Big W reveals the first three stores to close in January

The discount department store favourite has announced the first batch of stores to close next year and all three are in the same city.

Discount chain Big W has revealed which stores will close their doors as it pushes ahead with a cost saving strategy, as a retail expert blames a failure to keep pace with rival Kmart for its poor fortunes.

The subsidiary of Woolworths confirmed all three closures are in Sydney — Chullora, Auburn and Fairfield - will shut up shop in January after reaching an agreement with landlords.

“These are not decisions we take lightly and we regret the impact the closures will have on affected team members,” Big W managing director David Walker confirmed to news.com.au in a statement.

He said supporting employees who have lost their jobs remains a priority for the company which is committed to “doing the right thing”.

“Over the next six months, we will support our team and explore redeployment opportunities with team members who choose to continue their career at Big W or with other Woolworths Group brands in the months ahead,” Mr Walker said.

The company says it will continue to work with landlords in the coming months before deciding which of the next 27 stores will be on the chopping block.

In April, Woolworths chief executive Brad Banducci said there was “no alternative” but to close 30 Big W stores across Australia in an attempt to keep to keep the business afloat.

The process will put a $370 million dent in the company’s profit, the conglomerate announced to the Australian share market at the time.

Queensland University of Technology retail expert Gary Mortimer said the once loved discount department store made a key mistake in not responding swiftly enough to the reinvigoration of its rival Kmart.

Under the tutelage of Guy Russo, Kmart emerged as a favourite for bargain hunters wanting stylish household goods and Big W was left to wither, Dr Mortimer said.

Dr Mortimer said Big W struggled to compete with Kmart. Picture: Matt Loxton

He also said the company expanded too aggressively.

“Auburn and Chullora are very close to one another so there would have been a little bit of cannibalisation of some stores,” Dr Mortimer said.

Woolworths is yet to announce which of the remaining fleet of stores will be closed and, despite all three initial closures being based in Sydney, the retail expert predicts the next bunch will be a combination of regional and metropolitan.

“The regional stores are probably more exposed (to closures) and that’s simply because of the size of the population in those towns,” he said.

Dr Mortimer singled out Warwick in Queensland which has a population of about 12,000.

“When you’ve got a small population like that, the market’s no longer viable,” he said.

“But also the suburban stores where they’re up against a Kmart, or a Kmart and a Target, then they may choose to close.”

Earlier this year, Big W had already confirmed a warehouse in Monarto, southeast of Adelaide, will close in the 2021 financial year, with one in Warwick to follow two years later.

The blow to the company’s profits includes $270 million in lease and exit costs for closing about 16 per cent of its department store network, plus $100 million of non-cash asset impairments.

Mr Banducci said at the time a number of staff members would be recycled back into the business where possible.

“Our aspiration is to provide as many opportunities as we can for our team and that is what we intend working very hard on,” he said.

Big W has struggled to turn a profit for a number of years and operates in a highly competitive market against the likes of fellow discount department stores Target and Kmart.

But Mr Banducci said closing the business altogether simply wasn’t an option.

“We all need to lean in and support the business where we can,” he said.

“There are a lot of people who work there and it’s very important to them and to the community in which we operate.

“There’s no alternative, in truth, for us and we’re all behind it and highly invested in making it successful.”

The announcement follows reports from The Australian earlier in the week that shopping centre landlords had already begun pitching for new tenants to fill the empty Big W stores on Woolworth’s closure list.

Shop, Distributive and Allied Employees Association (SDA) — the union that supports the retail sector — told news.com.au it will be working with Woolworths to identify possible redeployment opportunities for those who lose their jobs.

“The 84 per cent of Big W stores which will remain open and other Woolworths brand stores all provide opportunities for the SDA and Big W to secure ongoing employment wherever possible,” the union spokesman said.

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