By: Retail Examiner  05-Apr-2012

Last weeks NIB brought a number of comments from readers, most of which seemed to concur with our views relative to “standards”. One respondent suggested that “young people” think they are paid for “attendance” and “not work”! Further it seems that the education system gives young people a strong idea of their “rights”, so that when they enter the workforce that is all they focus on, not “responsibilities”. Without being detrimental to the new entrants to the workforce, there is often the attitude that “I am owed something”. Is this a problem? Certainly it seems so with a number of young employees, and standards are certainly influenced by “attitude”.

In RCG we debated this subject this morning, and heard of a situation where a group of people attended a well-known Auckland restaurant called “The Foodstore” in the Viaduct over the weekend. The food was average to poor but not inexpensive, and the wine very expensive. The standard of the food was good reason for a couple of complaints. The response was poor and a “take it or leave it” attitude. Not good in a city where restaurants are plentiful and repeat business is generated by service and satisfaction, and more customers are driven by “word of mouth”. Funny, isn’t it, how a “standard” can be dropped by one or two simple issues in a business, but the outcome for the business can be significant. Let’s move on.

Last week we noticed that both Briscoe Group and The Warehouse produced interesting financial results. For the Briscoe Group, the 12 months to January 2012 produced revenue of $438 million, well up on the previous year’s performance of $419 million. Most importantly, profit was up from $21.6 million to $27.5 million. A pretty good result for a company that has taken on and maintained a retail offering that sells product at value prices constantly. Maybe that’s the reason for the success of the brand? Store numbers hadn’t changed much, so trading was at its absolute maximum, and we could class that as a very good result when consumers were too afraid to take their hands out of their pockets.

The Warehouse result was for the 6 months to January 2012. Revenue was up from $908 million to $938 million, and net profit was $54 million over the previous $52.3 million. Some commentators have said that The Warehouse is a shadow of its former self, and sure the share price is not at the levels that it once was, but lets face it this major retailer has far greater opposition now than it has had previously and the performance of Briscoe demonstrates just that. The old adage about retailers selling and customers buying still remains valid. If a retailer such as TWL has stock, then it must shift it. If that means less profit then that is what happens, cash flow is paramount, and heavy discounting is the only answer. Further, it is better for a company to make “some” profit than none at all.

We are in changing times, we have to adjust according to the circumstances of the time. When Bunnings arrived in New Zealand, it effectively took over the “Benchmark” business. From this platform it launched the Bunnings brand, and these stores have been emerging throughout the country. It basically emerged out of a “bloke’s business”, where we considered Benchmark to be a place where builders would go. That has changed. Bunnings offers more than just paint and hardware, with a range of merchandise that offers both quality and value. The appointment of a female chief executive demonstrates just how this business has changed, and how much both female and male consumers are reacting to this impressive brand. Both Mitre 10 and Bunnings are serious contenders in creating sales and generating traffic. These companies, along with Farmers Trading Company, prove just how competitive retailing is. In the face of that the results from both Briscoe and TWL are very satisfactory. The challenge ahead, as it is for all companies, will be whether this position can be improved upon.


Hellaby Holdings is an NZX-listed investment company and the owner of New Zealand’s two largest footwear chains, Hannahs and Number One Shoes. For the six months to December 2011, sales at these businesses declined slightly to $78.9 million (compared with $80.4 million the previous year). Despite the decrease in sales, profitability rose, with earnings before interest and tax climbing by 22% to $1.7 million. Hellaby says that “this is a remarkable result and reflects a very strong operational performance, particularly by Hannahs”. However, these levels of profitability are still well below what the company was achieving pre-recession, and it seems that there is still some way to go before these chains can recapture their past success.



McDonald’s re-opens Georgie Pie cold case
Fast food giant McDonalds is considering integrating aspects of Georgie Pie into its business, but is cautious of living up to the nations Georgie Pie nostalgia. McDonald’s took hold of the pie chain from supermarket operator Progressive Enterprises in 1996, mainly to acquire its real estate.
(Source: NZ Herald)

Australia tries on virtual dressing room
An Australian mall is set to reveal the worlds first virtual fitting room in the coming week. The device capitalises on motion sensing technology invented by Microsoft for the gaming industry.
(Source: Inside Retailing)

Homewares chain posts all time high
Briscoe Group, the homeware retailer, has experienced a record full-year profit as it elevated sales across its brands and kept costs in check.
(Source: Inside Retailing)

Walmart goes on safari
A South African court has given Wal-Mart’s $US2.2 billion takeover bid of local chain Massmart the green light, granting the world’s largest retailer its first foothold in Africa.
(Source: Inside Retailing)

The information in this article was current at 27 Mar 2012

Other news and updates from Retail Examiner



The value of employees and the relevance of reward is topical this week, due to the public release of incomes for Chief Executives of companies and those working in the public sector. However online shopping is growing and more people are using the online format, and as we have illustrated previously certain retail sectors are at a greater risk than others. We believe that either path will produce rewards that we should be satisfied with.



Last week Westfield sponsored an early morning weekday conference in Auckland, with addresses from individuals who spoke on the evolving JCPenney department stores in the USA, and then the evolving online retail market. All very interesting, particularly the methods adopted by JCPenney to recapture customers with an offer of price reliability, and a “no coupons” approach but rather a “just fair and square” approach to retailing.



As such, it was affected by the centre redevelopment, completed in February 2011, which enlarged the Farmers department store significantly and added a number of new specialty stores. In the News in Brief two weeks ago, Share Watch looked at Westfield Group and the specialty sales performance of individual Westfield centres in New Zealand.