Kmart is the new Warehouse - NZ shoppers still love big box bargains

Tuesday, 30 May 2017

Big box retail is in its most dynamic stage ever, says First Retail Group managing director Chris Wilkinson.

The way Kiwis shop has changed dramatically since the days when a stroll down the main street offered everything we needed.

Initially revolted against, bargain hunting at big box stores has become part of the Kiwi-shopping psyche.

Gael Heard has been a Warehouse employee for almost 34 years and still loves to shop at the store.

Shoppers like the mid-range, low price goodsall under one roof and their presence in New Zealand is increasing.

The Warehouse, now in its 35th year, was the first of its kind and now employs about 12,000 people across 92 stores.

The popularity of Kmart stores is growing with shoppers wanting more of the stores to open in the regions.

Wilkinson says the popularity of big box retailers follows a global trend of consumers seeking greater value and having a disposal affinity towards goods.

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Home improvement television shows have fuelled a trend towards DIY.

One of the company's first employees, Gael Heard, remembers being hired and working alongside The Warehouse founder Sir Stephen Tindall.

'That was great in those days. It's a great working environment and they look after their staff really well,' she said.

After 34 years, Heard is deciding to spend more time with her husband and will retire next week.

'I'll be sad to leave. But it's time for me and my husband now. I'll miss my customers though,' she said.

First Retail managing director Chris Wilkinson said big box retail is in its most dynamic stage ever.

'Destination retail is a significant part of the market. It's part of New Zealand's DNA,' he said.

But The Warehouse may be losing its edge. The group's half year net profit to January fell to $13.6 million, compared with $57.2m a year earlier.

And the group recently sold a large 1.4 hectare property in Newmarket, Auckland for $65m.

Stores are facing more competition from Australian retail owner Wesfarmers, which owns Bunnings Warehouse, Kmart, and Target.

Plans for a Bunnings in Westgate, Auckland were announced in February last year with an opening date yet to be announced. Queenstown can also expect the DIY supply store to open with a development application being lodged to build on Frankton Flats.

Bunnings New Zealand general manager Jacqui Coombes said the company has plans for further investment and job creation over the next 12 months.

Kmart stores were also expanding with the company's 20th New Zealand store opening in Petone on June 1.

'It's down to the continued march of Kmart through urban and regional New Zealand. They are putting stores in and their range and their consumer proposition has been quite transformational,' Wilkinson said.

Blenheim woman Linda van Kuyk set up the Facebook page 'Bring KMART to Blenheim' this year but the company said there were no plans to open a store.

However, Kmart New Zealand country manager Jason Picard said in a statement: 'In response to a growing customer demand of our on-trend products at everyday low prices, Kmart has and will continue to expand its footprint in New Zealand.'

'They've got quite quickly to where many retailers want to be,' Wilkinson said. 'They have a differentiated range and they've been able to transcend across a range of demographics.'

A big growth area for Kmart and Bunnings was homeware and gardening, driven somewhat by the media and the housing market.

'Strong property prices in New Zealand, and a culture of nesting by consumers has meant people are looking to develop contemporary interiors. Media on home improvement has driven this whole home improvement and gardening category strongly.'