It's a tough time to be The Warehouse.
First, it sold Torpedo7 for $1. Then it posted a nearly $24 million loss in the six months to the end of January. It outlined plans to close TheMarket - which not that long ago had been hoped to become New Zealand's answer to Amazon.
As it searches for a new chief executive to replace the departed Nick Grayston, who was brought in to turn the company's fortunes around in 2016, you might ask - what went wrong?
How has the iconic retailer, founded more than 40 years ago, found itself in what appears to be perilous shape? And will restructure plans announced this week be enough?
Analysts say there are a few factors that might be causing The Warehouse headaches.
Kmart
Kmart isn't just putting up tough competition, it's "rolled through the country eating The Warehouse's lunch, breakfast and dinner," says Chris Wilkinson, managing director of First Retail Group.
Kmart had made a clear push in recent years to sell its own-brand products, which were "contemporary", he said - and occasionally developed devoted social media followings.
Wilkinson said Kmart had an edge in being able to design, source and bring that product in. It would take Kmart 28 days from ordering from the manufacturer to having it on the wharf ready to ship to Australia and New Zealand, he said.
"It's a very dynamic model. Apparently the product is now going into the United States because retailers are buying that Anko product because of its flair, and contemporary nature."
Johan Koreman-Smit, a senior analyst at Forsyth Barr, said there was also increasing competition from H&M for apparel and Rebel Sport for sporting goods. The arrival of Costco and imminent opening of Ikea also would not help.
A tough environment
Times are tough for most retailers at the moment, and The Warehouse is no exception to that.
Koreman-Smit said in real terms, retail spending had suffered a decline larger than from the global financial crisis (GFC).
Smith said Noel Leeming was a significant part of the group's profits but spending on big ticket items such as whiteware and electronics had dropped away particularly sharply.
Costs
Costs would have to be the first point to address, Koreman-Smit said.
The business had already started this work and would continue to do it, he said.
"The cost of doing business at The Warehouse is quite high versus other retailers. If you think about it as a percentage of sales."
He said The Warehouse did not disclose the terms of its leases, but it had a lot of them and a significant footprint. It might choose to give some up in areas where there was more competition.
The latest annual report showed significant staff costs. As well as Grayston's $2.793 million salary, four other people were earning more than $1m a year, 13 were earning more than $430,000, 47 were earning between $160,000 and $430,000 and 739 earning between $100,000 and $260,000.
Losing sight of its core business
Analysts said there was also a sense that The Warehouse needed to find its identity again.
Koreman-Smit said forgetting about core business was something that happened relatively often in New Zealand.
"They try to expand and everyone forgets about the core. The core starts deteriorating and gets slowly eaten away by competitors. I think that's what's happened, really. They didn't have that focus."
He said the next stage would be working out what The Warehouse was. "I don't know if they know what they are and how they fit into the New Zealand retail landscape or what they're going to compete on."
"They've been around a long time," said Greg Smith, head of retail at Devon Funds Management. "They've got a strong footprint in a lot of places. It might be [they need] a major strategic makeover."
He said The Warehouse would need to reposition the "red sheds" as somewhere consumers wanted to go, for a reason.
"They need to recalibrate what is the value proposition at The Warehouse. 'Where everyone gets a bargain' was the tagline - a lot of people go to Kmart for that now."
Where to from here?
Wilkinson said groceries could be part of The Warehouse's recovery.
In January, its grocery sales were up almost 12 percent.
People also wanted to buy things that helped them make things from scratch or for the garden, given the current economic environment, he said.
"Being able to potentially corner the market in some of those aspects where other retailers may not be is an opportunity for them. They have to create that convenience. People make those shopping destination decisions based on convenience, they're not going out of their way to buy a cheap loaf of bread or butter. They've got a lot of work ahead of them."
Koreman-Smit agreed groceries had potential. "People get caught up in the margin being much lower, 8 percent versus the mid 30s or 40 percent for apparel, but it's all about the turns and the sales density per square meter. They've got tot make sure the amount of floor space they are using for grocery is the right size versus the stock terms and margins it's generating."
