Warehouse digests new businesses

Last updated 05:00 12/04/2014

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Having added 11 new businesses in 18 months, the Warehouse Group is entering a consolidation stage.

The listed retailer has already spent $4 million on repositioning its Warehouse Stationery stores, and group chief executive Mark Powell says a further $5.5m will be spent on refreshing its Noel Leeming stores from August.

The Noel Leeming chain was bought out of private equity hands 15 month ago.

Powell said customer service was one of the only ways Noel Leeming could differentiate itself from rivals like Harvey Norman and Dick Smith.

"The stores are fairly tired because they've been under-invested in. It will still be Noel Leeming, but it will be a contemporising of the brand and being really clear it's about service and support, as well as the product."

Since the Warehouse bought Noel Leeming, Powell said the electronics chain had seen a good increase in sales.

The company closed 12 of its 24 Bond & Bond stores, rebranded the remaining stores as Noel Leeming and put the extra staff into the existing stores rather than making them redundant.

That had put extra hands on the shop floors and the strategy had resulted in extra sales. The staff's loyalty was rewarded with a big pay rise, as the group moves to its equivalent of a "living wage".

Powell is in the process of trying to turn the Warehouse group around after several years of decline.

The Warehouse stores have had 12 quarters of growth, and Warehouse Stationery has had 18 quarters of growth.

New purchases include the Schooltex school uniform brand conditionally purchased in January from Postie Plus, and a 51 per cent stake in outdoor goods retailer Torpedo7.

Other new ventures include multi-media retailing innovations such as "click and collect," wifi in stores, and several purely online channels like ilovebeauty and baby.co.nz.

The group also announced earlier this year that it was moving further into the financial services sphere by buying Diner's Club's New Zealand business so it could offer more generalised credit cards and instalment products.

Powell said the task was now bedding all the new purchases in, but not at the cost of each business' "personality".

"We're not going to leverage synergy just for the sake of some internal benefit.

"Each business is at a different phase but what should be driving each business is a clear strategy."

Powell's strategy includes a focus on training. The first stage of the group's "career retailer wage" went in place August last year and the second stage will take off this August.

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"What that will mean is if you're fully trained, and done 5000 hours, which I think would be 60 per cent of the team, certainly among the ‘red sheds', you will be earning between $18 and $19 a hour, at least.

"When you add incentives, the value of team discounts and premium rates, it takes people well above the living wage."

The company was also sponsoring a specialist retail degree through Massey University from next year.

"We want retailing to be seen as a great career. Something like 15 to 20 per cent of New Zealanders work in retail and often it's not seen as a good career choice and it should be."

- BusinessDay.co.nz

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