Home appliance and furniture chain Smiths City went into voluntary administration yesterday.
Smiths City’s fall from grace as a well-established New Zealand brand to retail wilderness added a new chapter this week when the 107-year-old company went into voluntary administration.
The home appliance and furniture chain had previously been in receivership in early 2020 before being sold that year, but a revival looks to be short-lived amid increasing financial pressures.
Chris Wilkinson, a consultant and managing director of First Retail Group, said news of Smiths City’s voluntary administration was unsurprising given its position in the market today.
“Smiths City was very much kind of an undefined niche,” he said.
“They were a very well-established South Island brand… very well-represented throughout the South Island.
“One of their unique selling points back in the day was that they had a very large loan book. They ran their own hire purchase for products – they weren’t just appliances, they were furniture, camping, baby goods, kind of like a department store but more in that sort of larger format.”
But Wilkinson said Smiths City’s “biggest misstep” was its move into the North Island.
“They purchased LV Martin & Son, which was a very successful Wellington retailer of appliances. And that was their propulsion right throughout the North Island.
“[They] just continued to grow, but then began to falter.
“[Smiths City] really didn’t have a distinct edge in the North Island and people didn’t know them. They ended up taking expensive sites in Auckland and many other areas around the country and they just didn’t have that grunt and that market awareness in the face of the likes of Harvey Norman, which was growing extensively, Noel Leeming and other big brands.”
Wilkinson said he didn’t expect Smiths City to survive.
“I would doubt it, because at the moment those sectors are incredibly challenged. No one’s seeing growth, and the existing players are well presented in the market.
“I wouldn’t expect there would be an apparent purchaser.”
Yesterday, administrators at BDO Christchurch said they were calling for urgent expressions of interest in Smiths City.
“The voluntary administration process aims to achieve the best outcome for all stakeholders. This may include selling the business and assets to interested parties,” they said.
Investment company Polar Capital, owned by Colin Neal, bought Smiths City in 2020 in a deal worth around $60 million.
At the time, Smiths City had 29 stores, but today it operates just nine.
Wilkinson said it would’ve been a calculated play when Polar Capital bought Smiths City.
“But [Polar Capital] wouldn’t have necessarily foreseen what was going to happen economically,” he said.
Wilkinson said one of the big issues is that through Covid, a lot of people had extra money and went out and bought new appliances.
“What we’re seeing now [is] not only people really can’t afford new appliances, but in many cases, appliances just aren’t needing to be replaced because we had that kind of deluge of new equipment into the market post-Covid.”
Outside of the dominance of Harvey Norman and Noel Leeming, new players had come on board in recent years, Wilkinson said.
“The likes of Big Save furniture… very well resourced, own their own sites, they’ve now moved into appliances.
“All of these businesses will be chipping away at these markets.”
Wilkinson said new big box retailers had also branched out into other markets, almost acting as a one-stop-shop for consumers.
“There are no rules in retail any more. Nowadays you’re more likely to be going and buying your dishwasher tablets from Mitre 10 or buying your pet products from Bunnings, who’ve now got aisles full of this stuff.
“Even Chemist Warehouse sell cleaning products and footwear.”
The administrators declined to comment further about Smiths City’s position.
Cameron Smith is an Auckland-based business reporter. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.