Palmerston North Retailing Introduction and General Experience My name is Peter Crawford and I am the Economic Policy Advisor for Palmerston North City Council. My qualifications include a BA (geography and economics), BA Hons (Geography) and Diploma in Development Studies. Previous work experience includes five years at the Department of Trade and Industry (trade policy, regional development and import licensing), and 17 years at the New Zealand Manufacturers Federation (Executive Officer for a range of industry groups and Trade and Economic Analyst for the Federation). Scope and Approach The data used in this report is obtained from Statistics New Zealand and the Ministry of Tourism. Data from the Statistics New Zealand Retail Trade Survey covers Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006 Division G (Retail Trade), Division H (Accommodation and Food Services) and part of Division S (Other Services Automotive Repair and Maintenance). The annual employment earnings data from the Linked Employer-Employee Data series is only available at the ANZSIC 2006 Division level so the earnings data does not include earnings for employees in automotive repair and maintenance. The Statistics New Zealand Retail Trade Survey data for Palmerston North is released with a caveat noting limitations in the data. They are of a lower standard than published figures Statistics New Zealand releases. The Retail Trade Survey sample is selected and weighted at the retail industry group level nationally, and the release of this data for Palmerston North is below that design level. This data is subject to sample, non-sample and modelling errors and is indicative only. The retail sales data is exclusive of GST. Palmerston North Retail Industry Context Palmerston North city, with an estimated population of 80,300 people as at 30 June 2009, is the 12 th largest local authority in New Zealand and accounts for a 1.9% share of the New Zealand population. Statistics New Zealand has projected population growth of 15,100 between 2006 and 2031 (medium growth projection), with the city population reaching 93,600 by 2031. The Department s population projections show continuing urban drift, with large cities growing faster than smaller cities and rural towns. The medium 25-year growth projections of 0.7% average annual growth for Palmerston North are slightly lower than the national average of 0.8% but are much higher than other regional cities that are smaller than Palmerston North. The city s share of economic activity is significantly higher than its population share, which is reflected in the higher Palmerston North city share of national data for employee numbers, employee earnings, visitor numbers and retail sales. In February 2009 the employee count for the city was 46,550, 2.4% of national employment. The city is the 10 th largest local authority for employment. Census 2006 data suggests that over 20% of the city s workforce lives outside the city. Major commuter flows to the city come from Manawatu District, Horowhenua District, Rangitikei District and Tararua District (in declining order). Over the nine year period
2 from 2000 to 2009 the city s population growth was well below the national average but growth in employee numbers and employee earnings matched national growth levels. The difference between population and employment growth levels is due to a decline in tertiary student numbers in the city, reductions in the number of people receiving benefits, increased participation in employment by people aged 65 and over and increased levels of commuting to the city from surrounding local authorities. The Palmerston North retail sector accounted for 17% of total employment in the city in February 2009 and 11.3% of total employee earnings in the city in the year ended 2008 (the latest employee earnings data available). The retail employee count data for the city accounted for 2.4% of the national retail workforce while the retail employee earnings data for the city accounted for 2.5% of national retail earnings. The Statistics New Zealand Retail Trade survey also shows a similar pattern, with Palmerston North holding a 2.6% share of national retail sales in the year ended 2009 and a 2.4% share of core retail sales (which excludes motor vehicle and fuel sales and vehicle servicing expenditure). The city s share of total retail sales and core retail sales has increased over the period from 2005 to 2009. Total retail sales in the city have increased from 2.27% of national retails sales in the year ended 2005 to 2.59% in the year ended 2009. Core retail sales increased from 2.33% of national retails sales in the year ended 2005 to 2.40% in the year ended 2009. 2.7% Palmerston North Share of National Retail sales 2.5% 2.3% Annual % share 2.1% 1.9% 1.7% 1.5% Population share of national population Core retail share of national retail sales Total retail sale share of national retail sales December January February March April May June July December January February March April May June July December January February March April May June July December January February March April May June July 2006 2007 2008 2009 Year ended Core retail sales excludes motor vehicle sales and servicing Source: Statistics NZ Palmerston North has also been increasing its share of national retail employee earnings and retail turnover, reflecting the growth of Palmerston North as a significant regional retail centre. The employee earnings data for Palmerston North also shows the increasing importance of retailing within the city economy. Retail employee earnings in the city have increased from 10.1% of total employee earnings in the city in 2000 to 11.3% by June 2008 (the latest sector earnings data available). The employee count data for the city does not show a similar increase, suggesting
3 that full-time employment in the retail sector in Palmerston North has grown more strongly than part-time employment in the sector. 11.5% Retail employee earnings share of total employee earnings 11.0% Percentage share of total employment 10.5% 10.0% 9.5% New Zealand Palmerston North 9.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 Employment as at February Source: Statistics NZ Palmerston North is not recognised nationally as a major tourism destination yet experiences significant day visitor and overnight visitor flows. Ministry of Tourism data for day visitors to the Manawatu Regional Tourism Organisation (RTO) area (The Manawatu RTO comprises Manawatu District Council, Palmerston North City Council, Rangitikei District Council, Tararua District Council). The city attracted a 6% share of conference activity and conference delegates in the new Ministry of Tourism conference survey for the quarter. It also has an increasing role in hosting major national sports tournaments, particularly secondary school tournaments. Ministry of Tourism data from the International Visitor survey and the Domestic Travel survey shows that the Manawatu RTO is a major destination for day visitors and also a significant destination for overnight visitors. In 2008 the Manawatu RTO was the fifth largest for day visitors, with 4.7% of national day visitors, and a 2.2% share of national visitor nights (the Manawatu RTO has a 3.3% share of the national population. The definition for day trips covers a trip by a person of at least 40km (one way) within New Zealand but outside their usual environment. In 2008 1.9 million day trips to the Manawatu were recorded and 1.2 million overnight visits. Distribution of Retail Activity within Palmerston North Statistics New Zealand data on retail employment is available by area unit within Palmerston North. These area units do not correspond with the Council s District Plan business zones but are still useful for understanding trends in the distribution of retail employment in Palmerston North. There are also limits to the accuracy of the business employment and location data, which is collected primarily for tax purposes. Palmerston North is divided into the following 24 area units.
4 Aokautere Hokowhitu Lagoon Papaeoia Ashhurst Hokowhitu West Roslyn Awapuni North Kelvin Grove Takaro Awapuni South Linton Military Camp Terrace End Awapuni West Massey University Turitea Cloverlea Milson West End Highbury Palmerston North Central Westbrook Hokowhitu East Palmerston North Hospital Whakarongo The majority of the analysis of the distribution of retail employment focuses on: Palmerston North Central Outer Ring Road - the area units bounded by Botanical Road, Tremaine Ave, Ruahine Street, Park Road / Fitzherbert Ave / Te Awe Awe Street / Albert Street / Ferguson Street. (Palmerston North Central, Takaro, Palmerston North Hospital, Papaeoia, West End and Hokowhitu West) Peripheral Areas - the remaining city area units outside of the above zone (Aokautere, Ashhurst, Awapuni North, Awapuni South, Awapuni West, Cloverlea, Highbury, Hokowhitu East, Hokowhitu Lagoon, Kelvin Grove, Linton Military Camp, Massey University, Milson, Roslyn, Takaro, Terrace End, Turitea, West End, Westbrook and Whakarongo The Palmerston North Central area unit is bounded by Featherston, Fergusson, Cook and Victoria Streets and accounted for 15,000 jobs in February 2009, 33% of employment in the city. Retail employment is even more concentrated in Palmerston North Central, with 4,106 employees in February 2009, 49% of retail employment in the city. Employment rose by 6% between 2000 and February 2009 while citywide retail employment increased by 20%, resulting in increased dispersion of retail to outer area units of the city. Retail Trade Employment Palmerston North Central Outer Ring Road Peripheral areas Total Palmerston North Employee Count (February 2009 2000 2009 Employment Increase 2009 share of Retail Employment 4,106 2,120 2,159 8,385 6% 26% 52% 20% 49% 25% 26% 100% Major retail groupings and changes in the distribution of employment in the city are: 1. Motor vehicle and fuel sales and vehicle servicing In 2009 1,220 people were employed in the motor vehicle and fuel sales and vehicle servicing sector, with Palmerston North Central accounting for 29% of total city retail employment. Employment in this sector increased by 16% between 2000 and 2009, below the overall growth in retail employment of 20%. Employment in the sector in
5 Palmerston North Central declined by 20% between 2000 and 2009 and increased strongly on the fringes of the city. This shift in the distribution of employment was the greatest in motor vehicle retailing, with Palmerston North Central employment in motor vehicle sales declining from 230 employees in 2000 to 120 in 2009 as a result of closure of a number of car yards, particularly in Rangitikei Street. Employment at the fringe of the city increased from 0 in 2000 to 130 in 2009. 2. Bulk format retailing This retail grouping includes supermarket and grocery stores, furniture, floor coverings, houseware and textile goods retailing, electrical and electronic goods retailing hardware, building and garden supplies retailing and department stores. Supermarkets account for over 50% of the employment in the bulk format retailing category. Department stores employment did not increase between 2000 and 2009 but strong employment growth was recorded in furniture, floor coverings, houseware and textile goods retailing, electrical and electronic goods retailing and hardware, building and garden supplies retailing. Supermarket and grocery employment increased at the same rate as overall retail employment. Total employment in the bulk format retail grouping increased by 28% between 2000 and 2009 but the increase in Palmerston North Central employment was only 5%. The strongest growth in employment was in the Peripheral area, with the transfer and expansion of hardware stores (Bunnings, Mitre 10 and Placemakers) from the Outer Ring Road and Palmerston North Central areas the main contributors to this growth. Palmerston North Central, however, still had a 62% share of total bulk format retailing employment in 2009. 3. Accommodation Accommodation employment in Palmerston North Central accounted for just 9% of total city accommodation employment in February 2009 while the Outer Ring Road area accounted for two-thirds of employment in the sector. Employment in Palmerston North Central and the Outer Ring road area declined between 2000 and 2009 but increased in Peripheral areas. 4. Cafes, Restaurants, Takeaways, Pubs and Clubs Palmerston North Central accounted for 60% of employment in this sector in 2009. Employment increased by 325 jobs between 2000 and 2009, increasing from 956 to 1,290 jobs by 2009, while employment in the remainder of the city declined by 90 jobs. In 2000 the sector accounted for 25% of total retail employment in Palmerston North Central and by 2009 the share had increased to 31%. Total employment in the sector has not increased as quickly as other retails sectors. Weak growth in the commercial accommodation sector and a decline in tertiary student numbers of the city resulted in much weaker growth in employment in the sector compared with national data. Caveats to the location of employment data: There are limitations to the accuracy of employment data by area unit. The majority of the employment data is taken from monthly payroll tax data supplied to IRD. Large employers usually supply this data at a national level for a range of locations and the employment data is then reallocated by Statistics NZ to each area unit.
6 Summary of Trends 1. Palmerston North is capturing an increasing share of national retail turnover and retail employment. 2. Retail employment in the city is becoming more dispersed, with the strongest growth occurring in the fringes of the city. 3. An exception to the dispersal of retail employment is the cafes, restaurants, takeaways, pubs and clubs sector, which has experienced strong employment growth in the city centre. This is contributing to significant change in the composition of retailing in the city centre. 4. Bulk format retailing accounted for the strongest growth in retail employment in Palmerston North between 2000 and 2009. Very strong growth was recorded in: a. Furniture, Floor Coverings, Houseware and Textile Goods Retailing b. Electrical and Electronic Goods Retailing c. Hardware, Building and Garden Supplies Retailing
7 Industry by area unit Employee Count in February 2000 Vehicle and fuel sales and servicing Bulk Format Core retailing (included Retailing in core retailing) Cafes, Restaurants, Takeaways, Pubs, Clubs ANZSIC Accommodation Total Palmerston North City 1,055 3,450 2,050 520 1,900 6,970 Takaro 135 65 31 3 45 248 Palmerston North Hospital 120 119 73 30 230 499 Papaeoia 38 268 198 100 93 505 West End 34 93 57 240 3 370 Hokowhitu West 3 9 0 20 25 63 Palmerston North Central 444 2,390 1,560 60 965 3,868 Botanical/Tremaine/Ruahine/Park/ Te Awe Awe Block 774 2,944 1,919 453 1,361 5,553 Outside Botanical/Tremaine /Ruahine/Park/Te Awe Awe Block 281 506 131 67 539 1,417 Employee Count in February 2009 Palmerston North City 1,220 4,180 2,630 580 2,135 8,385 Takaro 167 146 106 6 45 505 Palmerston North Hospital 140 87 57 3 203 428 Papaeoia 33 324 230 70 170 597 West End 44 139 36 260 12 447 Hokowhitu West 12 59 12 50 30 143 Palmerston North Central 357 2,620 1,640 50 1,290 4,106 Botanical/Tremaine/Ruahine/Park/ Te Awe Awe Block 753 3,375 2,081 439 1,750 6,226 Outside Botanical/Tremaine /Ruahine/Park/Te Awe Awe Block 467 805 549 141 385 2,159 2000-2009 Employee Count Increase Palmerston North City 16% 21% 28% 12% 12% 20% Takaro 24% 125% 242% 100% 0% 104% Palmerston North Hospital 17% -27% -22% -90% -12% -14% Papaeoia -13% 21% 16% -30% 83% 18% West End 29% 49% -37% 8% 300% 21% Hokowhitu West 300% 556% 150% 20% 127% Palmerston North Central -20% 10% 5% -17% 34% 6% Botanical/Tremaine/Ruahine/Park/ Te Awe Awe Block -3% 15% 8% -3% 29% 12% Outside Botanical/Tremaine /Ruahine/Park/Te Awe Awe Block 66% 59% 319% 110% -29% 52% Percentage share of sector employment in February 2009 Palmerston North City 100% 100% 100% 100% 100% 100% Takaro 14% 3% 4% 1% 2% 6% Palmerston North Hospital 11% 2% 2% 1% 10% 5% Papaeoia 3% 8% 9% 12% 8% 7% West End 4% 3% 1% 45% 1% 5% Hokowhitu West 1% 1% 0% 9% 1% 2% Palmerston North Central 29% 63% 62% 9% 60% 49% Botanical/Tremaine/Ruahine/Park/ Te Awe Awe Block 62% 81% 79% 76% 82% 74% Outside Botanical/Tremaine /Ruahine/Park/Te Awe Awe Block 38% 19% 21% 24% 18% 26% Bulk Format Retailing includes: Supermarket and Grocery Stores Furniture, Floor Coverings, Houseware and Textile Goods Retailing Electrical and Electronic Goods Retailing Hardware, Building and Garden Supplies Retailing Department Stores Note: Employment data includes the ANZSIC Retail Trade, Accommodation and Food Services and Motor Vehicle Servicing classifications
8