Blenheim City: out for the count

After nearly 24 years of service to the people of Marlborough, the McHugh family suddenly ceased trading at Blenheim City SuperValue Plus on Wednesday night. Deputy Editor Lynda Munden takes a look at possible reasons why.

Citing trading conditions, competition and its Internet business as the primary reasons, the McHugh family closed up shop for the last time this week.

Co-founder and company director John McHugh attributed the closure and loss of 75 staff jobs to the loss of carparking during the construction on the former Centennial Hall site, the opening of the Countdown supermarket on that site, and trading conditions as major factors contributing to making the SuperValue site not viable. Significant losses incurred in setting up its pioneering Internet shopping service --Supermarket.co. nz -- added to the companny's untenable position.

In a letter to staff, director Warren McHugh was frank about the Internet failure, but also attributed some downturn in trade to the opening of the adjacent Countdown supermarket, set up recently by Australian-owned Progressive Enterprises which also owns the SuperValue brand. Commenting on the Internet enterprise, Warren McHugh said it was a fact that Internet grocery shopping was only successful when filling orders within local catchments. The Supermarket.co.nz had tried to cater for the whole of New Zealand, sourcing all supplies from Blenheim and freighting them anywhere in the country for only 12 per delivery.

The losses kept mounting, and this week the National Bank decided it had had enough and withdrew support. The Express understands the first real hint of what was to come filtered through to staff when some hours were cut last week. Then on Monday allegedly their wages were not paid.

The upshot of the bank's move was a meeting on Wednesday night at which the 75 staff were told sorry, don't come tomorrow. Most were stunned to say the least, but predominant were feelings of sadness, loyalty for the McHughs, and anger at the closure.

Some staff stayed to help with a stocktake, but most were out looking for new jobs, some across the road at Countdown. Seventy-five staff members lost their jobs and the flow-on from that alone will cause major ripples in Marlborough internal economy, not to mention the loss of income to local suppliers and distributors. Previously as many as 50 local suppliers and couriers regularly supplied supermarkets in Blenheim. Between five to 10 of those are supplying the new Countdown store.

Countdown may pick up some of the pieces jobwise, but despite being owned by the same company as SuperValue, it does not stock it shelves with fresh local produce. Additionally, with the exception of wages, the bulk of the money taken by Countdown goes straight across the Tasman to Perth.

Recent changes in grocery retail in Blenheim have escalated competition among the various brands as they fight for their share of the market. Springlands SuperValue recently rebranded itself Fresh Choice (also a brand owned by Progressive Enterprises), and changes are also believed to be afoot for the Redwoodtown SuperValue, bought in May by local businessman Gary Mortimer from the McHugh family. The other major grocery retail competitor is New World, which operates one outlet in Blenheim.

The McHughs were earlier given an option by Progressive Enterprises to rebrand as Fresh Choice , but opted instead to set up the Internet supermarket.

Since Countdown opened late last month the competitors have all felt the squeeze but most, in the words of Fresh Choice manager John Derry, expected a few weeks of unsettled business before things returned to normal.

Most that is, except for Blenheim City SuperValue Plus, immediately adjacent to Countdown. The opening of Countdown and subsequent loss of its business coupled with high overheads of running the Internet supermarket spelled its death knell.

Ironically the McHugh family tried unsuccessfully to buy the Centennial Hall site; its offer of $820,000 coming only days after the Marlborough District Council had already contracted to sell to Progressive Enterprises for $800,000.

Marlborough's mayor Gerald Hope said he was saddened by the closure, but believed it was coincidental that Countdown had opened its doors just across the road only a short time earlier.

His view is not shared by many, including former mayor and chairman of the Marlborough Civic Theatre Trust Leo McKendry. According to Mr McKendry the trust, which owns the Blenheim City SuperValue Plus building, has been concerned for up to three years about the future of the supermarket because of a council district plan zoning change which opened up the area for retail development.

Mr McKendry said at the time of the change there had been no consultation with the trust or any real thought given by council to long-term implications of the zoning change.

"I have to say that the decision the council made at that time signalled that when it did eventually sell Centennial Hall, it would be clearly with a view that the purchaser would operate a retail business. From the perspective of the hall being the size it was, it was very likely there would be few purchasers other than a supermarket."

The trust, which relies on rent from the supermarket, had been so concerned, he said, that some time ago it had started an emergency fund to cover its costs in such as event as this.

Exactly what will happen now remains to be seen. Divisional Manager of SuperValue/Fresh Choice, John Budge said yesterday that the preferred option was that the McHugh's company be voluntarily wound up, but that did not preclude the bank from bringing in a receiver. Either way, 75 staff are out of jobs, the McHughs are out of business, and Marlborough's economy is much poorer as a result.