The H&J Smith Group said it is planning on reducing the size of its retail division to secure its long-term future.
The company’s managing director Jason Smith said the business has been significantly affected by the COVID-19 health crisis and now faces a long and slow economic recovery.
In order to continue trading in the years ahead, the group is proposing reducing the size of its operations.
“It’s against this backdrop, and a firm desire to continue to operate sustainably well into the future, that we are proposing to close or reduce in size all but our flagship H&J Smith department store in Invercargill, including Paper Plus and Outdoor Invercargill, and our H&J Smith department store at Remarkables Park in Queenstown,” he said.
The H&J Smith’s retail division comprises six H&J Smith department stores, two Outdoor stores, Paper Plus Invercargill and the Take Note store in Gore.
The stores the company plans to close include the H&J Smith stores in Dunedin, Mosgiel, Balclutha and Te Anau. The store in Gore would be reduced in size.
The Armoury Store in Dunedin and Outdoor World at Remarkables Park, Queenstown, owned by the H&J Smith Group, would also close.
The planned store closures would affect about 175 staff.
Invercargill’s store would stay open while the Take Note store in Gore would relocate.
“Our retail division has been grappling with increasing wage and compliance costs, issues around store size and scale, difficulties securing supply, new entrants to the NZ market and the increasing dominance of multinational chains,” Smith said.
“None of which is dissimilar to the well-documented challenges facing department stores around the globe.”
Smith said the store network is also in need of capital expenditure to upgrade and modernise stores in line future customer needs, which wouldn’t be prudent given the ongoing uncertainty post-COVID.
“H&J Smith has been in operation for 120 years,” he said. “To be here for 120 more, it’s now very clear we need a long-term view.”
Smith said the company’s lease commitments mean there would need to be a programme of change occurring over a period of time.
“During this period, there may need to be further adjustments to our strategy,” he said.
Closure or reduced timings at each store could occur from August 2020 through February 2021, however details will be confirmed as part of the proposal process.
“It’s been a particularly difficult couple of months for our staff with the challenges of COVID-19 affecting how we deliver service to our customers,” Smith said. “They’re at the forefront of our minds as we work our way through this difficult process as quickly as possible to minimise further uncertainty for them.”
The proposal is now under consideration with a final decision to be made in early June.
Other businesses operated by the H & J Smith Group, including Mitre 10 MEGA in Invercargill and Queenstown and Laser Electrical in Invercargill, are not included in this proposal.