Queen St Whitcoulls store tipped to become Farmers

The Whitcoulls flagship store on Queen Street. Photo / Dean Purcell

Whitcoulls' flagship Auckland Queen St store could become a Farmers.

Retail leasing specialists, RCG of Parnell, this week predicted the move, saying the dominant Whitcoulls shop would give Farmers a major location statement opportunity.

"Ironic, isn't it, that the Santa which is erected on the Whitcoulls Queen St corner annually was an original Farmers store icon."

Whitcoulls and Borders would no longer occupy large chunks of shop space and product line integration was likely, particularly Farmers selling cards, RCG said.

Lease swaps were likely too, morphing some Whitcoulls stores into Farmers to rationalise large redundant bookseller floorspace and allow expansion of the more diverse Farmers. The purchase excluded Albany, Papamoa and Christchurch stores.

"We doubt that this was just the purchase of a couple of book chain brands but rather it was the purchase of an opportunity," RCG said.

Nathan Male, of Auckland's Metro Commercial, said the Whitcoulls/Borders sale to Anne and David Norman's James Pascoe Group was great for customers and gave the couple the biggest retail footprint in New Zealand's 12 Westfield malls.

"From a property point of view, this will make the James Pascoe Group the most sought-after tenant in the large shopping centres portfolio.

"It will make Westfield aware of their presence and most importantly ensure that the group gets the best retail deals," RCG said.

The Normans were good retail operators, he said, controlling a string of major brands in prominent locations not subject to the debt pressures of struggling private equity investors.

The purchase takes the Normans' stores to more than 180, including 53 Farmers.

"The Normans have a very hands-on management style and are passionate about retailing and New Zealand. The group also runs on minimal or low debt which is in stark contrast to many of the highly geared, private equity retail ventures," Male said.

Precisely which Whitcoulls or Borders stores would be closed is still unclear, he said, with the announcement already that one store will shut in Westfield Albany.

Male said Whitcoulls in provincial areas had traditionally been strong performers because they were often the dominant bookseller.

The Normans now have nine high-profile retail brands: Farmers, Pascoes Jewellers, Stewart Dawsons, Goldmark, Stevens, Prouds, Angus & Coote, 57 Whitcoulls and five Borders stores.

"Farmers are the anchor tenant to most shopping centres and now the Normans also control a mini-major in the form of Whitcoulls. As a group, they will have even greater negotiating power with all the major mall owners. They have been conducting collective negotiations for all their brands for some time," he said.

The future of Borders Queen St is unclear. Its lease is due to expire next year. Male said that store had a complex layout, suffering from poor vertical integration. Other Borders, such as Sylvia Park, had a far better offering, on a prominent corner site with good layout in the heart of a regional shopping mall.

The effect of the sale on rival Paper Plus bookstore chain will only become evident over time, he said.

"Paper Plus is an entirely different business model, being franchised and primarily focused on the provinces. It remains to be seen whether changes to the Whitcoulls model will present a greater challenge to Paper Plus in their key trading areas."