New Zealand's biggest retailer, The Warehouse, is using a revamped shop as a concept store to test shopper preferences and the retail market.

All going well, the NZX-listed company will install similar new-look interiors in its network of 92 stores, and other Warehouse Group retailers.

Digital price tags, more open spaces, IKEA-esque furniture displays and artificial intelligence-enabled technology are a few key features of the concept store in Albany, on Auckland's North Shore.

It also features self-serve checkouts and click-and-collect pickup boxes.

Advertisement

The Warehouse and Warehouse Stationery chief executive Pejman Okhovat told the Herald it chose Albany for its concept store because of its large volumes of returning customers.

"Our aim was to create a concept store for The Warehouse so we can test the new features and benefits with our customers, and see what actually works, what they like and this can pave the way for the future generations of The Warehouse stores," Okhovat said.

"Customers around the globe, in terms of their shopping experiences, are [now] much more about getting really close to the product they want to buy.

"This store allows our customers to get close to the product and see it in the way they want to see it in their homes."

Okhovat would not reveal the cost of the revamp but said it was a significant sum.

Over the next year the retailer will track the store's performance.

"We will be testing every single one of those features to see which out of those customers really like, what they don't like and what we need to change and modify.

"Our goal is to roll out either parts of this right away across the chain or the bigger components of this."

An instantaneous digital price tagging system - with prices shown on tiny screens, rather than paper labels - was introduced to improve the accuracy of pricing and productivity.

It will save 10 to 20 hours of time each week, Okhovat said.

"Pricing will be immensely improved on this because of the split-second price changes on the shelf," he said. "It will improve productivity and efficiency so we don't have to manually change all of the prices when we need to and it will save our team members' time, which they could be using to help customers."

Digital price tags have been rolled out to The Warehouse's 'concept' store in Albany. Photo / File
Digital price tags have been rolled out to The Warehouse's 'concept' store in Albany. Photo / File

Other features of the store makeover include marble-look flooring, trendy clothing racks, a prominent jewellery kiosk and modern layout, putting it on par with competitors including Kmart - a move analysts say has been a long time in coming.

First Retail managing director Chris Wilkinson said the new look and approach to retailing in an increasingly tough market was important for The Warehouse's profitability.

"The Warehouse's legacy store experience was contrasting with others, particularly Kmart, so the new format and look will help bring the brand towards the contemporary environments shoppers want and expect," Wilkinson said.

"Maintaining value proposition is vital. Retailers walk a fine line between making stores look too smart and the 'stack it up and sell it out' models of yesteryear."

Ben Goodale, managing director of marketing agency justONE, said the makeover came at a good time.

"The Warehouse has been very focused on the threat of Amazon and a lot of people would feel that in doing that they haven't really had an eye on Kmart," Goodale said. "A few years ago people would have laughed if you said to them that Kmart was going to be a significant retail player in New Zealand.

"It has been incredibly successful in the last few years, really building its brand, customer experience and a buzz about shopping there, which The Warehouse hasn't," he said.

"It is encouraging that The Warehouse have clearly been working on how they respond to that."

Okhovat said The Warehouse got most of its inspiration from retailers in the Northern Hemisphere. "Typically the Northern Hemisphere is ahead of us by six months to a year in terms of trends.

"We follow all of our competitors pretty closely. Competition, I think, is really healthy - it keeps you on your toes and provides real choice for the customer.

"Do we follow Kmart closely? Perhaps not. We follow them just as much as our other competitors."

The concept store had received positive feedback from shoppers, he said.