The Warehouse ditches its discount liquor stores

The Warehouse was enthusiastic when it launched the Cellars concept in 2006. Photo / Bay of Plenty Times

Retail analysts were excited when The Warehouse launched The Warehouse Cellars three years ago, but yesterday the company announced it would axe its discount liquor stores after Christmas.

Six of The Warehouse's 85 stores are attached to the discount beer and wine retailers and sell wine at prices similar to supermarkets.

The first Cellars opened in Tauranga in April 2006, followed by Sylvia Park, Te Rapa, Whangarei, Ashburton and Nelson. Exit costs are expected to be less than $1 million.

A liquor licence for another alcohol store attached to The Warehouse in Albany was turned down by the Liquor Licensing Authority on Tuesday.

Group chief executive Ian Morrice said the authority's decision was disappointing but the move to pull all liquor stores was part of a wider restructuring plan.

The Cellars were developed in association with The Warehouse Extra supermarkets and Morrice said the company had decided the stand-alone liquor stores were incompatible with growth plans after dropping Extra.

The Warehouse Cellars have high operating costs due to being a supervised area in-store, which is why the Albany liquor licence application sought to sell the alcohol to shoppers in the store as it is in supermarkets. If the application had been granted the company would have looked at doing the same in other Warehouse stores.

Retail analysts had said at the time there was the potential for the $2 bottle of wine as seen overseas, and such low prices could be used as a loss leader.

But when it opened the Cellars, The Warehouse set prices similar to supermarkets, citing a commitment to responsible alcohol retailing.

Shares in The Warehouse closed at $3.27 yesterday, down 1c.