New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Retail Sector</h2>
The response post GST changes
As of 1 December 2019, the threshold at which GST is payable on imported goods was reduced to NZ$0. Following this change we analysed a number of international online retailers to understand what the potential upside is for New Zealand based retailers.
Mixed responses from retailers
<ul>
<li>Many large Australian and UK retailers serving New Zealand have carried the GST cost burden with no change to the headline price (retailer pays)</li>
<li>A handful of retailers appear to have made no change and are either carrying the GST cost burden or are non-compliant</li>
<li>Only one example of active price response, with Australian market place The Iconic adding +15% to its “pick up” price (consumer pays)</li>
<li>At least one example, Amazon, of an international retailer halting service of New Zealand</li>
</ul>
Whilst this analysis is limited by a small sample set, a majority of sites surveyed appear to capture the GST change within the ticket price, which may limit the potential benefit to New Zealand retailers, in our opinion. However we still see the change as a marginal positive for retailers, given (1) consumer perception that they are now paying more (2) some retailers are passing on the tax lift into ticket prices, and (3) a handful of retailers have paused service to NZ.
Figure 1.&nbsp; Review of online retail sites post GST changes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.0.2&amp;permmsgid=msg-f:1651947305714551407&amp;th=16ece55278c78a6f&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8m9WZ09jjxfgaebFiz04gqO2-jtqxKh26MLzNwC6WGOEkgEbCS0R-PoN4AK5Q5tPOvkAN_6cKWobgVOE7eP3QrOa22YpHGoH2VQYK3DovH3hAsxpsiySdAg-0&amp;disp=emb" width="900" height="186" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: Various retail websites&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Amazon: Possible catalyst for a physical entry into the New Zealand market
Amazon has stopped serving New Zealand from its international sites. In the past, changes to the de minims level for taxes and duties has been a catalyst for physical (fulfilment centre) entry into a market. Amazon’s first round of fulfilment centres in the US were focussed on low population states with low slates taxes that were close to highly populated areas. For example, Amazon opened fulfilment centres in New Hampshire and Delaware, both of which are close to major East Coast cities and have zero sales tax. Amazon’s announcement to enter the Australian market coincided with the Australian Government’s proposal to reduce its de minis threshold to $0.
With warehouses in Perth, Sydney, and Melbourne and New Zealand currently not serviceable from its Australian site, we believe the possibility of a fulfilment centre capable of providing an Amazon Prime service to New Zealand has increased. Refer to our attached research report&nbsp;Amazon — From A(ustralia) to (New) Z(ealand)&nbsp;for a detailed analysis of the implications of an Amazon entry into New Zealand.
Guy Hooper&nbsp; Analyst, Equities Forsyth Barr Limited&nbsp;
P: +64 4 495 5255 | TF: 0800 367 227&nbsp; Level 22 , 157 Lambton Quay, Wellington

Retail Sector
The response post GST changes
As of 1 December 2019, the threshold at which GST is payable on imported goods was reduced to NZ$0. Following this change we analysed a number of international online retailers to understand what the potential upside is for New Zealand based retailers.
Mixed responses from retailers

Many large Australian and UK retailers serving New Zealand have carried the GST cost burden with no change to the headline price (retailer pays)
A handful of retailers appear to have made no change and are either carrying the GST cost burden or are non-compliant
Only one example of active price response, with Australian market place The Iconic adding +15% to its “pick up” price (consumer pays)
At least one example, Amazon, of an international retailer halting service of New Zealand

Whilst this analysis is limited by a small sample set, a majority of sites surveyed appear to capture the GST change within the ticket price, which may limit the potential benefit to New Zealand retailers, in our opinion. However we still see the change as a marginal positive for retailers, given (1) consumer perception that they are now paying more (2) some retailers are passing on the tax lift into ticket prices, and (3) a handful of retailers have paused service to NZ.
Figure 1.&nbsp; Review of online retail sites post GST changes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Source: Various retail websites&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Amazon: Possible catalyst for a physical entry into the New Zealand market
Amazon has stopped serving New Zealand from its international sites. In the past, changes to the de minims level for taxes and duties has been a catalyst for physical (fulfilment centre) entry into a market. Amazon’s first round of fulfilment centres in the US were focussed on low population states with low slates taxes that were close to highly populated areas. For example, Amazon opened fulfilment centres in New Hampshire and Delaware, both of which are close to major East Coast cities and have zero sales tax. Amazon’s announcement to enter the Australian market coincided with the Australian Government’s proposal to reduce its de minis threshold to $0.
With warehouses in Perth, Sydney, and Melbourne and New Zealand currently not serviceable from its Australian site, we believe the possibility of a fulfilment centre capable of providing an Amazon Prime service to New Zealand has increased. Refer to our attached research report&nbsp;Amazon — From A(ustralia) to (New) Z(ealand)&nbsp;for a detailed analysis of the implications of an Amazon entry into New Zealand.
Guy Hooper&nbsp; Analyst, Equities Forsyth Barr Limited&nbsp;
P: +64 4 495 5255 | TF: 0800 367 227&nbsp; Level 22 , 157 Lambton Quay, Wellington

Retail Sector: The Response Post GST Changes

Amazon.com Inc

Retail Sector: The Response Post GST Changes