What happens when Kmart comes to town?

Thursday, 8 March 2018

Kmart in Richmond has brought more customers to the region, boosting the bottom line of other businesses nearby.

For many Kmart fans, news of the retail giant coming to town is music to their ears.

Case in point: Blenheim. The hullabaloo when Kmart chose the top-of-the-south town was palpable.

Kmart in Blenheim is expected to open sometime in the New Year.

A post on the Facebook page 'Bring Kmart to Blenheim' summed up the reaction: 'WE DID IT!!!!!! KMART IS COMING TO BLENHEIM!!!!!!!!!!!'

The all-capped hurrah and exclamation marks spoke volumes.

Tammy Peckston, centre, with Lotus and Hunter Jackson were the first people through the doors at Petone's new Kmart in June 2017.

Some Kmart lovers from Blenheim travel more than 90 minutes to shop at Kmart in Richmond.

* Hundreds queue for new Petone Kmart

* Kmart sets opening date for Rotorua branch**

Petone, Lower Hutt welcomed Kmart last year.

But what really happens when the franchise moves in? Do smaller stores struggle to stay open?

Kmart has opened up shops in Richmond, Hamilton, Whangarei, Tauranga and Petone in recent years, with Rotorua and Queenstown in their crosshairs.

A crowd gathers outside Kmart Petone for the chance to throw cream at the store managers - all in the name of raising money and awareness for charity.

Blenheim is expected to welcome the franchise sometime in the New Year, at the Westwood Development on the outskirts of town.

Blenheim Business Association chairman Anthony Mullen said smaller businesses with similar products would have to work harder to appeal to customers.

Kmart opened in Te Rapa, Hamilton in 2014.

'Absolutely it has an impact on business, especially if they are trying to sell similar stocked items … That's where you have to be creative and clever and come up with reasons for people to come to your shop,' he said.

'We can't just expect to be able to put up an open sign on our door and expect people to walk in.'

Emma-Jane Cortegast, left, and Hannah Barnett camped outside Kmart in Petone before the opening on June 1, 2017.

Mullen said there was no way those businesses would be able to compete on price with Kmart.

'You have to think of something different to add to that shopping experience that people are going to say 'look I can get it there [Kmart] but I need to go to this place here because of the shopping experience or the service I get',' he said.

Kmart New Zealand had more than 115,000 likes on Facebook and 'Kmart NZ Lovers' had more than 30,000 followers on Instagram.

Retail New Zealand spokesman Greg Harford said when stores like Kmart opened it helped draw people to an area.

'Overall the experience I think shows where you have a big anchor store, perhaps a Kmart or Warehouse coming into an area, they will often act as destinations that attract customers in,' he said.

Harford said in the case of Blenheim, businesses in the central business district might see short-term impacts as customers checked out the new store but he did not think it would have a long-term effect.

'I know in relation to other stores like David Jones coming into Wellington for example, what we have seen is, yes there has been sort of an immediate drop-off as people race into the new store to see what it's all about but pretty quickly they're coming back into the other stores as well,' he said.

'Long term people are still going to want to shop at the local stores they know and love and overall what you might see is people coming from slightly further afield to shop at the Kmart but they'll also, I think, probably still be keen to shop in the other stores in the middle of town,' he said.

Harford said Kmart had the ability to draw customers in from further afield. Kmart in Richmond being a prime example.

Many Marlburians admitted to taking the 90-minute drive from Blenheim to Richmond just to shop at the store.

Kmart opened its doors in Richmond, near Nelson, in 2013, which had been beneficial to other businesses in the area.

Bed Bath and Beyond worker Shelley Yate said it had been great for their business, not far from the big box retailer.

'It's had a really good impact for us,' she said. 'It's brought a lot of people to our area, where they are. It's good, we are quite [a lot] busier with them.'

Yate thought other businesses near Kmart would have reaped the benefits.

'If there are other businesses around it's going to actually boost their sales because it has [for] us,' she said.

Nicholls Auto Centre, on the same block as Kmart in Richmond, an automotive business, was also 'definitely busier' as a result of Kmart opening.

Receptionist Kirsty Nicholls said Kmart had drawn more people to the area.

'With it being open so much I think it probably does create a little bit more business.'

Businesses in Petone, Lower Hutt had also benefited from Kmart opening in June, 2017.

Abtec Audio Lounge managing director Ashley Burrell said being near Kmart had been 'positive' for the business.

'We weren't sure what to expect but traffic flow and foot traffic around here is, there's no comparison, it's like it turned on a big huge tap of people,' he said.

'Most people, we are asking how they heard of us, they said they went to Kmart or they were sitting at the lights looking in our window,' he said.

Burrell estimated at least 5000 more vehicles were driving past his store each day since Kmart had opened.

In 2014, Kmart opened its second Kmart store in Hamilton and some businesses felt the pinch.

Dollar Store 123 staff member Helen Li said it was 'super hard' for the business for about a month after Kmart opened as customers flocked to the new store.

But business picked up again, she said.

Frankton market co-ordinator Vinod Bhikha said he did not notice an impact on the Sunday market after Kmart opened, but said that probably came down to the market being once a week.

'I think if the market was open six days a week we would have noticed it,' he said.

The market included a range of clothing, accessories, jewellery, fashion, food and arts and crafts.

A Kmart New Zealand spokesperson said their research indicated that when Kmart was not present in town, their 'loyal customers' were likely to drive to nearby cities or locations where they had a store.

'This can cause 'escape expenditure'; in the sense that customers spending money at these alternative Kmart stores, are also likely to undertake more of their shopping needs in that same location, in the interests of saving time.'

Kmart also provided employment opportunities locally, and could encourage residents to shop locally with many different retailers.