Eighty per cent of New Zealand shoppers go to the Warehouse

By SIMON HENDERY, Marketing Writer


It may be the place where everyone gets a bargain, but it has a way to go before it becomes the store where everyone buys their groceries.

Research by ACNielsen has thrown up some interesting figures confirming New Zealand shoppers' love affair with The Warehouse.

But the same study has found the proprietors of the trusty red sheds have some work to do to turn that infatuation into a weekly grocery shopping trip.

The ACNielsen research - collated from a range of the company's research products and services - shows that over the last month an impressive 82 per cent of household shoppers had visited The Warehouse.

That figure was 28 per cent more than the nearest national grocery chain, Pak'N Save.

But the popularity does not match up with grocery shopping habits.

While 91 per cent of shoppers visit a supermarket at least once a week, only 17 per cent visit The Warehouse once a week or more.

"The challenge for The Warehouse is converting Kiwi consumers' comfort and familiarity with red sheds into more frequent visits and grocery purchases," said ACNielsen New Zealand managing director Alistair Watts.

"It's both a challenge and an opportunity."

The Warehouse already stocks a significant range of non-perishable supermarket-style lines such as shampoo, toilet paper and dishwashing liquid through its 80 stores.

Its move to sell bread and the inclusion of refrigeration capacity at its new Whangarei store have led to heightened speculation that it is gearing up for a full-scale assault on the country's two supermarket giants, Foodstuffs and Progressive Enterprises.

"Shoppers are increasingly favouring one-stop shopping," Watts said. "And as The Warehouse continues to expand its range of goods, its geographical spread and resulting high foot traffic gives The Warehouse good potential to move into grocery."

It is a point not missed on Foodstuffs and Progressive. Progressive boss Ted van Arkel attracted the interest of the Commerce Commission last month with a comment that suppliers who helped The Warehouse enter the grocery market would have to "accept the consequences".

The Warehouse's line is that it is "always looking to extend its grocery range".

ACNielsen researcher Emma Shutes said given Warehouse shoppers identified price as a major influence for choosing the chain, a move into groceries would probably need to be positioned to compete with Pak'N Save, which had built a reputation for its low prices.

With the potential for groceries to pull shoppers into the store weekly, The Warehouse could even consider selling groceries at a loss to drive increased sales in other departments.

While ACNielsen's research outlined shoppers enthusiasm for The Warehouse, it also uncovered several product lines, including food, which they had concerns about buying from the chain.

Shutes said concerns about the sale of food centred on a perception that supermarket staff were friendlier and more knowledgeable about the products they sold than Warehouse staff. Customers also believed The Warehouse would stock unknown food brands.

Said one ACNielsen interviewee: "It's good to have a nice friendly person at the check-out, it lifts the experience of shopping."

"I imagine he [Warehouse founder Stephen Tindall] would stock odd brands," said another. "It's hard to grasp that he would stock Watties or Tip Top and still be competitive." There was also concern about the development of overwhelmingly large hypermarket-style stores.

"There was some comment [in the research] that The Warehouse would get too big and they don't like the idea of it knocking out smaller businesses," Shutes said.

ACNielsen's study also notes that a move into grocery by The Warehouse would require logistics, specialist staffing and equipment for handling perishables and frozen foods.

Watts said while The Warehouse expanded its product range, other retail chains were also increasingly blurring the traditional lines of what they sold with some supermarkets selling electronic goods.

ACNielsen