Change of tack at Red Sheds

Ian Morrice, group CEO of The Warehouse, says the new Te Rapa store is just the start with more changes planned. Picture / Amos Chapple

Something is unsettling about the interior of the The Warehouse's expansive new "laboratory" store in Te Rapa, Hamilton: It's grey.

On the outside, it's a Red Shed. Inside, an overhaul of fixtures, signs and layout leave a very different impression from the traditional cramped and crowded Warehouse.

Gone are the red racks stretching towards the ceiling. Red, apparently, draws the eye away from the products it houses. Instead a neutral grey, an 11,000 square metre footprint and aisles up to 2 metres wide provide a sense of light and space.

But Te Rapa is significant for more than just cosmetic changes.

It represents the first major in-store overhaul resulting from a re-think of company strategy under chief executive Ian Morrice, who joined The Warehouse last year.

It is where new methods of selling more will be tested, to be discarded where unsuccessful and adopted across the chain where they work.

Morrice told analysts on site yesterday that it would cost no more to replicate Te Rapa than to build a traditional Warehouse. Operating costs had been kept neutral.

"It's quite easy to walk around the store and think there's a significantly higher investment ... but part of this was about taking cost out," Morrice said.

The store is a cross between two hugely successful US chains - Super Target and Wal Mart.

Change is everywhere, from the convenience store-within-a-store where eggs, bread, milk and fresh flowers can be picked up, to the mannequins sporting "looks" to inspire customers. Floor model beds are dressed in colour co-ordinated ranges, goods have lost their individual price stickers.

Service has been overhauled too. Behind the scenes staff systems modelled on those of Wal-Mart have been put in place. Customers should notice more red shirts, though Te Rapa doesn't have more staff than a traditional store.

Instead of a security guard, a host will welcome customers at the door.

What remains as yet largely unchanged are the products.

Despite eight aisles of groceries, Te Rapa is not a hypermarket. Morrice has already revealed plans for two hypermarkets - stores that contain general merchandise and a full grocery, including fresh and frozen food - before the end of 2006.

Rather it's a step down the path that The Warehouse may take stores retaining its traditional focus on general merchandise.

Already there are plans to extend new apparel fixtures - which cost less and carry 20 per cent more product lines - to a further 10 stores before Christmas.

But Morrice said Te Rapa was not yet the Red Shed of the future.

"This isn't the answer. We don't believe it is. There are a lot of dynamics still to change."

What's new at The Warehouse

* The new Te Rapa shop which opens today is a 'laboratory store' where innovations will be tested
* Traditional Warehouse red racks have been replaced with grey
* A 'Service Squad' has the sole task of answering customer questions
* A 'checkout captain' will try to keep queues flowing
* The store has low-level fixtures, new style signs and wider aisles
* Customer-operated electronic information and bar-code price checking points are scattered through the store
* Free trailer use for purchases too big for customers' cars