New opportunities for New Zealand retailers with a greater emphasis on the retail dining experience and focus on convenience
Uber Eats is helping to reshape the commercial property landscape with exciting and sometimes unexpected new opportunities for New Zealand retailers, retail brokers say.
Nilesh Patel, a Director of Colliers International’s Retail team specialising in Auckland CBD retail leasing, says many retail businesses have struggled to adapt to the challenges of online competition.
However, he notes the food and beverage sector has seen impressive growth due to a willingness to embrace new technologies and adapt to changing consumer preferences.
“Two key trends have emerged as a result – a greater emphasis on the retail dining experience, and a renewed focus on convenience.
“Kiwi consumers still want to get out of the house to grab a bite to eat, meet friends and have a drink. What’s changed is that their expectations are now higher than ever – they’re looking for sophisticated retail environments and curated experiences that can’t be replicated online.
“On the other hand, consumers are demanding ever greater levels of convenience. Online ordering and delivery on demand is a bare minimum; consumers now want the ability to browse a diverse range of dining options, order with a single tap, and track their orders all the way to the door.”
Patel says Uber Eats is a gamechanger because it enables retailers to embrace both of these disparate trends.
“Operators no longer have to decide whether to focus on the dine-in experience or takeaway convenience – with Uber Eats, they can do both at minimal extra cost.
“This opens up new revenue streams, making businesses less reliant on a single retail storefront.”
Auckland retailers have been quick to adopt Uber Eats.
Since launching in March 2017, the service has expanded from 70 restaurants across the city to more than 400, with a delivery area spanning some 316 square kilometres. Aucklanders are now able to choose from 24,000 menu items across some 35 different cuisines.
Uber Eats has also expanded rapidly into other New Zealand markets. The service is now available in Wellington, Christchurch and Hamilton, with more than 700 restaurants signed up nationwide.
Patel says a good example of a retail business using Uber Eats to expand its revenue stream is Best Ugly Bagels in Auckland’s CBD.
“Located in the popular City Works Depot, in a funky space within a heritage industrial building, the eatery provides an attractive dine-in experience with great indoor-outdoor flow.
“The business makes its hand-crafted bagels on-site, selling them over the counter either packaged or prepared, as well as wholesale to other retailers.
“With Uber Eats, the business is also able to conveniently deliver prepared bagels directly to consumers throughout the CBD.
“This has proved highly successful; Best Ugly Bagels was among the top Uber Eats operators within the service’s first year in Auckland.”
Colliers Retail Associate Director Jessica Martin – who specialises in food and beverage, convenience and large format retail leasing – says Uber Eats is also allowing businesses to rethink where they locate their premises.
“In the past, food and beverage retailers have been tied to high-traffic locations – often paying a premium to lease prime tenancies in the CBD and city fringe.
“However, population growth and growing consumer sophistication is giving operators the chance to pursue retail opportunities outside of the core CBD.
“What Uber Eats adds to the equation is the ability penetrate a wider suburban market, with convenience as a key point of difference.”
A good example of this trend is Auckland eatery Happy Boy, which specialises in Asian fusion-style burgers, served in Chinese bao steamed buns.
Its video game-inspired premises, full of bright fluorescent colours, is located in the Auckland suburb of Royal Oak.
“In the past, a business of this sophistication might have struggled in a primarily residential location, well away from the CBD,” says Martin.
“However, an increasingly affluent and cosmopolitan catchment, along with the convenience offered by delivery on demand, has ensured the business is a success.
“On a busy Friday night, you’ll often find Happy Boy packed full of diners – as well as a waiting queue of Uber Eats drivers.”
Martin says Uber Eats could also allow retailers to ditch their retail premises altogether.
“In overseas markets, we’ve seen the rise of so-called ‘dark’ or ‘ghost’ kitchens. These are premises that exist solely to produce delivery orders for apps like Uber Eats, without the need for costly retail fit outs and front-of-staff overheads.
“Retail centre landlords need to be mindful of such changes in order to remain relevant in an ever-increasing world of convenience-based online shopping. “
Uber Eats will also have an impact on the types of retail premises that are popular among tenants.
Good street frontage, accessibility to parking and large back-of-house areas will remain advantageous.
Tenants may also start to demand different store layouts – for example, separate back-of-house entrances for Uber Eats drivers, so as not to disturb the front-of-house dining experience. This will also allow businesses to futureproof for developments on the distant horizon, such as delivery by drone or autonomous vehicle.
Patel says savvy retailers are reinvesting the additional income from Uber Eats into their businesses.
“This might involve a higher-end fit out, enabling an eatery to stand out in the increasingly competitive food and beverage space.
“Greater investment in the online space will also be advantageous. A good website with an up-to-date menu, mobile responsive deign, and professional photos will help retailers to attract customers.
“A strong presence on social media platforms like Instagram and Facebook is also a must.”
Patel says that as consumers continue to demand sophisticated dining options and ever-more convenience, the popularity of delivery on demand apps like Uber Eats is likely to continue.
“As a result, demand for prime and even secondary food and beverage retail premises will remain very strong – a trend we believe is unlikely to change in the foreseeable future.”