Archive | Retail

Smiths City eyes faster transformation as it plunges to loss

Furniture & appliance retailer Smiths City Group Ltd plunged to a $7.2 million loss for the year to April although its revenue fell only 5.1%. In its result announcement on Friday, the company reaffirmed its commitment to transformation and said it would accelerate the pace of change.

The company closed 2 stores & one clearance centre this year and now operates 35 stores, including 3 clearance centres.

Alastair Kerr.

New Smiths chair Alastair Kerr said the pretax loss was bigger than forecast only a fortnight before the end of the financial year.

Key financial outcomes (2017 in brackets):

  • Revenue down 5.1% to $215.9 million ($227.4 million)
  • Pretax return down 595% to $9.9 million loss ($2 million profit)
  • Return after tax down 400% to $7.2 million loss ($2.4 million profit)
  • Basic & diluted earnings/share down 400% to 13.6c loss (4.5c profit)
  • Net tangible assets/share down 16.7% to 80c (96c)
  • Net debt:total assets 40.4% (31.0%)
  • Smiths City Finance sales fell 13% to $8 million ($9.2 million) and trading profit fell 8.1% to $3.4 million ($3.7 million)

Mr Kerr said these results meant no dividend now or in the near future: “In light of these results & the need to invest in the business, the board now believes it prudent not to declare a full-year dividend. The board will continue to review its dividend policy but at present it believes the company is unlikely to resume paying dividends in the current financial year.”

Faster transformation envisaged

The programme to transform the furniture store chain began 3 years ago but picked up speed this year.

One area of change is on the board. Alastair Kerr, appointed as an independent director last December, took over from Craig Boyce as chair at the end of May. Ben Powles was also appointed in December, Antony Karp joined the board in June, Gary Rohloff resigned in April, and Sheena Henderson’s resignation took effect on Friday.

The business transformation, as espoused on Friday, includes closing off some accounting issues such as onerous leases, but the forward picture seems mainly based on opening customers’ eyes to goods in the shop on top of what they came in to buy.

Mr Kerr said online sales grew strongly – up 51% in the fourth quarter following relaunch of the ecommerce store – but the last year was mainly one of challenging trading conditions. Overall retail sales fell 4.7% to $207.9 million ($218.2 million), while same-store sales fell 2.7% to $198.6 million ($204.1 million).

“The downturn reflected a continuation of the easing in demand and intense competition in the first half. These challenges were impacted by store refurbishments & closures, election-year trading uncertainty and in some areas an insufficient focus on our customers.

“The result includes a number of one-off items including:

  • the recognition of $4.9 million of provisions for onerous leases
  • a $1.5 million provision related to the Employment Court’s May ruling that Smiths City must recompense staff for pre-trading sales meetings, and
  • a further $0.5 million of additional contractual provisions.”

Mr Kerr said the provision for onerous leases of several underperforming stores “reflects our determination to take the difficult decisions”.

He said gearing was up but the company remained well funded. At balance date it had $6.2 million of cash on hand & net interest-bearing debt of $54.7 million, all secured against Smith City Finance receivables. Gearing measured as net debt:total assets rose from 31% to 40.4%.

“And, in contrast to recent years, and reflecting the tough trading conditions, Smiths City has recorded cash outflows of $5.8 million in the current year.”

The add-on purchases

“Priorities for the year ahead & beyond include a significant uplift in investment in the brand, technology, systems & training that will drive efficiency in the business and improve the customer experience. We will also work harder to meet customer demands and improve the customer experience in the store, online & after sale…

“If a customer comes to us seeking a bed we should also be offering them manchester & bedroom furnishings. If they come to us seeking a lounge suite we should also offer them cushions, a throw or other accessories. We need to sell a lifestyle.

“In short, the challenge before us, and it is a long-term challenge, is to make the most of the traffic through our stores by leveraging our strengths and by delivering continual improvements to the customer experience. We are determined to achieve this goal and this will see a return to growth and, over time, improved returns to our shareholders.”

Internet sales rocketing

Roy Campbell.

Chief executive Roy Campbell said there had been some heartening changes: “In the 2018 financial year, as part of our transformation programme, we continued to make several important steps toward achieving that goal. We rolled out the new Live Better store livery, first with our Hastings store and just before Christmas our Auckland & Whangarei stores, and refined & rationalised our product offer.

“Our online channel, which we relaunched this year, is growing strongly. Internet sales in the fourth quarter are up 51% on the same period on the prior year and the rate of growth has continued to accelerate since launch. In the first month of the new financial year internet sales were up 80% on the prior year. The ecommerce site is demonstrating the advantage of pairing traditional retail channels with new digital channels.

“Customers turn to the online platform to compare prices across retailers and, after visiting the stores, use the platform as they discuss preferences & make purchases. We see plenty of potential to further develop the site in the coming year.

“These changes follow on the closure of our appliance-only stores, the rationalisation of group distribution & administration centres, stock rationalisation & refreshment, merchandising improvements & staff changes.

“However, the challenging trading conditions exposed our weaknesses and show we need to inject new energy into the programme and continue our drive towards exceeding customers’ expectations.”

Discounting & credit terms hit the sector

The trading loss included costs associated with the closure of stores in Riccarton, Ngauranga Gorge & the Greymouth clearance centre, and a change to the way the group manages the supply chain.

“As we signalled in April, soft demand has led to heavy discounting, often to unsustainable levels, and the expansion of interest-free credit terms to periods rarely seen in the industry. These trends were most pronounced in Christchurch & Auckland, where we operate our largest outlets and generate a significant proportion of our total sales.

“Trading at our Auckland stores has also not met expectations. The stores are now benefiting from new management & more localised marketing support. We recognise the benefits to the group of achieving a strong presence in Auckland and are intensely focused on achieving success in the country’s largest market.

“We continue to review the broader store network. This year it became apparent – despite our significant effort – a small number of stores would never generate enough to cover the lease payments, let alone generate a profit. We decided it was better to immediately recognise this in the accounts rather than letting the stores dilute the positive results elsewhere in the network. We are reviewing the future of these stores and will continue to trade them where it makes financial sense to do so.

“More positively, we have protected our margins and we have also worked hard at reducing our working capital to ensure every dollar employed in the business is working for shareholders. These initiatives have included changes to how we manage our relationship with suppliers. Inventories have meanwhile fallen to $30.2 million from $36.3 million at the same time a year ago.

“We are focused on driving traffic to our stores and growing our revenues. The simplicity of a retail proposition – delivering customers the right products in the right environment and at the right price – belies the complexity of the task in the face of changing tastes, intense competition & volatile economic conditions.”

Failed to meet own values

Mr Campbell said the company would continue to work towards refreshing the finance company proposition, including the move to the digital origination of finance applications.

As for its staff, he said Smiths City had fallen well short of meeting its own values: “In May, when the Employment Court found that we should have paid our staff for the meetings held before stores opened, it became clear we were falling short of our own values in a key area.

“In retrospect, we agree with the court. And we are complying with its order that we conduct an audit to identify any underpayments and reimburse those impacted. The audit covers all current & previous employees for the last 6 years and is not complete, but at this stage we have quantified the cost to Smiths will be around $1.5 million. We are working to finalise the exact figure and will move to reimburse all affected staff progressively over the coming months as we locate those that worked for us in the past years.

“Smiths City recognises people are a core strategic enabler of our business. Going forward, we will be placing considerable effort into training, staff development & promoting a culture that is focused on the customer and celebrates honesty, fairness, integrity & timely communication.

“In July, Smiths City will celebrate 100 years of helping New Zealanders live better, and we have reached that goal thanks in no small measure to our people building relationships with our customers, telling our story and working hard to make it a reality.

“In our next century we want our team to be proud to be working for us. We want them to feel valued by our organisation and convey that enthusiasm & excitement to our customers. Such an attitude will only strengthen the relationships that are critical to our success.”

“Muted” housing market affects outlook

“The outlook for the remainder of the year remains challenging. Trading in the first 2 months of the year has been volatile and the housing market, a key driver of demand, remains muted despite rising housing affordability. In addition to the intense competition, we are seeing spending patterns shift from consumer durables to lower-cost purchases.

“Against this, however, we expect to benefit from the positive sentiment in the rural economy. We are hopeful the continued roll-out of our Live Better store livery to the flagship Christchurch stores, the ongoing work to build brand awareness in the Auckland market and new initiatives to improve our operations will drive a better result in the current financial year.”

Craig Boyce.

The board changes

Craig Boyce retired on 31 May after 30 years with the company, which started when he was appointed general manager in 1988. He was promoted to chief executive (1990-99) and finally to the chair (1999-2018).

Alastair Kerr, appointed as an independent director in December, replaced Mr Boyce as chair on 31 May.

He was appointed as an independent director of Paper Plus NZ Ltd in August 2016, Cognition Education Ltd in 2017, and has held many senior executive roles overseas in a 35-year career, including at Marks & Spencer, Mothercare, Virgin, The Body Shop, L’Oreal and Williams Sonoma Inc.

He’s chaired UK construction company J Murphy & Sons Ltd, UK department store operator Fenwick Ltd & perfume company Arran Arromatics Ltd, and been a director of brewer Fuller Smith & Turner plc. He has an MA Hons degree from Glasgow University.

Antony Karp.

Antony Karp, of Sydney, appointed in June, was chief operating officer of the ASX-listed women’s clothing retailer Specialty Fashion Group from 2012-14 and founded Sydney-based business, financial & investment consulting firm Tonka Group in 2015. He’s had 20 years’ experience in the retail, property, funds management & hotel sectors, including senior management roles with David Jones & Woolworths, Colliers & Jones Lang LaSalle in Australia.

Mr Karp was nominated to the board by Smiths City’s major shareholders Mercantile Investments Co Ltd (chaired by Sir Ron Brierley) and Sandon Capital Pty Ltd (Gabriel Radzyminski founded Sandon and is a director of Mercantile).

Ben Powles.

Ben Powles, appointed in December, is chief executive of Fishpond Ltd & WorldFront Inc, and a director of Blackball Consulting Ltd, Parisian Holdings Ltd & Parisian Neckwear Ltd, and Targetad Ltd.

Gary Rohloff resigned in April to spend more time on his personal interests after 7½ years on the board. He founded Laybuy Holdings Ltd in 2016 and was appointed an independent director of Bikes International Ltd in January 2017.

Sheena Henderson resigned in June, after 3½ years as an independent director, to spend more time on her private business interests & her other non-executive roles. She’s a director of Cluster Ltd, Moa Group Ltd, Natural Pet Food Group Ltd and Watson & Son Gp Ltd, and was previously global brand director for Fonterra Brands.

Smiths City Group
Company commentary
2018 audited financial statements & notes

Attribution: Company releases.

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Chinese online retailer empties warehouse – of staff

The next tectonic shift in retailing has been unveiled in Shanghai, where e-commerce company has built a warehouse that can organise, pack & ship 200,000 orders/day.

All it takes in human terms is 4 staff – and their jobs are to service the robots.

US news outlet Axios reporter Steve LeVine said yesterday:Welcome to the creeping new age of automation. When the talk turns to Chinese big tech — rivals to Google, Amazon & the rest of Silicon Valley — the names usually cited are Alibaba, Baidu & Tencent. But scrappy JD, with a respectable $US58 billion market cap, is investing aggressively to be added to the pantheon.

“Its secret sauce, executives said this week in Beijing & Shanghai, is logistics — its creation of China’s first east-to-west, north-to-south package delivery business, able to deliver a purchase the same day almost anywhere in the nation, as long as it’s ordered by 11am (or 10am in some cities).”

JD (full company name Jingdong) said on a media tour

JD says its objective wasn’t to eliminate workers but to get faster & more reliable, and that it would shift its warehouse people to other jobs. The company said its new mantra was “retail as a service,” and it intended to sell the efficient methods it’s developed to other companies.

Chief technical officer Chen Zhang said in Beijing: “Everything is about scale. When you invest in technology, you don’t worry about spending money. You worry whether you can get to scale. When scale comes, profit will come.”

JD entered the field of e-commerce in 2004. It took its turnover to 99.2 billion yuan ($NZ22.2 billion) in 2016, and lifted its net income 43% that year to 260.1 billion yuan ($NZ58.3 billion). The company listed on the US Nasdaq exchange in 2014 and entered the Fortune global 500 list in 2016.

Online, the company’s Jingdong Mall is a one-stop integrated shopping platform. The company said it had become China’s largest mobile phone, digital & computer retailer in the traditional premium category, accounting for 62% of the China’s home network purchases.

JD has 2 other divisions, finance and, closely integrated with online shopping, logistics.

On its website, JD says Jingdong Logistics has 263 largescale warehouses nationwide and has 9 largescale intelligent logistics centres: “The self-operated distribution covers 98% of the country’s population and reduces the cost of commodity circulation by 70%. The operational efficiency of logistics has increased by more than 2 times. In addition, Jingdong Logistics also develops & promotes innovative environmental protection materials through a series of technological innovations to create a green logistics system of ‘timeliness, environmental protection, innovation & intelligence’ in all aspects.”

Axios, 14 June 2018: In China, a picture of how warehouse jobs can vanish

Attribution: Axios, website.

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Woolworths profit up, but currency makes a difference to Countdown returns

Australian retailer Woolworths Group Ltd, owner of the Countdown supermarket chain in New Zealand, made some big profit gains across the Tasman in the December half-year but stumbled on this side.

Despite the gains, and the aim of “moving from turnaround to transformation”, the Big W chain of discount department stores made an $A10 million loss for the half, and group chief executive Brad Banducci said on Friday he expected Big W to make a loss of $A80-120 million for the full year.

Group net profit after tax (NPAT) rose 37.6% to $A969 million ($A704 million in the December 2916 half), net profit after tax from continuing operations rose 14.7% to $A902 million ($A786 million), the dividend/share rose 26.5% to A43c (A34c).

That was on sales up 3.8% to $A29.8 billion ($A28.73 billion) and earnings before interest & tax (ebit) up 9.9% to $A1.43 billion ($A1.3 billion).

Calculating the NZ performance

The quality of the New Zealand results depended partly on where they were counted – in local or $A.

In $A, NZ food sales fell 0.2% (or $A4 million) to $A3.041 billion. In $NZ, those sales rose 3.6% to $NZ3.32 billion ($NZ3.2 billion).

NZ ebit fell 11.1% in $A to $A138 million (A$155 million), and still fell in $NZ, but by less, down 7.7% to $NZ150 million ($NZ163 million).

Mr Banducci said second-quarter NZ food sales grew by 3.3%, the highest in a number of years. “As previously highlighted, the 2018 financial year is a year of investment and has impacted ebit in the half, declining by 7.7% due to incremental investments in team hours, produce & digital initiatives. Online sales growth was a highlight as we expanded delivery & pick-up capacity and lowered fees.

“Customer satisfaction continues to improve as a result of key initiatives & investment. Activity includes increased store team hours & training, an improved in-stock position, fresh & local ranging focus, and the continued benefits from the Onecard & AA Smartfuel partnership.

“Strong online growth accelerated further in the half due to the expanded delivery capacity, reduced delivery fees and launch of free pick-up for orders over $50.

“Average prices decreased by 0.1% with ongoing activity to deliver lower prices every day, seasonal promotional activity and competitive pricing over the Christmas period, while contending with dairy & produce market cost increases.

“Sales/m² increased by 1.8% on a rolling 12-month basis, reflecting sales growth of 3.2% over the last 12 months and an increase in average space of 1.4%.

“In the half, one Countdown store was opened and one was closed, with 2 franchise stores opened. At the end of the half there were 184 Countdown & 67 franchise stores.

“Gross margin was largely unchanged on the prior year at 24.0%, with the small increase of 6 basis points attributable to improvements in stock loss more than offsetting increased price investment.

“Cost of doing business as a percentage of sales increased 62 basis points, primarily from the increased investment in team hours, online & store condition to enhance the customer experience, with the result that ebitda & ebit decreased 3.1% & 7.7% respectively. Return on funds employed was down 19 basis points on the prior year due to the lower ebit.”

NZ sales/m² in $NZ rose 1.8% to $NZ15.23 billion ($NZ14.96 billion). Australian sales/m² – in $A – rose 3.5% to $A16.26 billion ($A15.72 billion).

Mr Banducci said Woolworths had a medium-term target of opening 3-4 new Countdown supermarkets/year.

Link: Full half-year report

Attribution: Company release.

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Auckland Airport leads as omni-channel platform set to transform shopping

Auckland International Airport Ltd announced a partnership with German global technology service provider AOE GmbH yesterday, to create a “multi-retailer mall” which will enable international travellers to buy retail products & airport services via mobile phone & online.

The airport company’s retail & commercial general manager, Richard Barker, said the “omni-channel” commerce platform should be launched in mid-2018: “Our new online ‘multi-retailer mall’ will enable international passengers to purchase from multiple airport retailers with a single transaction and then pick up all their items from a single collection point, thanks to a sophisticated back-of-house operation. It’s the ultimate ‘click-&-collect’ shopping process.

“The online platform also means that international passengers can shop at any stage of their travel journey, using their own devices, and at a time & place that is convenient for them – be it before they leave home, on board their aircraft using in-flight wi-fi, or while sitting in any domestic or international airport.

“The platform’s staged introduction will eventually see most airport retailers participating. All Auckland Airport products & services, including parking, loyalty & lounge access, will also be integrated into the online mall, making it easier & more convenient for travellers to shop.”

Mr Barker said Frankfurt Airport had successfully introduced AOE’s omni-channel commerce platform: “We are excited that Auckland Airport’s introduction of the technology will be a first for any airport in Australasia. It will ensure that we deliver one of the most advanced digital airport retail experiences in the world and that we can significantly expand the range & type of products & services we offer to our customers.”

“Today’s partnership announcement continues the digital transformation of Auckland Airport. It supports our ‘faster, higher, stronger’ business strategy focus on strengthening our consumer business, and builds on the recent launch of our mobile-first Strata loyalty programme. Importantly, it will help to provide our passengers with a one-of-a-kind personalised journey.”

Links: AOE
OM³, or omnichannel multi-merchant marketplace

Attribution: Company release.

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Online trading sees more US mainstreet shops close

America’s big retail chains are snipping off large chunks of mainstreet retail space as shoppers continue to head online.

Image above: In what used to be prime retail space on Queen St in Auckland, discount shops were promoting pre-Christmas sales, with a street beggar one door down.

Even after the closures, though, the US will have far more retail space per capita than New Zealand, where the opening of new malls has always been accompanied by comparisons with Australia & the US showing how poorly served we’ve been.

Some New Zealand retailers have succeeded online while others have maintained their physical presence as their main, or entire, business. But the weakness of mainstreet retail is glaringly apparent when discount shops (pictured) take up what used to be prime Queen St space – right at the spot where annual pedestrian surveys showed Auckland foot traffic was its heaviest – and add to the insult by heavily promoting pre-Christmas sales.

Further down towards the foot of Queen St, exclusive foreign retailers have taken up glittering space intended for exclusive – mostly cruise passenger – shoppers, with the doors firmly closed to locals.

The disarray in the US retail sector was highlighted last week by closure announcements for large numbers of Macy’s, Kmart & Sears outlets.

CNN Money noted the disparity between the market value of online retailer Amazon compared to 10 of the biggest names in mainstreet & mall trading. Amazon has a market value of $US370 billion – 4 times more than the combined $US95 million value of Macy’s, Kohl’s, Sears, JCPenney, Nordstrom, Best Buy, Barnes & Noble, Dillard’s, Gap and Target. Take away Target’s $US40 billion, and the other 9 are worth a combined $US55 billion.

Sears announced it was shutting 150 more stores, including 108 Kmarts, on top of 78 closures in 2016 and over 200 in 2015. From sales of $US1.2 billion over 12 months, the 150 stores about to close lost $US60 million.

Sears Holdings said in a release: “The decision to close stores is a difficult but necessary step as we take actions to strengthen the company’s operations and fund its transformation. Many of these stores have struggled with their financial performance for years and we have kept them open to maintain local jobs and in the hopes that they would turn around. But in order to meet our objective of returning to profitability, we have to make tough decisions and will continue to do so, which will give our better performing stores a chance at success.”

Macy’s Inc is closing 68 of its 880 stores (3 already shut). It expects to lay off about 3900 staff as a direct result, and to axe another 6200 jobs as it streamlines its management team.

It expects the initial closures to generate savings of $US550 million/year, enabling it to invest an extra $US250 million in growing the digital business, store-related growth strategies, Bluemercury, Macy’s Backstage & China.

Macy’s Inc chair & chief executive Terry Lundgren said: “Our plan to close about 100 stores over the next few years is an important part of our strategy to help us right-size our physical footprint as we expand our digital reach. We are closing locations that are unproductive or are no longer robust shopping destinations due to changes in the local retail shopping landscape, as well as monetising locations with highly valued real estate.”

CNN Money, 6 January 2017: Amazon worth more than Sears, Macy’s and Target combined
CNN Money, 5 January 2017: Sears and Kmart closing 150 stores
CNN Money 4 January 2017: Macy’s job cuts
4 January 2017: Macy’s release

Attribution: CNN Money, Macy’s, Sears.

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Research indicates wave of foreign retailers will grow

The wave of foreign retailers coming to New Zealand will keep growing, CBRE researchers in Australia & locally have found.

Their biggest target is also foreign – the spend by Chinese tourists in New Zealand has risen from $770 million 2 years ago to $1.75 billion.

CBRE’s New Zealand head of research, Zoltan Moricz, was joined by Australian counterparts Stephen McNabb & Danny Lee in producing the Viewpoint paper out yesterday, Pacific retail – brands driving change.

Mr Moricz said CBRE tracked 450 international retailers, and 130 of them were looking to roll out stores in Australia & New Zealand over the next 3-5 years. Research suggested 80% were certain or highly likely to execute their rollout plans, and 50 of those retailers were likely to turn up in New Zealand.

The implications for New Zealand are, first, more international retailers in the cbd (Precinct Properties NZ Ltd’s new Commercial Bay development on Lower Queen St is an obvious target), and some entry to larger malls, rents driven higher, and stiffer competition for space for large local retailers and some of the Australian chains.

Mr Moricz said there was competition for space in new markets between international brands, saturation in existing markets drove them to look further afield, and the constant pressure driving growth meant these retailers had to grow to dominate.

New Zealand & Australia used to be seen as separate markets, and international brands would go to Australia first, turning up on this side of the Tasman as an afterthought. Now, Mr Moricz said, they treat Sydney, Melbourne & Auckland as their first catchment, then look at smaller centres in both countries after that.

tourists1610Chinese tourists were more inclined to buy to take home – 30% of purchases were to take home, versus 6% for visitors from the UK. Chinese tourists’ spend in Australia averaged $6500/trip versus $2800/trip for the top 5 visiting countries.

Chinese visitors to New Zealand quadrupled to 400,000/year over the last 10 years, according to CBRE. Statistics NZ figures show the rise in Chinese tourism has been even greater in the last 2 years – up by 65%, or 160,000.

He said high Chinese immigration as well as tourism had helped change the perception of Auckland, because of the greater acceptance of international retailers through Asia. The internationals’ penetration rate in New Zealand was 16%, 28% in Australia but 45% in China, Singapore & Hong Kong.

Mr Moricz said rental pressure could push some local retailers back to secondary malls, especially in the sectors where the international brands were trying to dominate, such as fashion.

While luxury brands tended to focus on the cbd, the CBRE research showed mid-range fashion & specialty clothing brands were also looking harder at New Zealand, and they had a broader target market which would take them into suburban malls.

Attribution: CBRE research paper, interview.

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TopShop to open in Wellington

Top Retail Ltd, the New Zealand licensee for UK retailer TopShop, will open its third New Zealand store in Wellington, at 256 Lambton Quay.

Like its first store, opened on the corner of Queen St & Victoria St West in Auckland in March last year, the Wellington premises will be on 2 levels, a total 1200m² with escalators between. TopShop is also in The Department Store in Takapuna.

The leases were negotiated by Metro Commercial Ltd, and the Wellington deal stitched together by director Nathan Male & brokers David Grant & Bryan Block on behalf of landlord Wilmshurst Properties Ltd, owner of part of Capital on the Quay.

The new store will take up ground-floor spaces previously occupied by YD and Maher Shoes, plus an extensive area of the first floor where numerous tenancies have been vacated. Base building works are being completed by the landlord, including seismic strengthening, and Topshop expects to open later this year.

Attribution: Agency release.

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Foodstuffs to replace Clendon store with Pak ’n Save

Foodstuffs North Island Ltd has decided to replace its New World store in Clendon with a bigger Pak ’n Save supermarket.

It’s had a New World in the Clendon shopping centre since the South Auckland suburb was established in 1984, but Foodstuffs property development general manager Angela Bull said yesterday it was time, after 30 years, for a complete makeover: “We have had a good look at the store and seen there’s a great opportunity for Pak ’n Save to come to Clendon to best meet our customers’ needs.”

The conversion from the present store’s gross floor area of 2993m² to the proposed Pak ’n Save 4706m² will happen in stages and the store will stay open throughout the construction. The redevelopment has consent and Ms Bull expected construction of the first stage of the new supermarket to start in mid-2016.

Attribution: Company release.

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From desultory to thought-provoking, Westfield tour unfurls ideas

I walked away from a 3-hour presentation on retail’s future this morning starting to feel slightly impressed after a desultory start. The first 2 presenters, both international, had been abysmal. One prompted face-down notes, the other no notes. The third prompted a positive note. The last loved everything too much but did highlight some cameos that got me thinking.

The Auckland presentation was the last in Westfield’s breakfast series, which follows on from the international mall owner’s annual world retail study tour.

David Roth, chief executive for Europe, the Middle East, Africa & Asia of advertising & PR company WPP plc’s “global retail practice”, The Store, mentioned referral towards the end of his half hour, then commented: “You need to be where your customers are.”

Instead of the transaction being the completion, he was saying greater knowledge of the customer & their preferences led to referral for ongoing business. Out of that, I thought, he was really saying retailers needed to convince their customers where to be, by referring people to a place which they didn’t know would be their preference.

He said there would be fewer & smaller stores, and I wondered why. On my walk back down Queen St I passed the Asian restaurant & cafe strip, a line of small eathouses not yet open for business for the day, and the Real Groovy building with its host of outlets spread around an old warehouse, different adaptations of people’s needs.

The eathouses are in a structure preserved when the rest of the block was up for an overly grand development at the end of the 1980s, developed into apartment blocks 2 decades later. The Real Groovy building just above Mayoral Drive was among the next batch in line for replacement when that 80s boom ended. They are locations requiring tenants to pay the rent.

“There will be fewer stores,” Mr Roth mentioned. And my response: “There will be locations, will they be filled? Will somebody come & try, but maybe not succeed because time has marched on from the eras of these old edifices? In the digital age, will something else take their place or will the spaces lie empty? If he’s right and there are fewer stores, will the commercial landscape shrink or will these shops find themselves dotted among vacant buildings, or vacant sites? Or will these buildings be put to quite different uses?”

James Stewart, partner & retail practice leader specialising in restructuring at accountancy firm Ferrier Hodgson in Melbourne, said leading US retailers were using data analytics to know who to sell what and through which channel.

IdeaWorks chairman Jon Bird conceded, in a quick world tour of retail ideas, that “New Zealand does food better than anywhere else in the world”. 2 examples he discovered at the recently opened City Works Depot in the Victoria Quarter (where the mostly Australian IdeaWorks has an office): Best Ugly wood-fired bagels in the Montreal style, and Food Truck Garage, proclaiming “the world’s healthiest fast food” – no deep fryer here.

Around the world, he said, star retailers were about connectivity. The Burberry store on Bond St in London combined screen images & services with store traditions better than any. The internationalising of retail in the digital era had been led by the expansion of US & UK brands, but “We’re about to see the second wave of retailers, Chinese & Korean,” he said.

2 more points: “Online retailers are challenging what stores could & should be” and “Retail needs to be entertaining, far more than transactional.”

The presentation material is on the Westfield study tour website (link below).

Out in the street, though, as I pass the physical shops, change is evident in Auckland. The kiosks of Queen’s Lane, where the Methodist chapel stood not so long ago, and at 350 Queen St are evidence of different retailing dynamics.

And online? Trade is being conducted by a combination of physical shop & web, and online transactions are taking a growing share of business. It reaches into spheres few would have dreamed only a decade ago would be touched to the extent they have by the digital – into real estate and into publishing, for example.

The presentation did get me thinking – of possibilities, of change forcing change.

Links: Westfield retail study tour
City Works Depot
The Store

Attribution: Company release.

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Briscoe first-quarter sales down 0.09%

Published 4 May 2009

Briscoe Group Ltd said on Friday unaudited sales for the first trading quarter ended 26 April were $90.2 million, 0.09% lower than the $90.3 million a ear earlier. On a same-store basis, the group’s sales for the quarter were 0.94% behind the first quarter for last year, which group managing director Rod Duke said reflected the continued competitiveness across the retailing industry. Despite the relatively flat sales, the gross margin percentage & ebit were up. Sales for the group’s homeware segment decreased by 3.35% to $58.7 million, while sporting goods sales increased by 6.61% to $31.5 million. On a same-store basis, homeware sales decreased by 4.63% while sporting goods sales were 6.61% ahead. Mr Duke said Briscoe had removed a tier of operational management and realigned store management remuneration so it’s linked more closely to performance of their stores. “At this stage we are expecting to report a bottom-line profit for the half-year to 26 July  that is ahead of the first half of last year.”


Want to comment? Email [email protected].


Attribution: Company statement, story written by Bob Dey for the Bob Dey Property Report.

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