KEY POINTS:
The Warehouse Group is taking the Red Sheds online in a sign the company is still developing as it waits for its ownership to be resolved.
The Warehouse said last week it had contracted the direct marketing agency Aim Proximity to handle its digital marketing.
This will include a makeover for its website, www.thewarehouse.co.nz.
The group's general manager of marketing, Stu Yorston, says the move is not part of a rapid march towards online sales. The focus for the new digital marketing contract was still getting customers into the 85 Red Sheds.
But the Aim Proximity contract covered all e-marketing and website development.
That would eventually lead to online sales.
The move to develop digital marketing at The Warehouse is significant as the company has until now taken a cautious approach to advertising and marketing, focusing on value for money.
Other big retailers, such as Mitre 10, are already active in digital sales.
The Red Sheds' move online could create a challenge for Telecom's online mall www.ferrit.co.nz.
The Red Sheds changed its advertising strategy two years ago when it appointed DDB Advertising as its main agency and made its low-rent TV commercials more slick.
Yorston said that during the pitch process, Aim Proximity had defined a long-term strategy.
The online move is a welcome initiative for the company, which has appeared to be in limbo.
In September last year, founder Stephen Tindall made a $5.75 a share bid to privatise The Warehouse. But this was aborted in October after Woolworths grabbed 10 per cent of the company at $6.50 a share.
Then Woolworths Australia and Foodstuffs applied for Commerce Commission approval to bid for up to 100 per cent of The Warehouse Group.
Foodstuffs also has 10 per cent of The Warehouse.
In June, the Commerce Commission ruled against the two grocery groups, saying a Warehouse takeover would harm competition and prospects for a third party to challenge New Zealand's supermarket duopoly.
On Friday, The Warehouse joined Woolworths and Foodstuffs in High Court challenges against the commission's decision.
The legal action is not expected to be resolved before the start of next year, and shareholders would be unlikely to rush to any new offer for The Warehouse while Foodstuffs and especially Wooloworths are waiting.
Warehouse chairman Keith Smith said it was business as usual at the Red Sheds.
But sharebrokers such as Macquarie Equities New Zealand Investment director Arthur Lim say questionmarks over The Warehouse's future would inevitably influence its approach to new strategies.
The move online is the first clear sign this year that the company is not following a wait-and-see strategy.
Aim Proximity is New Zealand's biggest direct marketing agency and recently picked up the accounts for Vodafone, after dropping Telecom, and Westpac Bank after losing the BNZ Bank.
The agency has also been shifting its focus to online marketing.
Five years ago digital marketing was about 5 per cent of the agency's business; now it is about 50 per cent.
Aim's chief executive Darryn Melrose said that businesses were moving away from the focus on website design that had dominated digital marketing.
He said New Zealand consumers were more sceptical than those in Australia about claims made in commercials.
Retailers gained from having a more direct relationship with consumers, using marketing techniques such as phone marketing.
RED ON WEB
* The Warehouse has hired Aim Proximity to redesign its website, thewarehouse.co.nz.
* The primary focus will be to promote the Red Shed stores.
* But the website will eventually offer online sales.
* This will put The Warehouse in competition with Telecom's internet mall ferrit.co.nz.
