The iconic department store, Smith & Caughey’s are closing for good after 144 historic years. They advised the proposal to almost 250 staff this morning in an all-staff meeting held in their Queen Street location that they will close for good in early 2025.
"Sadly, we don’t believe this is a storm to be weathered. In the absence of strong consumer confidence, an essential element for a prestige retail organisation, the company is concerned that it may no longer be able to sustain the impact of a continued sales drop in our physical stores compounding the impact of the past five years," said Chairman Tony Caughey.
The proposed closure of the 144-year-old business includes the historic ‘Grande Dame’ Queen St store. The owners stated the closure was the result of a “perfect storm” of factors. Caughey stated there was a range of factors that were largely outside of the company’s control. This included; economic downturn and a big drop in consumer confidence; rise of shopping malls; upmarket brands building their own retail stores; Auckland CBD traffic; crime; and no foot traffic. He added that Smith & Caughey’s stores in Queen St and Newmarket have been running at a loss, with a 40 per cent drop in revenue in the past five years.
"The company is trading at a significant loss which is unsustainable," said Caughey. "Sadly, we do not believe sales can be restored to levels necessary to continue to operate."
Smith and Caughey's Auckland Display 2018
Despite the announcement, Caughey said this was not a done deal and that staff will be consulted over the following weeks. The company would consider and evaluate staff feedback on the proposal and any other options for the retail business that might emerge. "We are acutely mindful of the impact to staff, customers and suppliers by the proposal."
While Caughey said a dozen options had been considered by the owners to retain the business, no single factor had forced the company to consider the proposal. "In recent years, the retail landscape has undergone a significant transformation," he explained. "This includes the growth of increased competition from new shopping malls, and the rise of retail stores for luxury and prestige brands that has reshaped consumer preference and impacted the appeal of prestige department stores."
"The impacts of the ongoing roadworks and development activity in the area have been disruptive to the traditional shopper who is coming into the city centre less frequently. We can’t see a way we can hang in there and when it does open, it won’t be enough to compensate all of these other factors."
In the current climate, Caughey said there appears to be no appetite for the risks associated with further investment in retail. They have been unable to find a solution to deal with the significant headwinds they face.
"This is an unsettling position for the staff, board and shareholders. We must be realistic and at the heart of us commencing this consultation process now, is the need to look after all Smith & Caughey’s staff as well as we can, and to operate in good faith."
"If the proposal proceeds, the plan would be to cease operation likely in early 2025. Whatever the outcome of the consultation process, our intention is still to offer our traditional experience of inspiring world-class Christmas windows, Santa’s Enchanted Forest and Santa Claus himself."
Smith & Caughey’s stores would remain closed for the rest of today but reopen tomorrow.
