What’s going on at The Warehouse?
And how it's emblematic of the broader state of the economy.
Mōrena, and welcome to The Bulletin for Tuesday, July 16.
In today’s edition: Darleen Tana speaks out, Donald Trump is back on the campaign trail, and Immigration NZ has confirmed staff were stood down over “inappropriate” Teams chats. But first, the state of The Warehouse and how it’s emblematic of the wider retail market.
A serious restructure
Before the weekend, Katie Bradford at 1News reported job cuts were on the way at The Warehouse’s head office. Just how many redundancies are on the cards isn’t known, but over a thousand people work in the head office. The news isn’t entirely surprising, given a wave of recent negative headlines about the iconic New Zealand chain and the broader retail market in general. Nevertheless, at least for me, it feels extra shocking when the brand in the firing line is one so intricately woven into the fabric of our country. Retail analyst Chris Wilkinson told The Post’s Rob Stock that The Warehouse needed to “win back the hearts and minds” of customers, and, repurposing a phrase we’ve heard from Christopher Luxon in recent months, “regain its mojo”.
What’s happened?
The financial signposts have been there for a while. RNZ’s Susan Edmunds, in a recent piece bluntly titled “what went wrong for The Warehouse”, listed off some of the fiscal challenges being faced by the big box retailer. Firstly, the brand sold off the sports store Torpedo7 for just $1. It also closed down its online operation TheMarket, a brand it had hoped could evolve into something like Amazon. It’s also been competing for a share of an increasingly fragmented market. Where once The Warehouse stood relatively alone, there are now Kmart stores popping up across the country. The Australian-owned retailer has made significant dents in The Warehouse’s business, becoming synonymous with cheap and often “viral” products that have earned it increased business. Here’s a recent article on The Edge about a “dupe” Dyson Airwrap being sold by Kmart. I can’t remember the last time a Warehouse product was being shared far and wide, and viral success has got to count for something. Ikea is also on the horizon, while cheap online retailers like Temu, which The Spinoff’s Shanti Mathias wrote about last year, have also come onto the scene.
The Warehouse’s biggest gamble was in tackling the grocery sector, a move that may be paying off, reported BusinessDesk’s Gregor Thompson. Last year, when it briefly lost the ability to sell Weet-bix, it criticised the lack of a “third entrant” into the grocery market. But it’s clearly not been enough to stave off job cuts and restructures. The discount grocery market is also challenging, with Costco planning an expansion around the country after opening in Auckland in 2022.
Where to from here?
These financial challenges haven’t just appeared out of thin air. Rebecca Stevenson at BusinessDesk wrote scathingly back in May about a recent visit to The Warehouse, describing “rows of unremarkable clothes” and a “sad assortment of fridges”. It could have been The Warehouse of 10 years ago, Stevenson wrote. Something needed to give, and it has. The Warehouse Group isn’t just The Warehouse, it’s also Noel Leeming and Warehouse Stationery. It’s these three “core” brands that the company intends to focus on in the future. “We need to be leaner,” said the group’s interim chief executive John Journee earlier in the year. "We're taking quick and decisive action to improve our performance and better serve our customers." Around the time, reported Simon Shepherd for Newshub, The Warehouse Group revealed annual earnings had fallen by about $61m.
It’s not just The Warehouse
The Herald’s Jamie Gray reported the slump for The Warehouse was emblematic of the wider state of the economy. Other well-known retailers are doing it tough, too, and have been for some time. Auckland department store Smith and Caughey’s announced it would be closing its doors after 144 years, while even major international brands like Sephora have been struggling in New Zealand – the cosmetics giant will be vacating its Queen Street store in a few weeks’ time. The difference is that those retailers are largely victims of a lack of inner-city foot traffic, a lingering after-effect of the Covid-19 lockdowns, while The Warehouse can be found in suburban shopping malls nationwide. Stats NZ figures paint a grim picture for the retail sector in general, as reported here by RNZ’s Jemima Huston. They show electronic card spending fell 0.6% in June, while the value of sales had dropped 4.9% on a year ago. In short, it’s a tough time to be a retailer wherever you are, though Retail NZ’s Carolyn Young told Huston that the government's impending tax cuts along with any long-awaited changes to interest rates might help to minimise business losses.
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Darleen Tana speaks out: ‘I didn’t exploit migrants’
Former Green MP Darleen Tana has spoken out for the first time, telling 1News’s Maiki Sherman “the easiest thing may well be to step away” from parliament. But she hasn’t formally decided if she intends to leave politics, which could leave the Greens in a tricky position: to invoke the party-hopping rule or not. "It's not so much about mandate, it's about the kaupapa," Tana said. “Many more people have reached out to me than not to actually continue to do that mahi.”
Tana denied any involvement in migrant exploitation and said she believed she had been upfront with her former party. While parts of a report tasked with finding out how much Tana knew about allegations of migrant exploitation at her husband’s business have been leaked to the media, it has still not been formally released. Tana said she had no problem if it was made public, but Stuff’s Glenn McConnell reported that the MP and her husband have been holding up the public release of the report the Greens commissioned over 120 days ago.
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Gabi Lardies explores the rise of home surveillance cameras, which sell security but often deliver anxiety. Alex Casey examines new research showing how the pandemic impacted eating disorders across Aotearoa. Lyric Waiwiri-Smith reports that the sports lads are back, and so are their lame jokes. Joseph Trinidad writes a tender essay to all the beards he's loved before. Lyric Waiwiri-Smith wonders what's going on with the Auckland bus fan pages. Toby Manhire interviews Hekia Parata, who says she backs calls to boycott the select committee for Act's treaty principles bill. And here are all the new movies and TV on streaming services this week.
That’s it for this morning, thanks for reading. I’ll see you back here tomorrow.
Let me know in the comments, or get in touch with me at thebulletin@thespinoff.co.nz, if you have any feedback on today’s issue or anything in the news.
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The economy is tanking.
At some point the current government must be held to account for its policies that are causing a major recession.
In the early days of The Warehouse I was adamant I would not set foot in the place because of the numbers of jobs in Aotearoa that were lost due to it's buying & discounting policies (many manufacturing plants closed down as a result) Still don't like the place but it almost became a monopoly unless you were a high income earner, and of course they did provide SOME jobs for those they put out of work elsewhere?