COVID-19: Why malls are doing better than 'mum and dad' retailers in the recession

Auckland's sprawling Sylvia Park mall is about to get a $277 million extension - right in the middle of the deepest recession the country's ever faced.

But the timing isn't all bad, says one expert, with malls doing better than shops on the outside as Kiwis' shopping habits change. 

Sylvia Park's Galleria will open next week, following the opening of a new Westfield in Newmarket and downtown's Commercial Bay. 

Fears of market cannibalisation haven't come to fruition though, says Milford Asset Management analyst Frances Sweetman. 

"Malls actually aren't doing so bad, particularly the big ones," she told The AM Show on Thursday.

"In fact, Sylvia Park has seen more visitors post-COVID than it did last year. While retail spend was down over that COVID period, we've had a few savings and we've gone out and spent it in July and August - and shopping centres are the ones that are benefitting. They're convenient, have got parking and all the retailers."

Newmarket's "doing well" too, she said. "Unfortunately it's the High Street that's suffering."

National Party leader Judith Collins found that out on Wednesday during an ill-fated walk down Ponsonby Rd which saw her turned away from stores. There were so few shoppers, the party planted supporters at regular intervals down the road for her to bump into. 

"What's really obvious to me is there's little foot traffic in Ponsonby Rd. That tells me there's a real problem," she told reporters. "Hardly anybody there."

The pandemic has changed how Kiwis shop. Online shopping is up 30 percent this year, and it's becoming increasingly local. In December last year GST was applied to offshore purchases made online, and two months later the coronavirus arrived - the combined impact seeing the local share of online purchases rising from 50 percent to 70 percent.

Shops in malls typically have much more robust online sales platforms, leaving "mum and dad" retailers in the dust, said Sweetman.

The lack of tourists is also hurting, she added. The borders have been shut to all but residents since March. 

The good news is that as Sweetman pointed out, last time the country went to alert level 1, spending bounced back - Auckland, the country's economic driver, entered level 1 on Thursday after nearly two months at levels 2 and 3. There are no active cases of the coronavirus in the country from community transmission.