This week The Warehouse announced it would shut nine stores, cull 1000 or more staff (around 10% of its workforce), transition to an agile business model, and more tightly embrace e-commence. A tough call to future proof the business.
Interestingly, the Prime Minster was “angry” that The Warehouse had received almost $70m wage subsidies for its 11,000 staff but still decided to close nine stores and reduce staff numbers. That comment indicates business naivety.
Even more interestingly, The Warehouse Group’s share price gained almost 4% immediately following the announcement that it would close more stores. That was a confidence vote by savvy, knowledgeable investors who saw the move demonstrating the company was looking ahead.
The Warehouse is NZ’s largest listed retail company with a duty of care to its many stakeholders – staff, customers, suppliers, shareholders, community, and the Government.
The Warehouse is rejigging its operating model and downsizing its store footprint. The CEO, Nick Grayson, said that closure of the nine stores had been planned prior to the pandemic, and more store closures could still happen as a quarter of the group’s store leases were coming up for renewal in the next 15 months.
“Potentially 200,000 to 250,000 people will be unemployed… 49 per cent of our customers are starting to cut back day-to-day spending and 25 per cent have what they called ‘slammed on the brakes’, so it is going to get really tough” said CEO Nick Grayson.
The Warehouse recognises that the world is changing, it is looking ahead, and responding. It’s strapping on its own oxygen mask first, safeguarding its future and long-term employment of the many.
SME business owners also need to recognise that change is happening and make business decisions accordingly.
Now is the time to reassess and future proof our own businesses. Register now for Q2’s free Business Recovery in Action webinar here.