Warehouse job cuts: Retail sector faces changes as customers go online, experts say

Retail job cuts are the inevitable consequences of people wanting to shop online, or in-store, and to do it all when they want, experts say.

This morning it was announced The Warehouse would be cutting hundreds of full-time roles, closing stores and reducing the wages of thousands of remaining staff.

First Union claimed the company told those gathered it planned to eliminate 782 roles, and an additional 137 jobs in store closures.

But Warehouse chief operating officer Pejman Okhovat said the meeting centred on proposed rostered hours changes and were not related to changes that were under way at the store's head office or three proposed store closes in Dunedin, Johnsonville and Whangaparaoa.

In today's announcement there would be a reduction of up to 320 full-time equivalent roles, or between 500-750 staff if part-time, fixed-term and casual roles were included.

Okhovat said the way the stores operated had remained largely unchanged for years despite significant changes in the way people shopped, with growth in the online business and customers visiting stores at different times throughout the week.

He cited a 23 per cent increase in people shopping online in the past three years, something retail experts told the Herald was a general trend across the sector.

Dr Andrew Murphy, senior lecturer in marketing and retail at Massey University, said he was not intimately knowledgeable about The Warehouse situation, but generally customers were becoming more demanding, and there were social consequences.

"Customers want to shop in the evenings, the weekends, but those are times when employees ideally would not want to be there.

"There is also a trend for customers to use shops as sort of showrooms, to view products, and try them on even, but then to purchase them later online, either at the same shop or cheaper elsewhere."

"Showrooming" not only took sales away from a retailer, but also meant staff at the store did not record the sale.

"These trends come at a social cost to employees, who are often quite vulnerable, both in the hours they are then required to work and obviously with reductions," Murphy said.

Stores needed to make sure these trends were long-term, and not short-term or simply a consequence of the Covid-19 lockdown, Murphy said.

And while it could be a cost-effective measure short term, reducing staff - especially in specialist areas - could negatively affect the customer experience.

"There is definitely a role for sales staff who can help people purchase the right product, rather than just replacing something. And if people make the effort to come into a store, and they don't find that, they might think they should just do it online anyway."

Retail expert Juanita Neville-Te Rito said some of the large retailers were "over-footprinted", with more stores than required, and while the Covid-19 lockdown had exacerbated issues, they were already struggling.

"Nobody wants to lay off that many people. Pre-Covid they would have been holding off closing their doors, but Covid has given them the 'cloud cover' to make those tough decisions.

"Retailers are expected to provide a good digital experience, trained specialist staff, health and safety requirements, but then also to make money, and there can be unintended consequences of providing all of that."

While retail job losses were inevitable as more people did shopping online, Neville-Te Rito said there would always be a place for physical stores.

"It is not just about buying things, but the social side, entertainment, getting a coffee or a wine and going to see a movie after. We want it all at our fingertips, so it is just about retailers finding that balance."