The Warehouse invests in 'click and collect' tower in bid to return to profitability

Pejman Okhovat, chief executive of The Warehouse, next to the click and collect tower. Photo / Supplied

New Zealand's largest retailer is preparing for the next wave of online shopping and has invested in a five-metre-tall 'click and collect' tower for one of its busiest Auckland stores.

The Red Shed, owned and operated by The Warehouse Group, has partnered up with Estonian technology firm Cleveron which develops vending machine-like towers and technology that automates the 'click and collect' process for online shopping - used by some of the world's largest retailers.

The tower works to simplify the collection process for shoppers who make online purchases and opt to pick up orders in store. After making a purchase, customers are emailed a six-digit code and once the parcel has been put into the tower the code is entered into the machine to retrieve their order.

The Warehouse will trial the technology at its Sylvia Park store for the next three months with the intention of rolling it out to its network of stores all going well. The retailer could not share figures on how much it had invested to acquire and implement the technology.

Pejman Okhovat, chief executive of The Warehouse, said the 'click and collect' tower was the first of its kind in Australasia. He said the company had taken inspiration from retailers in the North Hemisphere already using the technology, including American multinational Walmart which has 1000 towers in stores throughout the world.

Okhovat said the technology would enhance the shopping experience at The Warehouse and would facilitate the increase in online orders.

Online sales at The Warehouse are increasing rapidly and account for just over five per cent of all sales, according to group's latest financial report. The retailer has experienced double digit growth in online sales for the past two years.

About a third of online orders at The Warehouse are 'click and collect'.

"This is one of several new initiatives we are trialling to enhance the experience for our customers," Okhovat told the Herald. "The real basis for our omnichannel retailing is all about providing more choice for the customer."

In the US, the uptake in 'click and collect' versus traditional home delivery had surpassed the 50 per cent mark with some large retailers.

Okhovat said the 'click and collect' tower paired with the uptake in online shopping had the ability to return the retailer to profitability. "We're doing everything we can to try and encourage our customers to enjoy a better shopping experience.

"We have said we are going to invest in our digital future and this is one of those initiatives."

The tower, which can hold up to three hundred parcels, is another one of the initiatives The Warehouse and the parent group has invested in for its digital future. It has recently introduced Alipay as a payment method, redesigned its mobile app, and developed its e-commerce platforms and supply chain and fulfilment centres.

NZX-listed Warehouse Group lifted first-half profit by 12 per cent in the 26 weeks ended January 27. Net profit rose to $35.8 million, up from $31.9m a year earlier. Stripping out $2.2m of restructuring costs and the exited financial services unit, its underlying earnings rose 5.9 per cent to $37.4 m.

The Warehouse anticipates annual earnings will be $63-66 million, compared to earnings of $59m in the 2018 financial year.

Last year The Warehouse revamped its Albany store turning it into a concept store to test shopper preferences and the retail market. Digital price tags, self-serve checkouts, more open spaces, IKEA-esque furniture displays and artificial intelligence-enabled technology are a few key features of the concept store.

The Warehouse has 93 stores across the country and employs around 8500 staff.