JK Kids closing down

FILE

Popular kids clothing chain JK Kids is closing down, blaming its demise on intense online competition from overseas websites and the global economic downturn.

Its Rotorua store, on Hinemoa St, began its closing down sale on Monday with a staff member telling the Rotorua Daily Post it would close at the end of the year.

The chain's owner and managing director, Ben Sproat, said trading conditions for the retailer, which operates 22 stores throughout New Zealand plus an online operation, had been difficult for the past two years.

He said all the stores and the website would be closed by February.

"We've seen a decline in our retail store sales and we don't believe we're going to see that trend change."

Mr Sproat said JK Kids, which employed around 125 staff, had decided to "do the responsible thing" and close down before its financial position worsened.

"Discretionary spending in young families is clearly under pressure," Mr Sproat said.

"In terms of competition we're seeing quite a big impact from mothers, particularly younger mothers, buying online. They're able to buy from the UK, the US and many outlets over there are offering freight free if you spend over a certain level."

Many items purchased from overseas websites are also GST-free provided they are valued at less than $400, prompting the New Zealand Retailers Association to call for the consumer tax to be applied to all online purchases, to "level the playing field" for local retailers.

Mr Sproat said JK Kids had also come under pressure from New Zealand online retailers that purchased end of line product overseas, which it then sold to Kiwi consumers at low prices.

JK Kids was established by Mr Sproat and wife Lisa in 1995 when they spotted a gap in the market for affordable, quality kids' clothing.

Economists have predicted a surge in New Zealand's economic growth next year - an OECD report has forecast GDP growth of 3.6 per cent.

But Mr Sproat said he did not expect an uplift in the economy to translate into stronger apparel sales, especially as the online competition would persist.