Smiths City urged to broaden appeal
Aucklanders just don’t get the point of Smiths City department stores, and the Christchurch-based retailer needs to make itself more appealing, a retail expert says.
The company needed to act decisively to build its market position by quickly closing underperforming shops, discarding some merchandise, and lifting brand awareness in Auckland.
Smiths City has forecast a loss of about $8 million and its share price fell from 55 cents to 48c, potentially exposing it to a takeover from a Sir Ron Brierley-associated company.
Retail expert Chris Wilkinson, of First Retail Group, said the comparison between Boxing Day shopping at Harvey Norman and a nearby Smiths City shop in Auckland was startling.
The post-Christmas period was characterised by some of the most intense promotions focused on electronics and home appliances, and Noel Leeming and Harvey Norman stores appeared to have won judging by customer numbers at a nearby Smiths shop, he said.
‘‘Smiths is part of the DNA of South Islanders but Aucklanders still don’t really get the Smiths proposition. Smiths is weighted towards furniture but when you walk in you will often see lawnmowers and tents and they might need to jettison some lines that dilute customer perceptions.
‘‘The wider homeware market has been boosted in recent years by house building, the Canterbury earthquakes and rebuild, and immigration. It may be time for some cathartic decisions.’’
Wilkinson said some retailers went out of their way to play up to the Boxing Day frenzy by transforming stores and holding short-run, cut-price sales.
Smiths City needed to build instore experiences that consumers found aspirational, and take a new look at things to create a point of difference.
‘‘Smiths has advantages in having an experienced retailer like Roy Campbell as chief executive who has high skill levels and travels a lot to keep up with developments,’’ Wilkinson said.
‘‘They will also benefit from the director appointment of Alastair Kerr who is also on [the board of] Paper Plus, which is under extreme challenge.’’
Campbell said December trading had been strong, except for furniture sales, and Smiths City was not in the business of giving goods away, regardless of what competitors did.
Without disclosing which stores would close, Campbell said the $4.8m provision for lease impairments reflected the fact they were struck several years ago and were no longer appropriate for the level of trading.
‘‘I closed the Powerstore and LV Martin shops we owned and this a continuation of that constant process,’’ Campbell said.
Retail development group RCG director Paul Kean said Auckland was a difficult place to operate a furniture store and trading conditions had been harder recently than people may have realised.
‘‘One of its biggest challenges was that Smiths was not a wellknown name in Auckland. If you asked someone here they couldn’t tell you immediately where their stores are,’’ Kean said.
Smiths City opened stores in Auckland at Wairau Park on the North Shore and another on the Mount Wellington Highway to capitalise on growth opportunities it sees in the upper North Island.
The Auckland stores, and another in Whangarei, were part of the Furniture City chain, which Smiths City acquired in 2016.
The refurbishment and rebranding under Smiths City’s new ‘‘live better’’ format follows the opening of new stores in Taupo and Hastings.