The Warehouse threatens to close 'bottom-performing' store

Wednesday, 20 May 2020

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The Warehouse says it is having to make 'tough decisions' about the future of some of its stores as the impact of Covid-19 bites.

Staff at The Warehouse in Birkenhead were called into a compulsory meeting where they were told that the store had been poorly performing for a number of years and could be closed at the end of July.

Covid-19 and an expected further decline in sales in the immediate future meant the company could no longer sustain losses, staff were told in a handout seen by Stuff.

They understood that every store was being looked at.

'We are now at the point where we cannot continue to absorb these costs and we need to make some hard decisions about the future of the store,' staff were told.

According to the handout, sales at the store had declined from $10.5 million in 2015 to $9.5m in 2019.

The Warehouse is looking at closing some of its stores.

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'In summary, having taken into consideration the proximity of Birkenhead to other stores, the declining number of customers shopping at the store over time, and the significant work required to physically maintain the site, we are considering closing the Birkenhead store when our lease ends on July 31, 2020,' the company said.

One staff member, who asked to remain anonymous, said the closure would be devastating for the community.

'I've been working for The Warehouse in Birkenhead for eight years now, lots of people there have worked for over 15 years. It's devastating,' they said.

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'They didn't say exactly if they were going to close other stores, they said they are looking at every single store in New Zealand.'

There are 17 full time and 23 part time employees at Birkenhead. There are also some casual workers.

Staff were told they had to apply for redeployment to other stores.

Chief executive for The Warehouse and The Warehouse Stationery Pejman Okhovat said the proposal to close the Birkenhead store reflected changing shopping habits.

Chief executive of The Warehouse and Warehouse Stationery, Pejman Okhovat, says the company will have to make tough decisions.

'This has been the case in Birkenhead for a while, with many in the area shopping at the nearby Glenfield store which includes a Warehouse Stationery, just a few minutes away, or at our flagship store in Albany,' Okhovat said.

'Despite the incredible efforts of our team, this has meant that profitability and transactions at our Birkenhead store has steadily declined overtime.'

Covid-19 and the rising popularity of online shopping had put increasing pressure on some of the company's stores, he said.

'In terms of other stores, with the economic impact of Covid-19 and the anticipated decline in retail sales, we expect these declines to be exacerbated,' he said.

'Therefore, we will have to make some tough decisions about the future of some stores. Nothing is confirmed at this stage, and we’ll continue to assess the market and retail industry and will make decisions and proposals accordingly.'

First Union representative Kate Davis said she expected the company to reduce its physical footprint further.

'I would be surprised if we did not see other stores close in the near future,' Davis said.

'The union does fear for the smaller stores across the regions from all brands.'