Kmart has made an approach for The Warehouse's Dunedin central site which is proposed to close in August, jeopardising 42 jobs.
The Warehouse Group — this country's largest listed retail company — said in an announcement to the NZX yesterday it had begun a consultation process in order to shift towards an "agile" operating model.
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That would mean the closure of six stores, including from its Noel Leeming and Warehouse Stationery brands, around the country, and up to 950 job losses as well as 130 cuts from its head office.
The stores that face closure include the Noel Leeming Henderson Clearance Centre and Tokoroa store, The Warehouse Whangaparāoa, Johnsonville and Dunedin Central stores and the Warehouse Stationery Te Awamutu store.
The Dunedin city store employs 14 fulltime, 17 part-time and 11 casual staff.
"Team members have been informed that the store is being considered for possible closure," The Warehouse chief operating officer Pejman Okhovat said.
"We will be entering into a formal consultation process with our team members in due course before any final decision is made around closing any stores."
The Otago Daily Times understands Kmart has shown an interest in the Maclaggan St site — for which The Warehouse has a lease for up to two more years and is unlikely to want to give up, one retail industry insider says.
"You can bet your bottom dollar that The Warehouse won't be relinquishing that lease to let Kmart go in there.
"They see each other as competitors and they'd never allow that," the insider said.
Dunedin Mayor Aaron Hawkins called on The Warehouse to reconsider the proposal.
"With the country moving to Alert Level 1, I would hope that a less restrictive trading environment would give them reason to reconsider the proposal."
Hawkins said he hoped The Warehouse had exhausted government support and rent relief options.
Otago Chamber of Commerce chief executive Dougal McGowan said the proposed closure was a surprise.
"We are aware that a number of the big retailers have been finding things really tough but it has really come out of the blue."
Golden Centre Mall director and Heart of Dunedin member Jason LaHood said the closure of a big-box retailer highlighted the need to support the existing city retailers.
Retailers needed "breathing space" and no major work or changes to the CBD should be made in the next two years, he said.
"Supporting retailers really means giving them some breathing space to shore up their financial position.
"We all know there's change coming but it cannot happen in the next 18 to 24 months ... any disruption to the CBD would be the end of a lot of retailing in that area."
Shoppers at the Dunedin Warehouse had mixed reactions to the news.
"I can't believe it. I am so disappointed," Bernadette Ford said.
Dunedin man Anthony Grace said The Warehouse should have waited to see if alert level 1 brought more spending to the store.
"These guys deserve a chance.
"They work, they've got bills to pay and it would be unfortunate for them to lose their jobs and have this place close down."
Amy Telfer Chiles did not have any major issues with the proposal and said it made "economic sense".
The Warehouse Group chief executive Nick Grayston said Covid-19 and its impact made it clear the company needed to move to its "agile" model.
Changes in shopping habits meant the company was "accelerating some changes that had already been planned".
In total, up to 950 jobs — or 450 fulltime equivalents — could be lost across nine store closures.