The humble dairy is a quintessential Kiwi icon in decline. The coronavirus pandemic gave a short-term boost to the small neighbourhood shop, but can they survive? Andrea Vance and Iain McGregor investigate.
DEATH OF A SALESMAN
Kinjan Shah shares his world with his customers.
As he counts out change, prints out Lotto tickets and folds newspapers, it is hidden behind the counter of his dairy.
Occasionally, he sweeps aside the long, grey curtain that separates his professional and private life. A glimpse shows a tiny apartment: a kitchen, dining table, fold-away bed.
An aroma of curry spices and chapati smoking on a pan drifts out into the shop, mingling with the smell of steak and cheese pastries, warming in the shop’s pie warmer.
A candle burns underneath a shrine, as Shah’s wife Riddhi offers up a prayer. Their toddler son Rivaan watches cartoons from his high chair.
Shah, 37, clocks up around 85 hours a week behind the till at his shop in Avonhead, Christchurch. But owning his business means he has the flexibility to balance work with family life.
“It's a nice area. I am lucky... Very good people and a nice community.”
Dairy shop owners were the unsung heroes of the coronavirus pandemic, on the frontline of the lockdown.
Across the country, as shoppers queued outside supermarkets and stripped shelves of flour, toilet paper and anti-bac hand gel, independent grocers stayed open risking their health to serve their local community.
The dairy store, mini-mart or superette is the cornerstone of our neighbourhoods. There are around 4000 across New Zealand - but many are owner-operated family businesses operating on very low margins.
Many struggle to pay themselves the equivalent of the minimum wage. They are in a David-and-Goliath battle for customers with supermarket behemoths, with sales dropping 18 per cent between 2013 and 2018.
As well as cashflow problems, they must grapple with crime, a complex matrix of regulations around the sale of alcohol, tobacco and vaping products, and changing customer tastes and demands.
“Local dairies are under substantial pressure,” Retail NZ chief executive Greg Harford says. “They just don't have good margins.
“We've seen a little bit of growth through lockdown, a little bit of a boom in the earlier part of the year. More people were looking to shop in places where they didn't need to queue up to buy milk and bread.
“But, the sense I get, is that things have scaled back. And so while those businesses are still there, and still play a really important role in fulfilling those local community needs, those gains have probably tailed off a little.”
Kinjan Shah’s day begins early, with a prayer.
“My mum said give a few minutes to God before you open the store. Thanks to God and start your day with God's name. So I'm always praying and then I open the store.”
Although his family home is just a few doors down from his Cutts Mini Mart, Shah often sleeps in the room behind the shop.
“My day starts about half past six. I'm not a morning person. But I run the dairy so I always wake up early. But it's hard for me.”
He flicks on the lights, pulls up the metal shutter and drags sandwich boards onto the pavement. By 7am the door is open.
“Seven to nine is a good time for business. It’s my busiest time. People are going off to work. They stop for a drink, pie, smoke.”
As the rush dies down, Shah begins placing orders and mixes a mug of sweet, milky chai.
By mid-morning he’s joined by his wife and son. Riddhi goes into the back to begin cooking lunch, Rivaan is drawn to the pie warmer.
Dressed in dinosaur pyjamas, the three-year-old is fixated by the snacks. “So many pies. Pies,” he repeats, over and over. “Smile,” is another favourite phrase.
Shah picks up the toddler and they chatter in Hindi. “Did you understand what he said? He said ‘hello, boss’.
“He heard it when I have someone come into the shop. I say: ‘hello boss’. So he copies.”
Shah bought the shop in 2016. On the same day, he learned Riddhi was pregnant with Rivaan. “The 16th of October 2016, still I remember. It was lucky for me,” he says.
“It's like his playground growing up in the shop,” Riddhi says. “He loves [the] dairy shop.
“He always [wants] to fill up drinks and pies... it's good. Helping papa.”
The 34-year-old works part-time as a checkout supervisor.
“She's working with me, and as well as she's working in a Pak'n Save and she’s got another full time job to care [for] my little one,” Shah says.
“Three jobs. She's the busiest girl. But we manage. So, I'm lucky.”
The couple met 15 years ago, in Gujarat, on India’s western coast. Five years later, Shah came to New Zealand to study computer-aided design at Christchurch’s Ara institute of technology.
To fund his studies, he worked part-time in the shop he now owns.
Riddhi explains: “He worked two, three years in the same field he studied. And then when we got the residence [visa], he said: ‘I want to do some business, not the job’.
“So many of our friends and relations have dairies - that’s why he prefers to do this business. He has knowledge of the dairy.”
It’s a well trodden path: Indian settlers have been selling groceries in New Zealand since the late 19th century.
The ‘corner dairy’ traces its history back almost two centuries, when small ‘dairy produce sellers’ were the only shops permitted to sell milk, butter, cream, cheese and eggs.
Early Indian settlers suffered discrimination: the ‘Hindoo peril’ saw restrictions on where they could visit and socialise. But as they were British subjects, they were able to purchase businesses.
Edwina Pio, professor of diversity at Auckland University of Technology who writes in the area of ethnicity and work, says it allowed immigrants to enter the workforce.
“When Indians came in the late 1800s, they did not want to be in competition with the Europeans, so they felt the best way to gain money would be to sell fruit and vegetables.”
They grew market gardens, and ran stalls from main thoroughfares, lining streets like Lambton Quay and Courtenay Place in Wellington, and laying down carpet and lights.
“They then got carts, then moved to trucks and then to shops,” Pio says.
“Many Indians believed the family is very important. And in a patriarchal society, or system, quite often they would prefer the woman not to go out to work. And this was a nice way when the babies were born, that they work in the shop, look after the children, cook the food, and help out the husband or the brother.”
By the end of the Second World War, dairies were allowed to open longer than other grocers, including on Saturdays and in the evenings. They expanded their range and entered a golden age.
Pio says that Census figures show the majority of dairies are still owned within the Indian community.
Many share the surname Patel, and come from a merchant caste in Gujarat.
For her book, Sari: Indian Women at Work in New Zealand, Pio interviewed many immigrant families across the country.
“A number of dairy owners felt they would prefer their children don't continue in this business. Because the margins are too thin.
“But many [from younger generations] prefer to be in the dairy.
“They are graduates, they've got qualifications, but because they’ve grown up in that system they find it useful to continue and the [business has] become a superette.
“For example, selling flowers, plants or party items like balloons, serviettes, icecreams. Something that's slightly different.”
Recent migrants also prefer to be their own boss, rather than start on the lowest rung of the ladder, she says.
In the last half of the 20th century, dairies grew from an essential daily stop to a Kiwiana cultural icon.
Generations of children tripped into the dairy, counting out change for Pineapple Lumps and Snifters, a Tip Top icecream or a milkshake, in a familiar white, blue and red giraffe paper cup. It was often their first taste of independence: riding their bike to the store for lolly mix.
They sat at the heart of almost every local community: where housewives could pick up household staples and the local gossip, and tradesmen could grab a traditional meat pie, tobacco and a newspaper.
But as the century closed out, dairies became less profitable. Sunday trading was deregulated, customers could buy what they needed on the petrol station forecourt, supermarkets opened long into the evening, and the smaller stores couldn’t access bulk purchasing and compete on price.
By 2007 supermarkets attracted around 90 per cent of the total consumer spending on groceries.
Another death knell was alcohol reform: a tightening up of regulations in 2012 barred some convenience stores from selling beer and wine, depriving them of a vital revenue stream.
A 2018 Retail NZ report posed the question: Does the dairy have a future?
“In an era where post offices, video shops and butchers have often closed in suburban environments, dairies truly sit at the heart of communities,” the report said.
“In many cases dairies are the only accessible store for some members of the community, and they provide essential opportunities for social interaction for isolated people.
“For many members of the community, access to a main shopping centre can be more difficult. These consumers may not drive or have accessible public transport from their area.”
It cautioned: “If dairies close, communities will be deprived of what is often the last business standing.”
Trade Me currently lists more than 150 dairies and superettes for sale, ranging from a grocery store in Auckland with a $15,000 price tag to a $1.1m business in Tauranga.
A market research overview of the sector, published by Euromonitor in March, also painted a bleak outlook.
“High rents, changing consumer demand and increased competition from supermarkets has seen value sales decline...
“Many convenience stores in New Zealand are small, family-owned businesses that struggle to pay business owners the equivalent of a minimum wage, with increasing rates, rent and insurance costs making operating conditions difficult due to the stagnant market.
“This has resulted in many convenience stores developing an over-reliance on tobacco products to deliver revenue, which has itself led to further problems, such as increased levels of petty theft and robberies, as well as a disconnect with consumers due to increasing focus being placed on healthy lifestyles.”
Harford says there are more looming pressures. The minimum wage was increased to $18.90 in April, and the Government is proposing a further hike to $20 next year.
Small businesses are also dismayed at the cost of paying wages for a proposed statutory holiday at Matariki, marking the Māori New Year.
“All of that stuff will put quite big costs onto small businesses,” Harford says.
New restrictions came into force in November, which allows dairies to sell only tobacco, mint and menthol vaping products.
That took best-selling flavours, like berry, off their shelves which are still available in specialty stores.
In April, dairy owners bombarded Parliament’s health select committee with plaintive submissions, detailing the expected impact on their income.
Amit Patel, of Botany Downs’ Mirrabooka Superette wrote: “I rely on my business to support my family, buy food, pay bills in this very challenging climate.
“When a customer comes in to buy a vape cartridge, they are always including additional items to their cart.
“If I lose those customers because I cannot provide the flavour they want, I lose their entire shopping - bananas, bread, milk.”
Dairies are also grappling with charges for accepting credit card and contactless payments.
Retailers are paying 1.1-1.5 per cent of the value of every transaction to their banks: nearly twice as much their Australian counterparts pay.
“There are still lots of businesses, dairies, that don't take paywave or credit and that is a factor which does see people drive a bit further to the supermarket,” Harford said.
“People say it's only a few dollars, or only a few cents. But when there are not large volumes going through, as is the case for many dairies and convenience stores, those few dollars do make a real difference.”
Labour pledged to regulate these merchant fees during the election campaign.
When Frank Yan’s premises crumbled in the September 2010 earthquake, he traded from the street and then moved into an abandoned petrol station around the corner.
Ten years on, the dairy is surviving. But his slim takings have been hit by a double whammy: rising tobacco prices and dwindling incomes as Covid shrinks the economy.
“The price has gone up and up. My customers have little money but they find the money for cigarettes, they just don’t buy other things, like lollies.”
Dairies rely heavily on tobacco sales and are the most common outlet for the products.
A study published in July 2018, in the NZ Medical Journal, noted that the majority of respondents to a questionnaire reported that tobacco was important to their livelihood.
Half estimated that between a quarter and half of their customers buy tobacco, and half believed that tobacco contributed to at least 30 per cent of store sales. But three-quarters said it yielded little profit: 15 per cent or less.
“From this observation, it is the purchase of other items along with tobacco products that leads dairy owners and managers to view tobacco as important to business,” the study said.
Two years ago, two masked men armed with knives burst into the shop, demanding cigarettes and cash from Yan.
The crime left him with post-traumatic stress disorder and robbed his wife of her confidence. She now refuses to work in the shop.
Yan sticks around because he feels loyal to the locals who supported him through the post-quake days.
He goes in search of cheaper prices for his customers: driving to supermarkets which sell bags of candy cheaper than wholesalers. His $6.99 egg trays are a big seller, and a source of pride.
Through the summer, he swelters in the flimsy kiosk, which was extended by tacking on a shipping container. Chocolate melts if he doesn’t remember to display it in the drinks fridge. In the winter it’s freezing, the only heat from a portable gas heater.
The shop is makeshift: the signage is hand-painted in red. But the shelves are tidy and neatly-lined with everything from bags of sugar to birthday cards and car phone chargers.
Yan, 55, moved to Christchurch from China in 2004 to study business.
“It’s a very hard job. I get up at 5.30am and close at 8pm. But, I’m very happy. Everyone knows me. The local customers always support us.
“I like to meet different people and I make enough to live. I’ve got to know more about New Zealand, the culture. I hope I’m a Kiwi, even though I grew up in another country.”
Sam, his 25-year-old son, helps out behind the counter, but he won’t take over from the family business and is looking for another job after graduating with accountancy qualifications.
Occasionally, Yan dreams of moving, but rent in his area is now out of reach. He sometimes wonders about buying a liquor store instead, but says raising a loan is difficult.
“I would like a holiday,” he says. “I’ve never gone back to China because I’m always working. I need a holiday.”
Words: ANDREA VANCE
Visuals: IAIN McGREGOR
Design & layout: AARON WOOD
Editor: JOHN HARTEVELT
Why? Because Stuff is as Kiwi as T-sauce in a tomato-shaped bottle. Part of the daily diet of millions of New Zealanders, we're wholly locally owned and it’s our mission to make Aotearoa a better place.
And we need your help.
Stuff has more journalists than any other newsroom in New Zealand - we represent the full length of the long white cloud. But the way journalism is funded is changing.
We need your support to keep fighting for justice like we did for Teina Pora, Angela Blackmoore and the victims of Erebus; to keep breaking major news, like when we were first on the scene as terror struck Christchurch; to champion the causes that matter to your communities, like we did to get NZ history taught in our schools, plastic bags banned, and Matariki in our national calendar.
If Stuff is a regular part of your day, please consider becoming a supporter. You can make a contribution from as little as $1. Be part of our story, and help us tell yours.