On Auckland’s Vulcan Lane, a small opening with a spiralling staircase leads you to a basement, transporting you into the world of American vintage 10,490km from its original home. Max Tetlow talks to the founder of Magichollow, Laura Wright, about how she took her business from a simple online webstore to Auckland’s premier vintage destination.

‘F*** this, I don’t want a real job’ was the thought that turned Laura Wright’s passion into her business.

In 2008, aged just 14, Wright started selling vintage clothing on TradeMe under the alias Magichollow. From there, it moved to Facebook. Instagram came next, and then the webstore. Growing a strong customer base on social media led to pop up stores in Newmarket, Ponsonby and upper Queen Street, and in May 2017, Magichollow introduced Auckland to its first physical store.

At 24, Wright has built Magichollow from the ground up. She started off by op shopping around New Zealand and posting her finds on her social media accounts. The inventory was in her bedroom and she was the only employee. Now, three full-timers, a physical store, over 65,000 followers across social media and nearly two full storerooms of inventory later, Magichollow has firmly established itself as New Zealand’s go-to vintage destination.

And the bigger Magichollow has become, the bigger the opportunities that have come along. In 2015, Wright and her team made their first trip to the United States to hunt for higher quality vintage. Three months travelling around in a minivan and 500kgs of clothing later, they came home to New Zealand; almost immediately, everything they’d collected was gone. “Vintage in New Zealand was really limited, but when we came back from the States, the stock sold out in four months,” says Wright. “That showed us there was a really high demand for American vintage in particular.”

Wright says she didn’t initially want a physical retail store, but decided to open one based on customer feedback. “A lot of our customers would ask to try our clothes on, so really that’s where the pop-up shops came in.” She tested the idea with pop-up stores, including one in Ponsonby in January 2017 that had people lining up for hours just to get in. It was time to take the next step.

“That’s the thing about Magichollow: nothing was planned. It started as a love for vintage. It’s very unorthodox but that’s just how I roll”.

Not long after, a retail space opened up on Vulcan Lane. Wright jumped at the opportunity and in two weeks Magichollow went from being run out of a bedroom to a full store with four full-timers, three part-timers and a handful of casual staff.

‘We want to set the standard for vintage’

Wright’s goal has always been to change people’s idea of vintage clothing. “A lot of people have the conception that we get everything for like 10 cents and mark it up to the highest price. We like to have the highest quality of vintage and sometimes that means spending more.”

The notion that vintage clothing is dirty and smells is Wright’s number one pet peeve – she emphasises that they take the utmost care of clothing they sell. Not only is every piece carefully washed, but it’s hand picked by Laura to fit the brand. They’re not just putting out anything on clothing racks for the sake of it, she says. The clothes you see under the Magichollow name fit the brand, whether it’s a striking Marlboro tracksuit or a reworked crop top sweatshirt.

The premium apparel Wright and her team collect has created a loyal and ever-expanding customer base. “I was shooting with a model one day and she was saying her and all her friends had alarms on for 4:55 every Wednesday ready for the new drop.”

Long-time customer Jessica Carr is one of those girls. Although she lives in Dunedin, Jessica has been shopping with Magichollow since 2013. “I had my alarm on, ready for the Wednesday drop, refreshing religiously to make sure I got what I wanted”.

As much as she might like to, Wright can’t manage all aspects of Magichollow, which is where Zoe McNicholas and Makaira Lee come in. McNicholas works as the in-house designer – she’s behind all the crop tops and jean alterations you see online. An AUT fashion graduate, she started as a Magichollow intern while the company was taking moving into their Vulcan Lane premises. Now she’s about to launch a debut re-work capsule collection dubbed an “ode to sportswear”. It features 20 pieces crafted by McNicholas including Adidas track pants turned into structured tops, three Champion hoodies combined into one and Ralph Lauren business shirts transformed into tailored, feminine silhouettes.

Makaira Lee is in charge of the three-headed dragon of social media, styling and design. She studied photography at AUT, but has since gravitated towards fashion styling. These days she works closely with Wright and McNicholas to style their vintage in modern, unconventional ways.

The Magichollow crew aren’t slowing down anytime soon. A new buying trip to the US is in the works, and with plans to come back with another 500kgs of vintage clothing, they’re going to need a lot more room. While they’re happy with their Auckland store, they say the thought of an Australian expansion is at the back of their minds. But who knows? Magichollow is always working on the fly and so far, it’s worked.

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New Zealanders might complain about their banks but all signs suggest a Royal Commission into the industry here would fail to uncover serious problems, writes Massey Business School’s Dr Claire Matthews.

One banking boss collapsed under cross-examination, another resigned after revelations that clients were charged for services they did not receive. There’s no doubt Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has had the media glued to their seats.

But given the largest banks here are owned by the ‘Big Four’ Australian banks, New Zealand is following events with particular interest. The question that many are asking is, “Should we have concerns about the same issues in New Zealand?”

First of all, it is important to note that the Royal Commission’s remit ranges beyond the banks into the wider financial services market in Australia, but some of those organisations, such as AMP, also operate in New Zealand. To date, there have been two rounds of public hearings to address consumer lending and financial advice. The next round, in May, is focused on SMEs, and further rounds will follow.

So, let’s take a look at the issues raised so far and whether they apply to the New Zealand financial services environment.

The main concerns raised during the first round of hearings on consumer lending related to loans made to people who could not afford them, and the involvement of mortgage brokers in the home loan process. In 2014, New Zealand added responsible lending principles to the Credit Contracts and Consumer Finance Act 2003. The Act says: “A lender must, in relation to an agreement with a borrower, make reasonable inquiries, before entering into the agreement, so as to be satisfied that it is likely that … the borrower will make the payments under the agreement without suffering substantial hardship” – that is, the lender must be confident the borrower can afford to repay the loan.

This should provide confidence that lenders in New Zealand are not making loans to people who cannot afford them, but Australia has similar regulatory requirements, which suggests this confidence may be misplaced. Nevertheless, while lenders may not get it right every time, there does not appear to be widespread examples of inappropriate loans being made in New Zealand.

The issue of mortgage brokers primarily relates to the way they are remunerated. In both countries, mortgage brokers generally offer their services free to their clients and are remunerated by the lenders via commission made up of an upfront payment and a trail commission paid until the loan is repaid. The Royal Commission has heard the structure of commission payments in Australia incentivises mortgage brokers to maximise the size and term of the loan to maximise their own remuneration. The New Zealand situation is different, as the balance between upfront and trail commissions here are weighted towards upfront commissions. This view is supported by occasional complaints of churn by mortgage brokers seeking a new upfront commission by assisting a client to refinance with another lender.

While the hearings on financial advice are still underway, two key issues have been getting publicity: the quality of advice provided, and the charging of fees to dead clients.

The quality of advice issue appears focused on superannuation savings, and this is an area where there is a key difference between the two financial systems. New Zealand does not have compulsory retirement savings – the closest we have is KiwiSaver, which is fully implemented via managed investments with KiwiSaver providers. Much of Australia’s compulsory retirement savings are managed investments too, but Australians also have the option of self-managed superannuation funds (SMSFs). These have regulatory advantages over ordinary managed funds.

With SMSFs, the few members are usually also the trustees and have responsibility for complying with super and tax laws. There are considerable opportunities for professional advisers to assist with SMSF administration and management, for a fee. The issues raised at the Royal Commission appear to primarily relate to SMSFs, and are not confined to banks.  We don’t have anything equivalent to SMSFs in New Zealand, so similar issues are unlikely here.

It is worth noting, however, that concerns have been raised in New Zealand about the independence of bank staff providing advice, and the impact this may have on the quality of the advice provided. In part, this concern is about banks advising customers to purchase the bank’s own products, but this does not automatically mean that the advice is not appropriate as has been suggested.

Charging fees to deceased customers is also not necessarily wrong. It very much depends on the type of fees being charged and the service being provided. The Australian Securities and Investment Commission notes ongoing financial advice fees may cover regular reviews with the financial adviser, regular investment portfolio reports, access to the adviser, newsletters and seminar invitations. The estate of a deceased customer may still require some of these services, particularly the reports. A fee would therefore still be appropriate, but you would expect it to be a reduced fee due to the more limited service provided.

In New Zealand, public concern is focused primarily on the banks, so it is useful to examine statistics from the Banking Ombudsman. In the five years to June 2017, the Banking Ombudsman Scheme completed 1264 disputes, averaging 252 per year. Of those, 9.5% were resolved solely in favour of the customer, with a further 22.2% resolved with a result for both parties. By contrast, more than half (52.5%) were resolved in favour of the bank, including those that were withdrawn or abandoned. This does not support widespread issues in the banking sector.

While New Zealanders regularly complain about their banks, and have an innate distrust of their motives, if a Royal Commission was held here I doubt there would be widespread problems uncovered. Sure, there would be cases of inappropriate behaviour by financial services firms and their staff, but I believe such cases would be isolated examples and not indicative of endemic issues within the sector.

The regulatory environment in New Zealand is similar to that in Australia, but sufficiently different to suggest the regulated behaviour would be different. Possibly more important is the culture of financial services firms in the two countries is quite different. But if a ‘lite’ version of the Australian Royal Commission was helpful in addressing New Zealanders’ distrust of the sector, then it’s an exercise that’s probably worth considering.

Dr Claire Matthews is Director, Academic Programmes for the Massey Business School. Her research interests centre around consumer’s financial behaviour, decisions and attitudes, with a particular interest in retirement planning and KiwiSaver.

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