Trolley Trends

Checking out the supermarket sector

By Jody Robb

Article featured in Total Property - Issue 1 2016

Forward planning by supermarket giants for their space needs is akin to keeping the property pantry well stocked – with plenty in reserve. The two main players in New Zealand’s Fast Moving Consumer Goods (FMCG) sector – Progressive Enterprises and Foodstuffs – continue to expand in response to changing demographics and population concentrations, new suburban hubs and changing consumer buying patterns.

Many supermarkets now have on-site cafes, Lotto outlets, pharmacies and fuel forecourts to broaden their appeal. New small format ‘metro’ models are designed to capture the wallets of CBD workers and apartment dwellers, while large-format suburban stores are anchored in new mega shopping centres.

Online supermarket order and delivery services continue to grow in popularity along with emerging boutique and ethnic food markets catering to diversifying food preferences and sociographical influences.

Progressive’s general manager of property, Adrian Walker says around 90 percent of its Countdown, FreshChoice, and Supervalue sites are leased. “We are not long-term property owners. By selling assets and leasing property, we are able to generate capital for investment in our business.” He says the optimal site size for a regional and metropolitan standalone store is around 1.2 to 1.3 hectares and about 8,000 to 9,000 square metres with basement parking.

Comprehensive research determines where and when Progressive enters a new market particularly population growth and projections statistics – along with local authority data on building consents and subdivision developments.

Walker sees smaller ‘metro’ CBD stores and the firm’s ‘click and collect' online ordering and delivery service continuing to grow.

Tony Catton, acting general manager property development for Foodstuffs North Island (FSNI says the company can plan 15 years in advance for the location of a New World and PAK’nSAVE store. “However, in the 11 years I’ve been with the company, we’ve never got it horribly wrong.” A right spot was the Victoria Park’s New World serving both the affluent Ponsonby area and the fast evolving Wynyard high density residential and corporate precinct.

“It had a big population base at the time of development and is also on the edge of Auckland’s waterfront which is ripe for growth,” Catton says.

“Contrast this with provincial New Zealand where our property decisions are largely based on aligning with existing communities.”

Unlike Progressive, Foodstuffs owns around 90 percent of its properties.

The biggest stores have gross floor area of about 8500 sq m while CBD metro stores are around 1340 sq m.

A newer development is the appearance of upmarket boutique stores like Wellington’s Moore Wilson, and Auckland’s Nosh and Farro Fresh.

Investment company Veritas, which purchased the bespoke Nosh food market business, leases all its sites.

Chairman Tim Cook says the Nosh model is a mix of franchises and corporate-owned stores. “We will never replace big box shops and or have their range. Our offering is a subset of the big food retailers but with real points of difference.”

Cooks suggests the ideal niche store size is 250 to 350 sq m.


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