Latest / Best of Business / Sam Dickie: Fisher Funds expert on the rise in global retail giants moving into New Zealand

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Sam Dickie: Fisher Funds expert on the rise in global retail giants moving into New Zealand · Best of Business

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  Speaker 1: You're listening to a podcast from News talks'd be follow
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  Speaker 2: Over the last few years we've managed to pull a
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  Speaker 2: couple of retail giants to shore and they changing our
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  Speaker 2: shopping landscape. We've got Costco opening its first store in
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  Speaker 2: Westalkland in twenty twenty two, and now i KA is
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  Speaker 2: going to be opening up at Sylvia Park in December
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  Speaker 2: this year. Sam Dickey from Fisher Funds is with us. Hello, Sam,
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  Speaker 2: good evening here. Now these are really really big business
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  Speaker 2: is very successful. What makes them so formidable?
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  Speaker 3: Formidable? INDEEDA they are phenomenal businesses. So Costco half a
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  Speaker 3: trillion dollar company share price up around almost four thousand
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  Speaker 3: percent in the last twenty years, and I here the
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  Speaker 3: biggest furniture retailer in the world. Costco is obsessive about
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  Speaker 3: its customers. So when they go into any board meeting,
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  Speaker 3: any management meeting, they always talk about how they can
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  Speaker 3: drive down the price of their goods for their customers.
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  Speaker 3: They never talk about how they can gouge more profit
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  Speaker 3: or margin out of you and I. And that's called scale.
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  Speaker 3: Economy is shared and its feeds on itself and it's
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  Speaker 3: very hard for smaller players to compete with and that's
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  Speaker 3: why thing we stalk on stores booming, and IKEA's motors
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  Speaker 3: is also at sheer scale, so four hundred and twenty
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  Speaker 3: two stores across sixty odd countries. What's really interesting about
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  Speaker 3: Ikea though, is its unique ownership structure, and that's kind
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  Speaker 3: of a competitive advantage. So it is owned by Dutch
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  Speaker 3: and Swiss foundations, and the Dutch foundation model makes selling
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  Speaker 3: Ikea more or less impossible, which ensures independence from shareholders
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  Speaker 3: and that silly quarterly pressure, and it allows them to
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  Speaker 3: take a one hundred year strategic view while competitors chase
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  Speaker 3: short term gains.
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  Speaker 2: Interesting and why are they interested in coming to New Zealand?
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  Speaker 3: Yes, well, it is interesting because global behemoths have sort
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  Speaker 3: of ignored New Zealand for the last fifty years because
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  Speaker 3: it's so small until now. And you know, you think
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  Speaker 3: about the biggest retailers in the world, warm Amazon Home Depot,
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  Speaker 3: none of them have ventured down here with local operations,
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  Speaker 3: so so Costco, the third biggest retailer in the world,
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  Speaker 3: is here. And that's because New Zealand is an attractive
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  Speaker 3: market because it's dominated by it sort of a small
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  Speaker 3: handful a cartel or an oligopoly of duopoly in each segment,
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  Speaker 3: So a small handful of supermarkets for Costco to disrupt,
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  Speaker 3: a small handful of furniture players for Ike to disrupt,
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  Speaker 3: and plus iq sided the government's streamlined approval process to
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  Speaker 3: encourage overseas competition in retail. And of course it's a
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  Speaker 3: point in time thing. So New Zealand is in Auckland
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  Speaker 3: is a compact, affluent market. And while we're not number
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  Speaker 3: one on the global expansion list for these these great companies,
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  Speaker 3: they do get to us eventually.
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  Speaker 2: Should retailers here in this country be worried?
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  Speaker 3: The look? I do think they have been sheltered these
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  Speaker 3: oligopolies until now from these global bohemos, so that the
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  Speaker 3: news is not quite as rosy and they're going to
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  Speaker 3: have to run really fast to our compete these companies.
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  Speaker 3: And remember that they only have one store each by
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  Speaker 3: the end of this year, but Costco's planning another one
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  Speaker 3: in South Auckland and another one in christ To, so
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  Speaker 3: they kind of have a land and expand model that
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  Speaker 3: they don't really come down here just to have one store.
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  Speaker 2: And what about consumers? Should we be as stoked as
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  Speaker 2: we are.
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  Speaker 3: Yeah, I think so it's great news for us. So again,
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  Speaker 3: Costco's obsessive about us, about you and I, and using
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  Speaker 3: its scale to drive down prices for us every day.
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  Speaker 3: That's nice to have and choice is always good. We've
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  Speaker 3: been restricted to a small handful of supermarket players and
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  Speaker 3: IKE runs exceptionally lean profit margin and uses its massive
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  Speaker 3: scale to offer very low prices in that mantra that
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  Speaker 3: there's nothing free in life, but the best price you
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  Speaker 3: can get is when you do as much as you
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  Speaker 3: can yourself. So that's pretty exciting. So I think it's
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  Speaker 3: good news for us.
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  Speaker 2: So what does it mean for investors.
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  Speaker 3: Well, for investors in Costco, doesn't mean much at all
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  Speaker 3: really because New Zealand's pretty tiny and we can't invest
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  Speaker 3: in the IKE, but it means quite a bit for
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  Speaker 3: investors in New Zealand companies. So on the good news
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  Speaker 3: front for Main Freight, allegedly, I think there's been in
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  Speaker 3: the press. They've apparently won the IQ in New Zealand
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  Speaker 3: logistics contract and apart from being the best logistics operator
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  Speaker 3: in New Zealand, I suspect Main Freight it's pretty unique.
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  Speaker 3: Hundred year vision gelled quite well with IKEA's pretty unique
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  Speaker 3: kind one hundred year vision. It's pretty pretty rare to
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  Speaker 3: have that long term vision. But for investors in listed
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  Speaker 3: retailers that cross swords with Ikea companies like the Warehouse
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  Speaker 3: Harvey Norman, they should Those investors should revisit their investment
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  Speaker 3: thesis and make sure they're factored in a significant step
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  Speaker 3: up in competition from global winners.
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  Speaker 2: Yeah, hey, Sam, as always really appreciated it. Sam Dickey,
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  Speaker 2: Fisher Funds will talk to you again in a week's.
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