OUR
NETWORKS
Ngā Kōtuitanga
OUR
Our purpose to help Kiwis live better every day is enabled by developing a world-class customer experience through:
- Our portfolio of brands, both online and instore;
- A reliable and sustainable distribution and supply chain; and
- Our enterprise systems, processes and data.
Our portfolio of brands – online and in store
We are proud of our portfolio of brands which provide a variety of products to serve our customers, wants and needs through our ecosystem of online, mobile app, in store and service offerings.
Our diversified brand portfolio delivers a range of products – from homeware, toys, grocery and apparel; stationery, office and study equipment; outdoor gear and sportswear; and a full electronic and appliance product and service offering to kit out every area of our customers’ homes at a strong value price point.
Our portfolio of brands – online and in store
Customers have the choice to shop at their own convenience, through our 246 stores, 3 mobile apps, and 5 online sites – all supported by our membership programmes which enable us to build stronger relationships with our customers and extend their engagement across the Group.
Store development
Our store strategy is all about ensuring we have the right stores, with the right footprint, in the right place for our customers. We undertake a great deal of research, including population and demographic shifts, when looking at new store locations, and we review store performance on an ongoing basis. During FY23, The Warehouse, Warehouse Stationery and Noel Leeming have seen some consolidation of store locations as we optimise our store network.
In particular, in May 2023, we closed The Warehouse Snells Beach, the Warehouse Stationery and Noel Leeming Warkworth stores and opened an exciting new retail centre in Warkworth including The Warehouse, Warehouse Stationery (SWAS) and a new Noel Leeming store.
In addition to the Warkworth retail centre opening, during the year we closed The Warehouse South City, Warehouse Stationery Auckland CBD and Warehouse Stationery Johnsonville. We opened a new Torpedo7 store in Botany, moved the Torpedo7 Christchurch store to a larger site, and closed the smaller of our two Noel Leeming stores in Dunedin.
In FY23, 26 The Warehouse stores received a new grocery customer experience roll-out with benefits including greater grocery, pantry and chilled food offerings. We have expanded our private label Market Kitchen range to include 64 different products. In addition, 12 The Warehouse stores now provide a fresh grocery offering to our customers. This is going very well, with all products (except bananas) sourced locally, supplying in-season fresh fruit and vegetables.
Our customers are also loving our Garden Centres in 72 of our 88 The Warehouse stores. This year, we have installed new garden equipment in these stores, enabling a better growing environment, better racking and easier customer access areas.
Customers continue to prefer our self-service checkouts, which have been deployed into over half of all The Warehouse stores. These checkouts have become an increasing helpful customer experience in our stores, especially in The Warehouse stores with a grocery offering.
We continue to optimise our Warehouse Stationery store-within-astore (SWAS) integration programme with a further five Warehouse Stationery SWAS stores opening during the year including Lower Hutt, Palmerston North, Timaru, Warkworth and Hillcrest Hamilton.
We are excited about the upcoming new store openings in Wānaka in October 2023, including new The Warehouse, Warehouse Stationery SWAS and Noel Leeming stores in this growing region of New Zealand.
We also announced the closure of The Warehouse and Warehouse Stationery in Belfast, Christchurch and Noel Leeming Northlink in September 2023. We have temporarily closed The Warehouse Tory Street store in Wellington following an electrical fire, and are reviewing the location of this Wellington store.
Decisions like these are never made lightly and we take into consideration a number of factors such as population growth, foot traffic and proximity to our nearby stores. This is part of our regular store optimisation review to ensure we have our people and stores in the right place, and in the case of Belfast, we have seen more customers choosing to shop in our larger nearby locations, including our new stores in Papanui.
Store team and customer safety
Our team members and customers safety is of utmost priority for The Warehouse Group. As retail crime continues to challenge our business and our team, we work closely with New Zealand Police to mitigate every possible occurrence in our stores. As a Group, we have implemented a number of our own initiatives to keep our people and customers safe. We have installed fog cannons, glass guards, strong-room door strengthening and alarm integration in our Noel Leeming stores, and alarm system upgrades in 110 stores across our network.
Customer shopping habits in store and online
The year in review has seen a significant shift as customer’s shopping habits return to normal after an unprecedented surge in online shopping during the last three years of COVID−19 disruption, and customers took to shopping online to access the goods they needed. In FY23, customers moved back to shopping in store with foot traffic up 14.2% and store sales up 9.7%.
As our in-store sales increased, online sales decreased compared to the prior year, with online sales making up 10.9% of total Group sales in FY23 compared to 16.8% in FY22, but increasing compared to pre-COVID-19 times, up from 7.8% in FY19. Customers continue to embrace collecting their online orders in store through our Click & Collect offering – particularly at The Warehouse and Noel Leeming stores. Total Click & Collect sales accounted for 51.8% of omnichannel online sales (FY22: 49.0%), including 47.8% of The Warehouse online orders and 62.9% of Noel Leeming online orders. This year we updated our Click & Collect pricing model in The Warehouse where customers can use Click & Collect for free when products are in stock at their selected store, or with the option of paying a small $3 fee to get any product transferred to a store of their choice.
This has been accepted across all our store channels as we continue to offer customers the products they want, when and where they need them, while ensuring we cover our own cost to serve.
Our mobile apps continue to resonate with customers across The Warehouse, Noel Leeming and TheMarket. In particular, The Warehouse app ranked as the No.1 most downloaded shopping app in New Zealand for 107 days in FY23. We know our customers use it for shopping on the go, and also use the app to find products and compare prices while shopping in store.
Our third-party marketplace, powered by TheMarket.com, extended into The Warehouse. This expansion now allows third-party sellers to surface their products for customers via The Warehouse and TheMarket.com, all through TheMarket as our centralised third-party seller platform.
A reliable and sustainable supply chain
The reliability and efficiency of our supply chain is critical to getting products from our suppliers, through our distribution networks, into store and available for our customers.
In recent years, supply chains have been challenged, availability constrained, and cost of shipments at record highs. We are thrilled that by working strongly with our loyal suppliers and freight partners, these challenges and constraints have eased in this financial year and are returning to relative normality. Supply chain and shipping costs have also normalised back to pre-COVID-19 levels.
A reliable and sustainable supply chain
We did experience supply congestion during our peak trading period of November to December 2022 and while global supply chains and shipping partners returned to normal supply volume levels, their own infrastructure took time to catch up. That did cause some delays with products getting through our distribution centres and into stores, as well as in fulfilment delivery to our customers, but again these congestions have significantly lessened.
The grocery supply chain has stepped up to our increased demand levels. Our grocery private label, Market Kitchen, has grown at pace and while access to equitable cost prices remain challenged, we are seeing this supply chain improve.
We are enabling process changes across our own distribution and fulfilment network, and this year saw the go-live of our new Warehouse Management System (WMS). We are now embedding this new system to create better ways of working and unlocking operation and distribution efficiencies including pack size optimisation and distribution of fuller pallets.
Our key operating metrics to monitor the performance and efficiency of our distribution network include cost per units handled, distribution cost to serve, and fulfilment cost to serve.
Our distribution cost to serve (cost per unit of distribution to store) decreased during the year. We saw increased efficiencies this year as store sales increased, productivity improved, COVID-19 restrictions eased, and we lapped FY22 which saw COVID-19 disruption in our distribution centres including shutdown periods, rapid antigen testing and social distance requirements.
In comparison, our customer fulfilment cost to serve (cost per unit of distribution of product to customers home or via Click & Collect) increased during the year. As customers returned to pre-COVID-19 shopping habits, online sales have decreased in FY23, resulting in less volume going through our fulfilment centres. In addition, we have seen a large increase in costs from our freight-forwarding partners including New Zealand Post. The combination of less volume and higher variable and fixed costs has increased our fulfilment cost to serve.
Powered by enterprise systems, processes and data
In FY23 we made significant progress in developing our operational systems to enable access to real-time data across procurement, distribution and fulfilment. This has allowed our team members to deliver even better in-store and online customer experiences.
Powered by enterprise systems, processes and data
The largest initiative is the deployment of our Enterprise Resource Planning Finance and Inventory (ERPFI) solution and this has been a multi-year development programme. Testing is expected to continue through 2023 with the go-live in the second half of FY24, depending on progress with testing and avoiding disruption from peak trading.
The first phase of our Group Order Management Solution (GOMS) went live in October 2022. Through our brands’ eCommerce webstore and mobile apps, future GOMS releases will deliver a single fulfilment optimisation solution integrated with real-time inventory for all our brands. This will improve our customer experience for online orders, for delivery and Click & Collect.
Our Master Data Management (MDM) system is deployed across all our brands and products and is integrated into our ERPFI Inventory, WMS and eCommerce platforms. Our last iteration will see us integrate dimension and supplier data through a self-service portal, expected to be completed in FY24.
Our Human Capital Management (HCM) system had a first release in October 2022 which included deployment for around 2,400 employees, with the full system going live in August 2023. This has now been rolled out to all 11,000 team members including stores and distribution centres. In addition to the Employee Self-Service module, full deployment includes automation through our recruiting and new employee onboarding processes.
Looking forward to FY24, our key systems will include go-live of the ERPFI solution, final roll-out of GOMS, further data enrichment in MDM, and the deployment of MS Dynamics 365 at Torpedo7 to help integrate all our agile brands across the Group.
