The human cost of Dick Smith’s slide into receivership

  • News
  • January 28, 2016
  • Sarah Dunn
The human cost of Dick Smith’s slide into receivership

“To have generations of New Zealanders shopping in our stores and – in more recent times – online, is testament to what Dick Smith did right for so many years: offer the products customers want, at a price that’s right, with knowledgeable, friendly service.

It’s a simple formula that helped us become one of the most-loved and trusted retail brands, employing thousands of Kiwis.

That trust was hard won and, in recent times, easily lost.”

The letter went on to emphasise that Dick Smith stores remain open for business. It encouraged upset customers to look on the bright side and give the company a second chance: “rather than the end of anything, we look at this as the beginning of a new journey.”

When NZRetail spoke with Mark Powell, who left The Warehouse Group earlier this month to become Massey University’s first CEO-in-residence, he empathised with those who had been personally affected by Dick Smith’s collapse.

“I think, number one, it’s very sad,” Powell says. “There are people who are probably at this very time very worried about their futures, what’s going to happen, there’s a lot of investors who’ve lost a lot of money.”

Powell doesn’t claim an inside view on the factors which drove Dick Smith into receivership, but as the chain is a direct competitor with TWG-owned electronics brand Noel Leeming, his team have kept a close eye on it since Noel Leeming’s purchase in 2013.

“What we saw was a business that took a lot of staff out,” Powell says. “It pumped up the cost saving. We saw a team that seemed quite demotivated.”

Powell sees a direct connection between Dick Smith’s low staffing levels and, compared to Noel Leeming’s career retailer wage, low pay rate; staff morale; and flagging sales. Low staff morale leads to high turnover, says Powell, which impacts on service and, consequently, sales.

“Clearly they’ve lost a lot of sales, they’ve lost a lot of market share. And really that, to me, is a lesson in the core basics of price, promotion and customer experience. Especially in that sector, because customer experience in that sector, people walk in and they want some help. They’ve often done a little preview search but it’s a big ticket purchase, often.”

In the upcoming February/March issue of NZRetail magazine, Powell further explores the connection between implementation of the career retailer wage at Noel Leeming and increased staff retention.

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