Iconic Auckland department store Smith & Caughey’s is considering closing down its online and offline retail operations next year after facing a steep sales decline over recent years.

The company has started a five-week consultation process with its staff about the potential closure. During this process, the firm will evaluate staff feedback and any other options for the retail business.

Founded 1880, Smith & Caughey’ is the nation’s oldest department store. Revenue has declined by 40 per cent during the past five years, which resulted in significant losses, according to Tony Caughey, the company’s chairman.

“Sadly, we do not believe sales can be restored to levels necessary to continue to operate,” he added.

Caughey cited increased competition from new shopping malls and the rise of retail stores for luxury and prestige brands that has reshaped consumer preferences. 

The aftermath of the Covid pandemic also led to a reduction in the number of office workers in the central city, followed by a huge drop in consumer confidence and rising cost-of-living pressures, he added.

The board has reviewed many strategic options over the past two years but was unable to find a solution to deal with the headwinds, Caughey continued.

“In the absence of strong consumer confidence, an essential element for a prestige retail organisation, the company is concerned that it may no longer be able to sustain the impact of a continued sales drop in our physical stores, compounding the impact of the past five years,” he stated.

• Further reading: The Warehouse swings to net loss amid lower sales, Torpedo7 exit