Warehouse moves into ‘cut-throat’ market
Fairfax/Business day has an article today about the Warehouse’s purchase of Noel Leeming
“The Warehouse Group will boost its shaky brand power with the purchase of Noel Leeming Group, but it is joining a cut-throat, margin-choking market, analysts warn. New Zealand’s biggest listed retailer announced yesterday it had bought the group, which has about 1500 staff and comprises the Noel Leeming and Bond & Bond electronics and appliance chains, for $65 million….
Tim Morris, analyst and director at Coriolis Research, said brands, particularly electronics brands, were the weakest link in The Warehouse’s offering. “You buy [Noel Leeming] and suddenly Sony has to sell to you, and so does Fisher & Paykel . . . and you can sell all that stuff in your stores as well.” The purchase opened up a new market for The Warehouse, and expanded its property portfolio.
But the fiercely competitive electronics sector was “an ugly space right now”, with no game-changing Apple products to boost sales and massive price deflation, particularly in flat-screen TVs. “The Warehouse can’t fix that because it’s external, and there’s just a lot of competition in that space, there’s probably one or two chains too many.””