Close
 

Why Red Rack's off-price retail is a timely move for The Warehouse

  • News
  • October 17, 2018
  • Jai Breitnauer
Why Red Rack's off-price retail is a timely move for The Warehouse

In September 2017, JP Morgan analysts noted off-price retailing would reach USD $18 bn to $19 bn of incremental sales by 2021. More recent figures have put that at more like USD $33 bn – so it was a great time for The Warehouse to launch Red Rack, NZ’s first, large-scale, off-price retail offering last week. With up to 60 percent off brands like Billabong, Nike and Paul Frank, The Warehouse are expecting good consumer support across the 47 participating stores nationwide. 

“There have been some small off-price offerings (before) but we’re the only retailer doing it at scale,” says Nick Grayston, chief executive of The Warehouse Group.“We don’t see why New Zealanders should have to pay more than people overseas so we’re using our scale and capability to offer incredible value to Kiwis.”

Off price retailing has been happening overseas for years. In fact, credit for its invention goes to Edward Filene, who suggested selling discounted excess inventory in the basement of his father’s Boston department store a century ago. So why has it only just come to New Zealand, and what does its arrival signify for the retail landscape?

“We’ve offered branded import products for some time but this is a much more considered strategy,” says Grayston. He sights tightening consumer spending and reduced disposable income, due to the fuel market, house prices etc., as making the retail climate ripe to receive such an offering.

“Off-price retail has proved popular overseas, with around two-thirds of shoppers in the US shopping for clothes at off-price retailers, and the off-price market expected to grow. We think Kiwis are really going to embrace the concept.”

The move to allow GST to be applied to all imported goods, announced earlier this year, also means a reduction in overseas bargains ordered online, leaving an opening in the domestic market to help satisfy that Kiwi needs for a deal. 

Research from the NPD group in 2016 showed that 75 percent of apparel purchases in the US came through off price retail channels – second in growth only to online sales. This group were said to be disloyal and impatient, looking for instant bargains rather than waiting for sales, and shopping according to price rather than service standards. While over half of this group were aged 45 +, many fell into the Millennial category, confirming our ideas about this group of young shoppers who want exactly what they want at stunningly good value, and they want it immediately – meaning they prefer to shop in a store and take their purchases away with them. And they shop this way regardless of the size of their wallet.

"Thanks to tax cuts, bonuses and refunds, most consumers saw their finances improve over the first quarter. This includes more constrained households," GlobalData retail managing director Neil Saunders said in an interview with US title Retail Dive in June. "However, this fillip to income did not change the value mindset. Our data shows that even those with rising incomes remain value-conscious and are keen to make their dollars stretch as far as they can."

However, as online and off price retail booms, some commentators have noted that more traditional retail is suffering. Department stores, for example, are on the decline. Writing in Forbes in Nov 2017, Richard Kestenbaum noted that the increase in off price retail outlets (even Macy’s and Saks have an offering) will lead to an increase in competition for product to sell through that channel – giving rise to products made for off-price retail – which reduces the legitimacy of the offering.

“The true closeout product is going to be harder for the store to get in the future because companies are using technology to reduce the quantity of unsold full-price products,” he says, noting that higher spec tech aimed at meeting real time demand and reducing manufacturer losses is challenging the off-price market globally.

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.

 
Sponsored Content

New Zealand loyalty program members want rewards quickly

Research reveals New Zealanders are getting value from their programs.

 
 
Design

Torpedo7 evolves its bricks and mortar strategy

Torpedo7’s new flagship at Westfield Newmarket represents the next step in the evolution of this former pureplay’s bricks and mortar strategy.

 
 

Visual merchandising tips from top designer Kris Ericksen

  • Design
  • October 9, 2019
  • Sarah Dunn
Visual merchandising tips from top designer Kris Ericksen

The Judge’s Choice award for the Welly Loves WOW Window Dressing Competition this year went to Danish jewellery retailer Dyrberg/Kern’s luminous window display. The designer behind it, Kris Ericksen of Plato Design, shares some tips on how to put together a stunning piece of visual merchandising.

Read more
 

Social scoreboard

Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

 
topics
Concept to closet
Business coverage of New Zealand Fashion Week.
Regional rollercoaster
What does retail look like in 2019 for ...
Town centres
A positive retail environment over the past 12 ...
Amazon Arrival
Keeping up with all things Amazon as it ...
The Retail Yearbook 2017
As we battle our way through the busiest ...
The future is bright
We spoke with four retailers in their twenties ...
Hospitality enhancing retail
Some think food and integrated hospitality offerings will ...
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
How to open a store
Sarah Dunn considers what it would take to ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
Sisterhood
Women in retail help one another. We spoke ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...
 

The Kai Box talks plant-based business

  • News
  • October 9, 2019
  • Sarah Dunn
The Kai Box talks plant-based business

Auckland-based vegan food company The Kai Box is riding a wave of consumer interest in plant-based food. Co-founder John Mellows shares some thoughts on the popularity of veganism with us.

Read more
 
 

Peek inside the new Sass & Bide store at Westfield Newmarket

  • Design
  • October 8, 2019
Peek inside the new Sass & Bide store at Westfield Newmarket

The new flagship at Westfield Newmarket is Australian label Sass & Bide’s third in New Zealand and 16th in total. Take a look at its fit-out in our gallery below.

Read more
 
Sponsored content

Zoe & Morgan talk music

Our friends at OneMusic caught up with the lovelies at Zoe & Morgan to learn about what makes their stores hum.

 
Next page
Results for
Topics
Jobs
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

Advertise
The Register

editor@theregister.co.nz

Content marketing/advertising? Email anita.hayhoe@icg.co.nz or call 022 639 3004

View Media Kit

}