Farmers makes bold move to focus on strategy

Farmers will close its head office of 10 years in three weeks, pull people from several other sites around Auckland and create a one-business greenfields development at East Tamaki.

The warehouse part of it is already open and the support centre opens next month. It is a bold move to put a new strategy in place, with $46 million spent on the company's own new premises and plans to get about 12ha adjoining the Ormiston Rd site developed for small businesses.

In the rapidly developing strip between Manukau City Centre and Howick, the Farmers site's neighbours within 18 months will probably include fast-food outlets, service facilities such as a garage and bank, and small distribution centre operators.

To complete its own transition, Farmers will move about 300 people from its Onehunga head office, parent company Foodland Associated's corporate office and retail credit card centre in downtown Auckland, Deka's support centre, also in the city, and three smaller distribution centres.

"There are huge benefits, synergies in the way we run our business. We've operated split for too long," says Wayne Walden, managing director of the Farmers Deka holding company.

"This whole company has been re-engineered. We've brought a whole new team in, and new retailers into the business. We've taken retailers from Australia and England and a logistics manager from South Africa.

"On top of that, the whole rebranding of the business has been important. We've gone into more lifestyle merchandise, changed store layouts. Our formats are essentially far too small, they don't give us the ability to expand. Our strategy is to look for much bigger formats, in the 6000 to 8000 sq m range, to create a clear destination."

Farmers will spend up to $50 million on new stores in the next 18 months. But for the expansion strategy to work, Walden says it needed to have the infrastructure in place.

This extraordinary development, in New Zealand terms, is nearing completion at East Tamaki, on a ramp to the Etcart arterial route and a short hop from the new Botany Downs town centre.

The retail chain has built a 31,500 sq m distribution centre and its 10,000 sq m support and logistics centre will open on August 9.

That will put 500 people on the one Farmers site. Even so, streamlining of the distribution process has cut 100 staff from that side of the business.

"We used to put through 100,000 units a day. We've doubled that with less people, so the savings are reasonably high," Walden says.

The distribution centre has pallet storage five racks high, accessed by high-level pickers developed by Farmers to comply with New Zealand health and safety regulations.

At the other end from those big-ticket items, clothes hurry around the building on racks which take them through a steam tunnel - they come out ironed, ready for wrapping and marked to go to a particular store. These slick rails run for 13.8km and deliver garments fully checked for quality from the entry dock to a truck waiting at the exit dock.

"We used to have an army of people doing this. The system now allows us to sort to the size curves that each store requires. These things can go horrifically wrong, but this centre was commissioned without a hitch," says Walden.

The whole process is designed to move things through quickly, not have an inventory waiting to be designated to a store.

"We're moving to being a consumer-led organisation. We used to decide what the consumers would buy. You can't do that now. They want more value for less, they want more control over decision-making, and in the retail environment they want an experience relating to their lifestyles."

Mark Allan, project manager for the logistics and support centre, has been designing for a standard day of 15 hours - it has a 164-seat main cafe which can be turned into a 200-seat auditorium for presentations and conferences, plus kitchen and servery areas in each wing.

Buyers will be based downstairs and support groups across both Farmers and Deka brands upstairs in open plan offices. A learning centre can accommodate 150 people.

The systems being put in place make it easier for the chain to target its markets. It has introduced a fashion statement for its top ranges and is planning to fight for more market share at the bottom, much of which has been taken by the Warehouse chain.

"We're starting to tailor our businesses more to markets now, which Farmers never did," says Walden.