H&J Smith proposes to close stores - 220 jobs at risk

The H&J Smith Group is proposing to close its department stores throughout the lower South Island, including Queenstown.

Group Managing Director Jason Smith announced this morning that the flagship store in Invercargill along with the Queenstown store at Remarkables Park, and the Gore store, will close due to "systemic changes in the retail sector".

They employ 220 people, including 190 in Invercargill and 30 across Queenstown and Gore. They now face redundancy.

The Mitre 10 MEGA Queenstown, Mitre 10 MEGA Invercargill and Laser Electrical, all owned by the company, are unaffected and will operate as usual.

The Dunedin, Mosgiel, Balclutha and Te Anau stores were closed in 2020 during a Covid-19 restructure.

"We have been honoured to have spent more than a century as an integral part of the Invercargill, and Southland, community,” Smith says.

"Over that long tenure, we have witnessed and adapted to many changes within an ever-evolving marketplace, and we have always strived to offer products and services to reflect the needs and desires of our customers.

"The marketplace is evolving once again and it’s moving away from the traditional Department Store model. So, with an eye to the future, we believe it is time for H&J Smith to evolve once again."

Shopping preferences, supply chain issues, supplier access and procurement, and ongoing reinvestment requirements have all had a significant impact and will continue to make it more difficult for independent retailers to operate, Smith says. This was accelerated by the pandemic.

In 2020, supplier constraints, COVID-19, and restraint on reinvestment led to H&J Smith Group taking a decision to restructure the business to "right-size" its retail footprint in Otago and Southland, closing Dunedin, Mosgiel, Balclutha, and Te Anau.

"The steps we took in 2020 and early 2021 put us in a good position to recover from the impacts of COVID shutdowns and continuing aftershocks of the pandemic. The recovery has been better than we expected, and we continue to trade positively," H&J Smith CEO John Green says.

"The supply chain has faced the biggest changes where procuring stocks has only grown more difficult. Our ability to establish a point of difference that can support sustainable growth is undermined by these changes.

"It is important for H&J Smith to be proactive, so we can take care of our people and help them through this transition rather than have the decision made for us in the future."

The proposal is out for consultation for four weeks with a final decision expected after Friday, 23 June.

On job losses, the company, in its media release, says staff were informed of the proposal on yesterday.

"All our employees have contractual provisions in their employment agreements that provide for a paid work notice period of four weeks and redundancy compensation. This is based on a standard formula relative to their length of service, or, in some cases, is a fixed payment.

"For those employees who have not yet met the qualifying period for this entitlement, we propose extending the redundancy compensation programme be extended to them as well, with no employee receiving less than four weeks of ordinary pay in redundancy compensation.

"We will also be investigating, should the proposal go forward, if some of the affected staff members can potentially be redeployed throughout the wider H&J Smith Group."

In addition to the changing retail market, the flagship HJS Department Store in Invercargill, which has operated for 100 years, requires significant remediations to the existing building to ensure it meets 100% NBS.

 

H&J Smith Department Store in Invercargill

The 12,000sqm Invercargill store is made up of 12 different buildings, built at different times, all of which have different seismic ratings which prevent subdividing of the space for other tenants or uses.

While the company has 23 years to complete the remediation of the space, the extensive remediation required does not remedy the many issues affecting all independent retailers.

"The decision to propose calling time on our Department Stores has not been taken lightly. However, we have always reflected the needs and desires of the community we serve whilst looking to the future," Smith says.

"Now we feel it is time for the community to create a new vision for what this building and site can be moving forward, potentially as part of the current rejuvenation of Invercargill’s city centre."

The H&J Smith Group started as a Department Store business in 1900.