grocery stores; specialised food and liquor; furniture, floor coverings, houseware and textile goods; electrical and electronic goods; hardware, building and garden supplies; recreational goods; clothing, footwear and personal accessories; department stores; pharmaceutical and other store-based retailing; non-store retailing; and retail commission-based buying and/or selling.

Please note that when Statistics New Zealand releases retail figures they include Division H figures in the release publication. Division H includes accommodation and food and beverage food services (e.g. restaurants, takeaways, pubs and taverns) and we don’t include these in our online retail sales index.

What online sales are captured by the Online Index and what sales aren’t?

Our primary source of information is card payments (credit and debit cards, including the use of online payment services like PayPal).

We also make estimates of Trade Me sales relevant to our retail category set that aren’t picked up via card payments. In doing so, we seek to estimate only sales that would count as ”retail” spending in official statistics (which would not include household-to-household sales of second hand goods, for example).

The Index includes goods purchased online from New Zealand retailers and goods purchased by New Zealanders from international online stores. Retail online sales are a subset of wider ecommerce spending.

We don’t capture online sales using prepaid gift cards or payments made directly into merchants’ bank accounts (other than those picked up through our Trade Me estimates).

Are all the online sales you measure included in the retail sales figures reported by Statistics New Zealand?

No, the official Statistics New Zealand figures do not include online purchases bought from overseas merchants, which amount to approximately $1billion in the retail categories we monitor. That’s why we say “online sales are equivalent to x% of reported traditional retail sales”, rather than “online sales are x% of retail sales”.

How good is the underlying data?

Marketview has an 11 year history of analysing and categorising New Zealand spending data and has built up a detailed knowledge of the data it deals with. Furthermore, Marketview and BNZ have conducted a range of sample testing and data reviews in producing the Index.

The BNZ Online Retail Sales Index is compiled from millions of non-cash transactions involving hundreds of thousands of people. However, nothing is ever perfect, and as with any indicator, improvements will be ongoing.

How does the BNZ Online Index compare with other studies of the NZ online retail market? Other online retail studies that we have come across are survey-based snapshots (e.g. annually), often involving a range of detailed questions. Our Index uses actual (rather than surveyed) payment data, across a much bigger population base (hundreds of thousands of people), but with a more narrowly focused parameter set (e.g. it doesn’t capture information about what sort of research a person does before they purchase online). We allow for regional and age skews in our data when scaling it up to a measure for the broad economy. Other studies may make similar types of adjustments. We also remove GST from domestic purchases to facilitate comparison with official retail statistics. GST treatment may vary across other studies. We generate a monthly time series, whereas major market surveys are often produced on an annual basis.

Overall, we believe that our Index and other sample surveys both have their place in informing the retail market. We believe one of the key strengths of our Index is that the very large “sample size” of actual online payments helps us produce a robust measure of aggregate online spending across the payment types we cover.

Please note that some online studies produced by other parties may cover “ecommerce” online spending, whereas our data set focuses on “retail”. “Ecommerce” captures a much wider set of data (e.g. air tickets, accommodation, cinema tickets, contact lenses) and will result in a much higher figure for online spending. While Marketview has comprehensive data for the wider ecommerce sector and can produce bespoke reports in this area, wider ecommerce is not the focus of our Index.


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Contacts for enquiries

Gary Baker

Director, Institutional Research

Bank of New Zealand

+64 9 924 9353

+64 21 995 435

[email protected]

Stephen Bridle

Managing Director

Marketview

+64 4 472 1991

+64 274 740 141

[email protected]

About Marketview

Marketview specialises in the management and analysis of depersonalised, debit (EFTPOS) and credit card transactional

data. Marketview manages annual transaction volumes of 1 billion transactions and spending worth over $40 billion. We

have spending data across a broad range of industries, dating back to 2002. We cover spending at stores, and online

transactions with both domestic and international E-tailers.

Working with our data partners, Marketview converts the raw transactions into high quality, precision market intelligence

reports. Our services include Market Performance monitoring, Customer catchment definition and valuation, and Consumer

purchase behaviour. Reports are available on a subscription basis or through one off projects, tailored to meet specific

requirements.

The first Marketview services were launched in association with BNZ in September 2001. Today our reporting services are

used by retailers - national chains and independents, central and local government agencies, as well as a range of

professional services consultancies.

Disclaimer

The information in this document (Information) is provided for general information purposes only. The Information does not constitute, in any jurisdiction, any advice, recommendation, opinion, guidance, offer, inducement or solicitation with respect to the purchase or sale or any financial product or the engaging (or refraining to engage) in any transaction. The Information is governed by, and is to be construed in accordance with, the laws of New Zealand and any dispute or claim arising from, or in connection with, the Information is subject to the non-exclusive jurisdiction of the courts of New Zealand. To the extent that any Information could constitute financial advice, it does not take into account any person’s particular financial situation or goals. Any statements as to past performance do not represent future performance, The Information may contain forward-looking statements that may be based on certain assumptions. Actual events may differ from those assumed. All forward-looking statements included are based on information available on the date hereof and no Relevant Person assumes any duty to update any forward-looking statement. Accordingly, there can be no assurance that any forward-looking statements will materialise or will not be materially worse than those presented. The Information may include estimates and projections and involves elements of subjective judgement and analysis.

None of BNZ or any of its directors, officers, employees, agents, advisers or contractors (each a Relevant Person) provides any legal, tax, accounting, financial or other advice in respect of the Information. Anyone proposing to rely on or use the Information should obtain independent and specific advice, including (without limitation) legal, tax, accounting and financial advice, from appropriate professionals or experts, and should independently investigate and verify, and reach their own conclusions in respect of, the Information. No Relevant Person gives any representation or warranty, express or implied, that any of the Information is accurate, reliable, complete, current or reasonable, and no Relevant Person undertakes to update the Information. To the maximum extent permissible by law, each Relevant Person disclaims all liability and responsibility for any loss, damage, cost or liability whatsoever suffered or incurred by any person directly or indirectly resulting from the content of or any omission from the Information (including by reasons of fault, negligence, negligent misstatement or otherwise). Where the Information is provided by a specific author in this document, that Information is the personal view of the author and does not necessarily reflect the views of BNZ. National Australia Bank Limited is not a registered bank in New Zealand. “Apple” is a trademark of Apple Inc.

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