Episode description
Episode description
Will a shake-up in leadership at The Warehouse give the company what it needs to survive?
In today's complicated retail environment, The Warehouse needs more than its history as an iconic Kiwi brand
News of another New Zealand retail giant in trouble comes at a time when the industry is facing what one expert calls its most dynamic phase in decades.
Smith & Caughey's yesterday announced a proposal to close after 144 years of trading. The closure would result in close to 250 job losses, and follows a 40 percent drop in in-store revenue in the past five years.
"We're seeing retailers that have been around for generations closing and these curveballs that have been thrown, certainly since Covid, have been things that none of us have ever experienced before," says Chris Wilkinson, managing director of the consultancy First Retail Group.
Meanwhile, at the other end of the retail spectrum, whoever takes over leadership of The Warehouse Group is faced with a company that has taken drastic steps to get back on track.
After the sudden departure of chief executive Nick Grayston, the international search for a new chief executive is likely to take months.
The news on the afternoon of 20 May that he was leaving, effective immediately, followed an earnings downgrade, a $23 million half-year loss, a slump in its share price and asset sales.
NBR co-editor Calida Stuart-Menteath called time on Grayston weeks before that in her weekly editorial Last Word.
"We concluded that Nick Grayston had been there eight years and hadn't managed to do what he said he was going to do," she says.
The retailer has gone from being a pioneer in its day, opening up consumer and households goods to low and middle income Kiwis at prices not seen before, to one struggling against competitors such as Australian-owned K-Mart.
Stuart-Menteath details the Red Sheds' period of growth through the 80s and 90s, and its listing on the stock exchange in 1994. In 2000, sales exceeded $1 billion and it was in the top 10 largest listed companies in New Zealand.
A buying spree in the past decade under the previous chief executive saw The Warehouse expand into a group of retail brands, some of which became top performers. Others flopped. Among them was sports chain Torpedo 7. It was bought for tens of millions of dollars and recently sold for just one dollar.
The Warehouse Group has since refocused to three key brands - the Red Sheds, Warehouse Stationery and Noel Leeming.
Wilkinson says The Warehouse was a forerunner to big format retail and shoppers went there not only for the bargain but because the shopping experience was a novelty…