Woolworths is to close 30 stores across Australasia – including six Countdown supermarkets in New Zealand – through an operating model review, announced last week to the Australian stock exchange.
The plan includes a further 500 job losses, 1000 staff being moved from group office into businesses and the rollout of new Australian supermarkets being “slowed significantly”, chief executive officer Brad Banducci says in a stock exchange announcement.
The company is also looking to sell EziBuy, an Australasia e-commerce and catalogue retailer based in Palmerston North.
Just one New Zealand Countdown supermarket – Rangiora Central – is set to close this year.
Countdown intends to offer all 57 staff work at either the Rangiora East store, or one of the other remaining Christchurch stores, before the closure on 2 October, says James Walker, general manager corporate affairs.
One Countdown supermarket, Waihi, has already closed due to safety concerns.
The remaining four supermarkets set to close cannot be announced due to ongoing commercial discussions, such as with landlords. However, they are unlikely to happen for at least 12 months, Walker says.
“As we always do, we will work with team affected by these closures to transfer to nearby stores.”
Countdown plans to open three new stores in the next year, in Aotea (Wellington), Beachlands and Ashburton South. Two replacement stores in Waiheke Island and Mosgiel will also be built, Walker says.
“As a supermarket business, we’ve got to make sure we’re in a place where our customers need us to be. As a general rule, closing supermarkets and opening them is part of the business.”
The job losses are coming out of Woolworths’ head office and the closure of a distribution centre in Australia, Walker says.
But this side of the Tasman, Countdown is still going ahead with its plans to provide customers with more face-to-face service by creating about 600 new roles on the shop floor, such as checkouts, produce and night-fill. A further 200 staff will also be given extended hours.
“We want to make sure we’ve got the best possible service in our stores. Customer service is key,” he says.
Walker says Countdown’s customer numbers are growing year-on-year in New Zealand. He calls the changes a “minor readjustment and opportunity to redeploy”.
“Countdown is performing well. We’re closing some stores that we think, unfortunately, make sense to do so, but we’re opening new ones and will continue to open them in the foreseeable future.”
Countdown has 183 stores across New Zealand and 18,000 employees.
Changes are ‘business as usual’ expert agrees
The Countdown supermarket changes in New Zealand are pretty much business as usual, agrees retail expert, Chris Wilkinson from First Retail.
The six stores to close are likely to be in areas where Countdown is comfortable a competitor is not going to move in, he says.
“There’s a lot of stores where there is a clear over-lap, or a competitor that’s fairly strong. That’s normal business as usual.”
There should be ample opportunity for the staff from the closing stores to find work, he says.
But Wilkinson also does not think much of the 600 new staff, as they will be spread across the 183 stores.
“They’re a big corporation. That’s three staff per site and these stores are running two shifts. In many cases that could be just business as usual,” he says.
The new staff will see Countdown start to match the numbers of rival New World, owned by Foodstuffs, which previously had higher staff numbers, Wilkinson says.
But one thing Countdown does do very well is plan for succession, by training and upskilling the management of the future. This is vital for the whole retail industry, he says.
EziBuy could be hard sell, retail expert predicts
Finding a buyer for EziBuy could be difficult in a global market flooded with ecommerce, Wilkinson says.
EziBuy was started in Palmerston North in 1978, by brothers Peter and Gerard Gillespie, initially selling out of black and white catalogues. Now it is one of the largest multi-channel retailers in Australasia, selling apparel and homeware from its website, through its Palmerston North-based call centre or from its five stores in New Zealand.
But Wilkinson says EziBuy’s success came from servicing the likes of the rural community when options were limited.
“While EziBuy was the only player for many years, now it’s one of millions of online traders,” he says. “I would imagine that model’s fairly exhausted now.”
The market to buy is limited if the retailer does not have a strong position, Wilkinson says. He gives the examples of Shanton, and Valleygirl and Temt.
Mid-market womenswear retailer Shanton took more than six months to sell last year, while 30 out of 31 Valleygirl and Temt stores have closed while administrators try to find a buyer.
Wilkinson says a large online retailer, such as Australian appliance and homeware seller Kogan, could be interested in EziBuy for its logistics and distribution.
“EziBuy has some pretty amazing logistics. Its model and distribution system could provide service for someone like Kogan,” he says.
However, when Woolworths Ltd bought EziBuy in 2013, it was to pair EziBuy with its Australian discount department store chain Big W. But the distribution model did not work as well as planned, Banducci confirms in his stock exchange announcement.
“The synergies expected at the time Woolworths bought EziBuy were not realised and performance has been below our expectations. As a result, we have separated Big W and EziBuy, and will look at options to sell EziBuy.”