Bricks and mortar still a winner for Smiths City chain

Thursday, 7 September 2017

Some retailers may be falling by the wayside but 100-year old shopping chain Smiths City is rebranding three stores in a quest for market share in the North Island.

Last year the Christchurch-based company spent $5.8 million buying three Furniture City stores - Wairau Park on the North Shore, Mt Wellington and Whangarei.

Roy Campbell, chief executive of Smiths City, said the company wanted to become a recognised national retailer and had needed outlets in Auckland for some time.

At various times in the past, Smiths has reacted to market signals and retrenched. It was even tipped into receivership in the 1990s but traded through.

* Smiths City rolls out a new look, rewards shareholders with special payment

* Brierley tries to unseat Smith City directors**

Now it is in expansion mode in terms of the location of new stores, although the offerings have changed, with a stronger and narrower focus on furniture and appliances rather than DIY.

The first newly branded Smiths City store has just been opened in the ex-Furniture City store in Whangerei.

The remaining two Auckland stores will be rebranded before Christmas, bringing the total number of Smiths City stores nationwide to 37 with 17 in the North Island and 20 in the South Island.

The push north has also included opening new stores in Taupo and Hastings in the search for markets with long term growth prospects.

Expanding in the upper North Island would see Smiths become a truly New Zealand retailer, Campbell said.

Many of Smiths' rivals in the appliance sector have gone - Good Guys pulled out in 2014, Dick Smith closed last year, and JB-HiFi closed its Westgate store as it reported large losses.

Some retain an online service and Campbell said the emergence of online shopping had resulted in much greater price transparency and intensified competition, whether buyers completed purchases online or not, he said.

It meant retailers had to focus on their differences and strengths.

Online retailing did not spell the end of bricks and mortar stores, Campbell said.

Customers seeking furniture and appliances still wanted to visit a shop and touch and feel products before they bought.

They wanted to sit on the sofa, test the comfort of the bed, and see whether their chosen fridge has all the storage compartments they need, he said.

The other benefit of real estate as opposed to online trading was the interaction with sales staff rather than 'a faceless retailer with no obvious fixed abode'.

This doesn't mean Smiths owns all its shops. It sold the flagship Christchurch shop in Colombo St to a local investor to free up cash two years ago.

It may also have been a defensive move against Sir Ron Brierley who is associated with two companies holding just under 20 per cent of the shares in Smiths.

A special dividend by way of a return of capital in coming weeks also takes the heat out of any shareholder dissatisfaction that might support a Brierley move.

The other strength of Smiths is its financing operation, creating longer term relationships with buyers wanting credit to fund purchases.

Campbell said Smiths City was in its second year of transformation, with new format stores being steadily rolled out, new furniture designs and suppliers.

In March, Smiths City opened the first of its new format stores in Hastings.

Founded in Christchurch in 1918 by Henry Cooper Smith the company sells home appliances, home furnishings, home heating products, carpets and sporting goods.