The 2011 full year profit result out last week for the Warehouse Group Ltd [WHS.NZX] has once again rekindled the obvious that the company needs to makeover its stores, bring in some service and sell stuff that people actually like to buy at the price that is consistently cheaper than its competition.
We have discussed just this over many years on this blog 1, 2, 3, and the essence of my argument for a warehouse turnaround has always been that the company must sell branded goods at the best prices with all the other retail essentials wrapped around that: consistency of product availability, better quality goods, better service with staff more engaged with customers and advertising that promotes these things to the right people.
Their 2011 strategy to investors for a turnaround doesn't fill me with much confidence that management know where they are at now let alone how they will get out of the rut they have been in for the last 5-6 years.
"TWL a mass-market retailer well represented in all customer segments other than extremes." Page 20 of 2011 report.
Have they been into one of their own stores and compared what others have to offer? The statement above would indicate they are wide of the mark on their own position in the market because I don't have to tell you dear reader (and long-suffering shareholder) that the Warehouse is now beaten in just about every category they compete in and the competition and punishment is only going to get worse.
That statement puzzles me because it simply isn't true.
They also indicate poor service, lack of quality and inconsistency of range availability being a problem. The consumer knows all that and these are of course just basics that retailers should know and execute at every available opportunity. A focus on this and the securing of big brands at the best prices, available everywhere else, will get more punters in the door and more importantly keep them coming back.
NB. if you are a WHS shareholder you can put your concerns and questions to the new CEO Mark Powell in a new Share Investor Q & A coming up soon.
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NEW - From Fishpond.co.nz | Think Bigger, By Michael Hill
c Share Investor 2011