Grocery adds lustre to The Warehouse

The Warehouse's foray into the grocery market has been its saving grace. Photo / Cactus Photography

The Warehouse’s big-box footprint is shrinking in its traditional markets, but the saving grace for the Red Sheds remains its latest foray into the grocery market.

The retailer’s sales shrank across the board in the 13 weeks ended October 29, most sharply in its Torpedo7 sporting goods chain, but the 6.7 per cent fall to $713.3 million in total sales outpaced the 0.1 per cent contraction in core retail sales across the wider industry, slicing half a percentage point from The Warehouse’s market share to 9.1 per cent.

In saying that, the listed retailer’s grocery remained a selling point, growing 8.2 per cent in the quarter, accounting for 22.8 per cent of the Red Sheds’ $394.2m of sales, or roughly $89.9m.

Its grocery category accounted for 18.7 per cent of the Red Sheds’ $1.89 billion of sales in the 2023 financial year, or $353.9m, compared with 16.3 per cent of its $1.73b in the 2022 year, or $281.5m.

The retailer has been pushing into grocery more aggressively in recent years as policymakers grumbled about the snug duopoly of Australia’s Woolworths and the Foodstuffs co-operatives, introducing a watchdog with yet-to-be-seen teeth.

The Warehouse’s previous foray into grocery, in the mid-2000s, was thwarted by the supermarket chains buying blocking stakes in the New Zealand stock exchange-listed company to prevent founder Stephen Tindall from stitching up an alliance with Pacific Private Equity to take the firm private and turn it into the local version of WalMart.

Grocery remains a tough market to crack, with wannabe start-ups such as Supie - whose vastly-undercapitalised offering had just 3000 active customers - struggling to gain a toehold, and the likes of Nosh, Farro Fresh or Moore Wilson’s more akin to niche operators than a national standard.

Government data out today shows grocery food prices rose at a faster pace than other categories in the 12 months ended October, rising 7.9 per cent compared with the 6.3 per cent annual increase across the food price index.

“The largest contributing food group was grocery food, mainly driven by higher prices for fresh eggs, potato crisps, and yoghurt,” Statistics NZ consumer prices manager James Mitchell said.