Can - and should - The Warehouse be saved?

Sunday, 6 October 2024

Tracy Watkins is editor of The Post and Sunday Star-Times.

OPINION: I inherited many things from my father - among them his eyebrows, and his love for a bargain. Unfortunately he could be too seduced by price sometimes. He once ordered a smartphone from China which he skited had all the functions of an iPhone “for a fraction of the price!” Unfortunately, when it finally arrived months later, he discovered everything was in Mandarin so we never worked out how to use it.

On the day of Dad’s funeral, when a courier van pulled up outside, it wasn’t flowers as we expected, but a bulk delivery of cheap flagons for his home brew, ordered a few days before he died suddenly while in the middle of making a batch.

But one of his favourite pastimes was tootling down to The Warehouse in Tokoroa and hunting for bargains. He had a workshop full of gadgets and tools for every contingency.

Now The Warehouse is in trouble, it seems. It recently posted a $54.2 million loss, and it’s not hard to understand why.

When Kiwis want a bargain these days they either go online or turn to the Australian-owned Kmart chain, with its slicker social media presence, and bargain prices due to goods sourced from countries with cheap labour costs.

But as retail and marketing academics Lisa Asher and Drew Franklin wrote recently in The Post, “there’s a big reason it’s more important now than ever before that The Warehouse rights itself”.

“As the ComCom reviews the merger of Foodstuffs North Island and Foodstuffs South Island our knight in shining armour is The Warehouse, rather than a foreign company. The competition it brings to our grocery trade – at present, about the only competition at scale – helps bring down prices.”

Which in some ways is The Warehouse returning it to its roots.

It is probably hard for younger generations to understand why “the red shed” is such an iconic New Zealand brand, and the impact it had on people of my parents’ generation.

It burst onto the scene at a time when high tariffs, strict import controls and a protected economy kept prices for many everyday items out of the reach of many.

Times might seem tough now; they were tough back then too. My parents both had good jobs, but they struggled financially with a young family, like many.

Decades later, Mum still talked about her feeling of shame after sending my little brother to school camp without the compulsory raincoat, and it rained every day. Hard to believe now in the days of fast fashion and cheap imports, but raincoats were expensive and there just wasn’t enough money to buy one.

I feel my own shame, meanwhile, for complaining so bitterly about my wardrobe hand-me-downs that Mum took me shopping for a pair of jeans, which were hellishly expensive at the time due to those same import controls.

I realised years later that it must have broken her financially.

The Warehouse brought choice to people like my parents that had never been available before. You could argue, of course, that it also brought consumerism, fast fashion and that it hollowed out town centres and closed many smaller family businesses that couldn’t compete. All of which is undoubtedly true.

Also true is that its decline is just another case of the market at work. Retail, like other industries, is experiencing profound - and painful - change, as more and more of what we consume moves online.

Asher and Franklin argue that for The Warehouse to survive it needs a CEO who understands what makes “the quintessentially Kiwi ‘Te Ware-whare’, what it is”, and its unique place in the cultural landscape.

But does the “quintessentially” Kiwi Te Ware-whare mean the same thing to today’s shoppers as my father, with his love of fossicking through bargain bins?

Arguably if, in its place, smaller, boutique, NZ-owned businesses sprang back up, that would be a good thing.

But that is likely just wishful thinking. Because boutique usually can’t be done on the cheap. And consumers vote with their wallets because cheap is all they can afford. We all want nice things, even on a budget.

So the big winners would be the likes of Kmart.

Which may be inevitable but also sad, and will make it even harder for those who remain to compete with the big Aussie retailer - as we’ve already seen with the Australian-owned banks and supermarket chains.

Either way, it’s probably not going to be a win for Kiwi consumers.

What do you think? Email sundayletters@stuff.co.nz. Please include your full name and address.