Department stores shaping up to be a strong retail group

  • Opinion
  • June 15, 2016
  • Paul Keane
Department stores shaping up to be a strong retail group
The Warehouse Group growth
The Warehouse came to prominence after its launch in the 1980s growing rapidly with store expansion throughout New Zealand, and as a result, it had significant sales and profit growth. More recently, The Warehouse Group have been less than aggressive in terms of store growth, and sales have not been spectacular. They seem to have concentrated on the expansion of the group, adding retail brands such as Noel Leeming and Torpedo 7 to the group’s stable, rather than growing the original “The Warehouse” brand. Maybe it is a matter of the group’s store expansion reaching maturity; still there is little doubt that “The Warehouse” needs a shot in the arm.
Kmart refresh
Wesfarmer’s Kmart were also a shrinking retail force, but they have recently opened new stores in Hamilton and Bethlehem, and have more planned. Their new store concept is refreshing, gives the customer a sense of belonging, and has a modern internal layout that succeeds in capturing customer merchandise interest.
Briscoe Group attempts expansion
The Briscoe Group have been very solid over recent years with quite outstanding profit and sales results. The potential purchase of Kathmandu was an opportunity to break further into the outdoor merchandise category, probably on the back of the Rebel offering. The group tried hard, but all offers were rejected and the potential purchase now seems more distant than ever. This potential purchase may have defocused the group from the traditional chore of keeping its retail brands focused, however the attempted purchase certainly confirmed the Briscoe Group’s desire to expand.
Farmers stores a mixed bag
Farmers Trading Company under the careful eye of James Pascoe Group ownership have continued to expand their store numbers with a new store opening in the NorthWest Shopping Centre in October 2015 and a few more, including Silverdale, on the horizon. Whilst new Farmers stores are quite impressive, older stores are looking tired. Wellington’s Lambton Quay store - which should be a major statement for the group - looks in need of refurbishment, and representation in the city is lacking.
David Jones arrives in Wellington
The imminent opening of Australia’s David Jones in Wellington will be seen by some as heralding a new era in department store retailing in this country. There is no doubt that this store will regenerate activity on Lambton Quay and will be enthusiastically received by traditional department store shoppers. Despite some reservations about the location (given its low ceilings and lack of true department store space) David Jones will get the local market excited via the range of new merchandise on offer.
Healthy competition
Add to all this H&J Smith’s emergence as a true competitor in the South Island, the resurgence of Ballantynes in Christchurch along with Smith & Caughey’s in Auckland, and the department store sector looks as if it could have an interesting decade of trading.
It is also likely that some of the above brands will either merge or be taken over. Certainly all the signals are there that existing department store retailers will have significantly more competition, which in itself will generate some very interesting and enthusiastic activity among the major retailers in this country.

 Paul Keane is a registered property professional and has vast experience in New Zealand’s commercial property industries. He provides retail and property consultancy including development management to many New Zealand property owners, developers and city councils. This post originally appeared on RCG's blog.
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