Proud store sinks in wave of discounting

Errol Hotham dragged me into his office he called "the broom cupboard". It is a small service room tucked in behind the retail floor of 100 per cent Guinness Appliances' flagship First Avenue store in Tauranga.
At the start of the year, he spared the more spacious office upstairs to be closer to the customers and the pulse - and to save costs.
He wanted to be close to the action to find a way of saving one of the city's oldest businesses that began as Guinness Bros general store on The Strand in 1908 - 103 years ago.
Mr Hotham, aged 40, has spent half his life with Guinness Appliances, starting in sales and delivery and finishing up general manager for the past five years.
He knew the appliances industry inside out and he pulled every trick to keep the well-known Guinness brand in front of the consumers.
More catalogues, TV advertising, improved website, (new trends) discounting and no interest terms - he did it all.
"We made sure we were footing it with everyone else," said Mr Hotham.
He continually upgraded the flagship store to keep it fresh and attractive for the customers.
More room in the aisles, improved lighting, and the new, impressive TV bay for all those big flat panel screens. The First Avenue store has a spacious, inviting feel and it has all the brands from Fisher and Paykel, Bosch, LG, Asko, Westinghouse to Sony, Panasonic, Canon and Samsung.
But it wasn't enough to keep the customers pouring in. The foot traffic decreased, particularly over the past three years when the recession hit.
People who came in would spend less, electing to buy the 5.5kg washing machine for $700 or the smaller 32-inch TV for $1000 even though, deep down, they preferred the 6.5kg washing machine for $900 and the 42-inch TV for $1500.
Over the past five years, when the company losses occurred, Guinness Appliances had a combination of less sales at a lower dollar value.
In the end, the owner Hughes and Cossar Group Holdings called it a day for the proud home-grown Guinness Appliances chain. The retailer that prided itself on loyalty and service is closing for the final time on May 31.
Guinness Appliances' last three stores, Owens Place Bayfair (it was closed before Christmas), Te Puke and First Avenue had a 35 per cent slump in sales last year. That was the last straw.
Guinness Appliances had already closed the Papamoa, Greerton, Waihi and Katikati shops, two home furniture stores in Katikati and Grey Street downtown Tauranga, and the service service in Glasgow St as the Australian bulk retailers settled in.
"The landscape changed with the onset of the Aussies and the way they sold appliances," said Mr Hotham. "They weren't specialist appliances stores like us but department-type stores which used appliances as loss leaders to attract foot traffic. That's when the [price] margin pressure went on.
"The focus was on the amount of discount; no one asked for a discount when I first started out, it was unheard of. The only chain in town then was Farmers; the rest were independent operators.
"Our philosophy was to look after the customers and provide service. But we couldn't increase prices on the back of our service offer," said Mr Hotham. "We had to remain market competitive and our industry got incredibly fierce. Everyone was determined to be the cheapest."
It was a catch 22 - if Guinness Appliances maintained its high levels of service, including repairs and maintenance, then its store prices would have to be a little higher.
Mr Hotham said Guinness Appliances had nine retail outlets at one stage. "We liked to support the small community-based stores but people wanted to be in the city to get the right deals."
He said the internet also helped change the retailing landscape. "People would come to us looking for answers about the TV set and washing machine. Now they can find everything out about the product on the internet.
"The consumers became more informed about what they wanted and it took the knowledge away from our experienced staff. The focus after that is price."
He had to admit that, sadly, it was a natural process the Australian chains would win the day with their bigger marketing budgets and stronger buying power - though Guinness tried to protect that by joining the 100 per cent group, the biggest buying group in New Zealand.
Back in the early 1900s Sid and Jack Guinness, the original founders of the iconic Tauranga business, sold everything from wines and spirits, farm equipment, appliances to bulk commodities and petrol.
In 1986, the family business moved into the building on the corner of The Strand and Wharf St, now housed by The Crown and Badger pub, and then five years later expanded after buying Christies Appliances and Selectrix (formerly Wrightsons).
The new-look Guinness Appliances, the biggest independent operator in the Bay, moved its flagship store and head office to First Avenue in the mid-1990s.
By then, it had opened up a store in Bayfair Shopping Centre and then moved it to 223 Maunganui Rd before finishing up in Owens Place in 2005 to eyeball Harvey Norman.
Mr Hotham said Guinness Appliances changed with the times "as much as its resources would allow. You know, loyalty means something to some people. But Tauranga's dynamics has changed.
"A lot of people have moved into the city and the Guinness name wasn't synonymous with them. We all tried hard and we are going out in a dignified manner."
After the Guinness Appliances closing was announced mid-week, Mr Hotham has taken many condolence calls from past customers.
One woman rang from Rotorua, he said. "She felt strong enough to pick up the phone and call me. She remembers her parents bringing her into the store and her parents buying grog from us on The Strand."
On the internet, another customer wrote: "I've been away from Tauranga for 45 years but remember Guinness Bros well. I hope they can keep the building open and perhaps trade as a museum of sorts, along with arts 'n crafts, farm and home-grown produce would be good as many ppl [people] are looking for alternatives to the greedy supermarket chains."