Forum Archive Index - August 2001

[jerrold poh <pohj@ihug.co.nz>]

Thanks for the article DR ...  even though it did feel like the author
was brown nosing Tindall there abit :).  

The side by side comparison was good in the first post and really did
put some perspective on just how well this little company tucked away in
New Zealand is doing, which has actually motivated me enough to do some
research on it :).  

It is the opportune time, (well, I reckon anyway), what with the general
impression that the expansion isn't doing too well in Australia, and
the current down trend it's in (correct me if I'm wrong Phaedrus?).  

Has anyone have any other thoughts on this company (actually quite
surprised they weren't many replies to this email)?  


Jerrold.



On Fri, Aug 10, 2001 at 07:13:44AM +1200, DR wrote:
> The Warehouse Group was started by Stephen Tindall in 1982 with $30,000 in 
>capital, one small store and three full-time employees. In fewer than 20 
>years, Tindall has turned the Warehouse Group into the country's largest 
>retailer, with 40% of the $1.7 billion spent annually in department stores on 
>nonfood items. "It's an understatement to say that Tindall changed the face of 
>retailing in the country," says Clyde D'Souza, an analyst with Salomon Smith 
>Barney in Auckland. 
> 
> Tindall's method was to develop a local version of the low-cost, 
>category-killing megastores built by Costco, Wal-Mart and Carrefour. Designed 
>to look like warehouses, the chain's 75 outlets, whose exterior walls are 
>painted bright red, are typically huge stores in suburban areas. Inside, one 
>finds aisle after aisle of cheap stuff piled high: tennis shoes at $6.30 a 
>pair, boxes of lawn fertilizer for a dollar, nail polish at 84 cents a bottle. 
>"If you go into any small town in the country, the biggest store there is 
>probably us," says Tindall. 
> 
> And he is just warming up. Last year, he invaded Australia, whose economy is 
>six times the size of New Zealand's. He spent $54 million buying a smaller 
>competitor there; operated under the Solly's and Clints brand names, it will 
>be rebranded to become a bridgehead in Australia. To supplement growth in New 
>Zealand, Tindall is starting to sell telecom and financial services and may 
>add electricity sales as well. All told, Tindall expects to increase sales by 
>2.5 times within five years. 
> 
> Can he pull it off? "It won't be an easy road, but I think Tindall and his 
>team can do it," says Karen Wilson, an analyst with J.P. Morgan in Auckland. 
>To bring in fresh blood, Tindall kicked himself upstairs last year, taking the 
>title of founder and appointing a new CEO, Greg Muir, who had been with the 
>company since 1999 and had helped run other Australasian blue chips, such as 
>TNT and Lion Nathan. 
> 
> Tindall's record speaks for itself. If you had been smart enough to buy a 
>thousand shares of Warehouse Group when it listed on the Auckland exchange in 
>1994, your $1,050 investment would have compounded at about 27% a year and 
>would now be worth $5,670. 
> 
> Tindall, 50, has retailing in his blood. His great-grandfather founded what 
>used to be the country's largest retailer, George Courts. His father was also 
>a retailer, importing hand tools and other hardware. After graduating from 
>high school, Stephen Tindall went onto an executive track at George Courts, 
>winning the retailer award of the year at the age of 27. All the signs pointed 
>to his one day taking the reins of the company. 
> 
> But he had other ideas. "I always yearned to do my own thing," says Tindall, 
>who stays in shape by swimming two and a half kilometers every day. During a 
>sales visit he made to New York City in the spring of 1982, a client invited 
>him to see a factory outlet (i.e., discount) store in suburban New Jersey. 
>Tindall saw his opportunity. In October that year he quit his job, at age 31, 
>and launched his first Warehouse store a month later. 
> 
> It was a store unlike any other in the country. The concept of dirt-cheap 
>goods was revolutionary for New Zealand. Tindall pioneered other concepts. He 
>was the first to computerize his sales and inventory data, plowing $20,000 of 
>his $30,000 in startup capital into two NCR cash registers that recorded sales 
>data on magnetic tape, which he printed out once a week. At George Courts, 
>inventory was taken only once a year, manually. "I was suddenly 52 times 
>better in knowing how I was doing," says Tindall with a chuckle. Today, the 
>Warehouse Group continues to be technologically advanced: As early as 1998 the 
>company started to build an intranet/internet system and launched a data 
>warehousing project. 
> 
> Perhaps Tindall's boldest move was to aggressively take advantage of lower 
>tariffs on imports during the wave of privatization and deregulation in the 
>1980s. "I was probably the first to start importing when they lifted the 
>restrictions," says Tindall. By doing so, he could enjoy fat margins and still 
>undercut domestically produced goods. He once imported 120,000 coffee cups 
>from France, pricing them at 71 cents when similar mugs sold for $1.25 
>elsewhere. The cups sold out in three days. "It was just, whoosh!" Tindall 
>exclaims. Cutting costs even further, Warehouse buys directly from suppliers 
>around the world, thus eliminating middlemen. 
> 
> One of the secrets of Warehouse's success has been Tindall himself. "He has 
>managed to go from being an entrepreneur to running a complex organization," 
>says D'Souza. "Others couldn't take it to the next level." Tindall's success 
>attracted about half a dozen imitators, who have all come and gone. "They 
>weren't reinvesting in the business. They didn't worry about technology. And 
>they didn't understand what being a shopkeeper is all about," says Tindall
> D.
> 


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