Kmart takes the fight to The Warehouse in the regions

Monday, 16 July 2018

What do you think about Kmart coming to Blenheim?

Kmart is ramping up the pressure on rival The Warehouse in the regions, a retail expert says.

While Kmart prepares to open new stores in Invercargill, Blenheim and Queenstown, The Warehouse is laying off 180 staff, mostly from its provincial centres.

The job losses are a result of The Warehouse's move to simplify its in-store management structure to more closely resemble that of Kmart.

Kmart said on Monday it would offer jobs to some of The Warehouse workers being laid off.

Kmart follows a strict selection process for new store locations.

* Kmart not coming to New Plymouth's Waiwhakaiho Valley**

The workers will need to go through the normal recruitment process, but Kmart will prioritise 60 positions for former Warehouse staff.

Retail development expert Paul Keane, of property consultancy firm RCG, said the Australian-owned big box homewares retailer would focus on areas with available workers and population growth, leaving small country towns to shop at The Warehouse.

Commercial property consultant Paul Keane has been following Kmart's NZ expansion since it opened here in the late 1980s.

But even The Warehouse seemed to be 'retreating' from that niche in response to the higher cost of associated with those markets.

First Union organiser Kate Davis said The Warehouse's workers were 'absolutely terrified' of losing their jobs, especially those on visas who face splitting up their families if they lost their job and had to leave the country.

Retail expert John Polkinghorne said smaller towns like Cambridge and Te Awamutu would be 'low priority' for Kmart.

Polkinghorne said Whakatane had a store and similar sized town could follow.

'Somewhere like Taupo isn't out of the question.'

RCG retail expert John Polkinghorne said Cambridge and Te Awamutu would be 'low priority' for Kmart, but Taupo was a possibility.

Analysts have previously said Paraparaumu would make a good location because the area was increasingly popular with young families.

But even shoppers in some of New Zealand's biggest cities still have to drive some distance to the nearest Kmart, and Keane said that probably would not change.

Kmart will open a new store on this Clyde Street in Invercargill.

The nearest Kmart to Wellington is in Lower Hutt.

Keane said this was because rents in central Wellington were too expensive for large budget retailers.

There are 19 Kmart stores in NZ, soon to be 22.

Kmart's initially expanded quickly when it arrived in New Zealand in 1988, but stalled soon after as it struck trouble in Australia, Keane said.

'They've changed their image and their marketing and in the last five years we've seen them start to expand again.'

This change in image has led to a 'more up-market feel' which has made it competitive with The Warehouse, Keane said.

The Warehouse has 94 stores nationwide, while Kmart has 19 soon to be 22, when it opens stores in Blenheim, a Queenstown, and most recently announced, Invercargill.

The Warehouse still has Gisborne, Timaru, Ashburton Taupo, Matamata, Gore, Oamaru, Greymouth, Wairarapa, New Plymouth, Kaitaia, and Morrinsville to itself.

Keane said Kmart property managers stuck to strict requirements when picking a new store site, which included population growth, store size, rent, and carparking.

Stores tended to be around 4000 square metres.

In 2016 Kmart's plan to open its first New Plymouth store fell over after it failed to get access to enough carparks.

Kmart indicated at the time it remained interested in opening a store in city.

Kmart's Australian parent company, Wesfarmers, said in its annual report that it expected to open 10 new stores in the year to June 2019 in New Zealand and Australia.

Kmart operates 220 stores throughout Australia and New Zealand and employs about 30,000 people.