1 00:00:00,120 --> 00:00:02,160 Speaker 1: Now over the last few years we've managed to pull 2 00:00:02,200 --> 00:00:04,840 Speaker 1: a couple of retail giants too sure and that changing 3 00:00:04,880 --> 00:00:07,320 Speaker 1: our shopping landscape. We've got Costco opening its first store 4 00:00:07,320 --> 00:00:09,440 Speaker 1: on wes Stalkland in twenty twenty two, and now i 5 00:00:09,600 --> 00:00:11,959 Speaker 1: Kia is going to be opening up at Sylvia Park 6 00:00:12,000 --> 00:00:14,280 Speaker 1: in December this year. Sam Dickey from Fisher Funds is 7 00:00:14,280 --> 00:00:14,560 Speaker 1: with us. 8 00:00:14,560 --> 00:00:16,400 Speaker 2: Hello Sam, good evening, Heather. 9 00:00:16,640 --> 00:00:19,760 Speaker 1: Now, these are really really big business is very successful. 10 00:00:19,840 --> 00:00:21,160 Speaker 1: What makes them so formidable? 11 00:00:22,600 --> 00:00:27,040 Speaker 2: Formidable? Indeed, they are phenomenal businesses. So Costco half a 12 00:00:27,040 --> 00:00:29,920 Speaker 2: trillion dollar company share price up around almost four thousand 13 00:00:29,960 --> 00:00:32,440 Speaker 2: percent in the last twenty years, and I here the 14 00:00:32,479 --> 00:00:38,120 Speaker 2: biggest furniture retailer in the world. Costco is obsessive about 15 00:00:38,120 --> 00:00:40,440 Speaker 2: its customers. So when they go into any board meeting, 16 00:00:40,960 --> 00:00:44,839 Speaker 2: any management meeting, they always talk about how they can 17 00:00:44,920 --> 00:00:46,840 Speaker 2: drive down the price of their goods for their customers. 18 00:00:47,000 --> 00:00:50,479 Speaker 2: They never talk about how they can gouge more profit 19 00:00:50,560 --> 00:00:52,680 Speaker 2: or margin out of you and I. And that's called 20 00:00:52,760 --> 00:00:55,800 Speaker 2: scale economy shared and its feeds on itself and it's 21 00:00:55,880 --> 00:00:59,440 Speaker 2: very hard for smaller players to compete with and that's 22 00:00:59,440 --> 00:01:02,280 Speaker 2: why they were still constores booming and IKEA's motors is 23 00:01:02,320 --> 00:01:04,280 Speaker 2: also at sheer scale, so four hundred and twenty two 24 00:01:04,280 --> 00:01:09,319 Speaker 2: stores across sixty odd countries. What's really interesting about Ikea, though, 25 00:01:09,360 --> 00:01:11,760 Speaker 2: is its unique ownership structure, and that's kind of a 26 00:01:11,800 --> 00:01:15,880 Speaker 2: competitive advantage. So it is owned by Dutch and Swiss foundations, 27 00:01:15,880 --> 00:01:18,680 Speaker 2: and the Dutch foundation model makes selling Ikea more or 28 00:01:18,720 --> 00:01:22,640 Speaker 2: less impossible, which ensures independence from shareholders and that silly 29 00:01:22,720 --> 00:01:25,120 Speaker 2: quarterly pressure, and it allows them to take a one 30 00:01:25,240 --> 00:01:29,800 Speaker 2: hundred year strategic view while competitors chase short term gains. 31 00:01:29,840 --> 00:01:32,160 Speaker 1: Interesting and why are they interested in coming to New Zealand? 32 00:01:33,240 --> 00:01:35,840 Speaker 2: Yes, well, it is interesting because global behemoths have sort 33 00:01:35,840 --> 00:01:38,520 Speaker 2: of ignored New Zealand for the last fifty years because 34 00:01:38,760 --> 00:01:41,200 Speaker 2: it's it's so small until now. And you know, you 35 00:01:41,280 --> 00:01:43,440 Speaker 2: think about the biggest retailers in the world, warm Amazon 36 00:01:43,440 --> 00:01:45,880 Speaker 2: Home Depot, none of them have ventured down here with 37 00:01:45,920 --> 00:01:49,440 Speaker 2: local operations. So so Costco, the third biggest retailer in 38 00:01:49,480 --> 00:01:52,800 Speaker 2: the world, is here. And that's because New Zealand is 39 00:01:52,840 --> 00:01:55,280 Speaker 2: an attractive market because it's dominated by it sort of 40 00:01:55,280 --> 00:01:59,920 Speaker 2: a small handful a cartel or an oligopoly of duopoly 41 00:02:00,120 --> 00:02:02,520 Speaker 2: in each segment, so a small handful of supermarkets for 42 00:02:02,560 --> 00:02:05,480 Speaker 2: Costco to disrupt, a small handful of furniture players for 43 00:02:05,520 --> 00:02:08,320 Speaker 2: Ike to disrupt, and plus iqre side of the government's 44 00:02:08,919 --> 00:02:12,440 Speaker 2: streamlined approval process to encourage overseas competition in retail. And 45 00:02:12,480 --> 00:02:14,840 Speaker 2: of course it's a point in time thing. So New 46 00:02:14,919 --> 00:02:18,080 Speaker 2: Zealand is in Auckland is a compact, affluent market. And 47 00:02:18,120 --> 00:02:21,160 Speaker 2: while we're not number one on the global expansion list 48 00:02:21,200 --> 00:02:23,679 Speaker 2: for these these great companies, they do get to us eventually. 49 00:02:24,200 --> 00:02:26,280 Speaker 1: Should retailers here in this country be worried? 50 00:02:28,280 --> 00:02:32,120 Speaker 2: The look? I do think they have been sheltered, these 51 00:02:32,160 --> 00:02:34,680 Speaker 2: oligopolies until now from these global bohemoths, so that the 52 00:02:34,720 --> 00:02:36,440 Speaker 2: news is not quite as rosy and they're gonna have 53 00:02:36,480 --> 00:02:40,280 Speaker 2: to run really fast to our compete these companies. And 54 00:02:40,760 --> 00:02:42,440 Speaker 2: remember that they only have one store each by the 55 00:02:42,520 --> 00:02:44,120 Speaker 2: end of this year, butt Costco's planning another one in 56 00:02:44,160 --> 00:02:47,280 Speaker 2: South Auckland and another one in christ To, so they 57 00:02:47,360 --> 00:02:49,080 Speaker 2: kind of have a land and expand model that they 58 00:02:49,160 --> 00:02:51,440 Speaker 2: don't really come down here just to have one store. 59 00:02:52,680 --> 00:02:54,960 Speaker 1: And what about consumers? Should we be as stoked as 60 00:02:55,000 --> 00:02:56,359 Speaker 1: we are? Yeah? 61 00:02:56,400 --> 00:02:58,680 Speaker 2: I think so it's great news for us. So again, 62 00:02:58,720 --> 00:03:01,240 Speaker 2: Costco's obsessive about us, about you and I, and using 63 00:03:01,240 --> 00:03:03,240 Speaker 2: its scale to drive down prices for us every day. 64 00:03:03,480 --> 00:03:05,799 Speaker 2: That's nice to have and choice is always good. We've 65 00:03:05,800 --> 00:03:08,320 Speaker 2: been restricted to a small handful of supermarket players and 66 00:03:08,960 --> 00:03:13,440 Speaker 2: IKE runs exceptionally lean profit margin and uses its massive 67 00:03:13,480 --> 00:03:16,840 Speaker 2: scale to offer very low prices. In that mantra that 68 00:03:17,160 --> 00:03:19,079 Speaker 2: there's nothing free in life, but the best price you 69 00:03:19,120 --> 00:03:20,400 Speaker 2: can get is when you do as much as you 70 00:03:20,440 --> 00:03:24,720 Speaker 2: can yourself. So that's pretty exciting. So I think it's 71 00:03:24,720 --> 00:03:25,440 Speaker 2: good news for us. 72 00:03:25,680 --> 00:03:27,560 Speaker 1: So what does it mean for investors. 73 00:03:28,800 --> 00:03:32,600 Speaker 2: Well, for investors in Costco, doesn't mean much at all 74 00:03:32,600 --> 00:03:35,000 Speaker 2: really because New Zealand's pretty tiny and we can't invest 75 00:03:35,000 --> 00:03:36,600 Speaker 2: in the IKE, but it means quite a bit for 76 00:03:36,840 --> 00:03:39,960 Speaker 2: investors in New Zealand companies. So on the good news 77 00:03:40,000 --> 00:03:43,200 Speaker 2: front for Main Freight, allegedly, I think there's been another press. 78 00:03:43,400 --> 00:03:46,119 Speaker 2: They've apparently won the IKE in New Zealand logistics contract 79 00:03:46,160 --> 00:03:49,880 Speaker 2: and apart from being the best logistics operator in New Zealand, 80 00:03:50,040 --> 00:03:54,400 Speaker 2: I suspect Main Freights pretty unique hundred year vision gelled 81 00:03:54,480 --> 00:03:57,200 Speaker 2: quite well with IKE is pretty unique kind one hundred 82 00:03:57,280 --> 00:03:59,680 Speaker 2: year vision. It's pretty rare to have that long term 83 00:03:59,720 --> 00:04:03,520 Speaker 2: vision but for investors in listed retailers that cross swords 84 00:04:03,520 --> 00:04:07,400 Speaker 2: with IKEA companies like the warehouse Harvey Norman, they should 85 00:04:07,920 --> 00:04:11,160 Speaker 2: Those investors should revisit their investment thesis and make sure 86 00:04:11,200 --> 00:04:14,360 Speaker 2: they're factored in a significant step up in competition from 87 00:04:14,400 --> 00:04:15,080 Speaker 2: global winners. 88 00:04:15,240 --> 00:04:17,800 Speaker 1: Yeah, hey, Sam, as always really appreciated Sam. Dicky Fisher 89 00:04:17,800 --> 00:04:19,320 Speaker 1: Funds will talk to you again in a week's time. 90 00:04:20,080 --> 00:04:23,240 Speaker 2: For more from Heather Duplessy Allen Drive, listen live to 91 00:04:23,320 --> 00:04:26,359 Speaker 2: news talks. It'd be from four pm weekdays, or follow 92 00:04:26,400 --> 00:04:28,160 Speaker 2: the podcast on iHeartRadio.