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Published 22 August 2013 11:34, Updated 04 February 2014 00:15
Woolworths chief Grant O’Brien trumpeted the deal as a further move by the grocery giant into the brave new world of online retail. Photo: Rob Homer
Grocery giant Woolworths – which now boldly describes itself as Australia and New Zealand’s largest “multi-option retailer” – has purchased clothing and homewares retailer EziBuy in a $NZ350 million ($306 million) deal.
EziBuy, which was founded in 1978 by Peter and Gerard Gillespie, started life as a single store in the New Zealand city of Palmerston North. Today, it sells via an online platform, call centres and catalogues in a model that Woolworths describes as “direct retail”.
Almost 70 per cent of the group’s sales are in Australia. It sells under its own brands including Capture, Urban, Emerge, Grace Hill and Sara, and also has distribution deals with international brands Otto and Next.
The Gillespie brothers are selling their stake in the business, as is private equity firm Catalyst Investment Managers, which bought into the business in February 2007.
Woolworths chief Grant O’Brien trumpeted the deal as a further move by the grocery giant into the brave new world of online retail, and hinted at cross-selling opportunities across the larger Woolworths customer base.
“This acquisition will provide us with a unique competitive advantage as we continue to develop our multi-option capabilities. We believe the combination of our retail network, EziBuy’s direct-selling expertise and our respective loyal customer bases is a winning formula for us.
“Direct-to-customer retailing is a critical part of the multi-option market and it is clear that these channels will continue to provide Woolworths with opportunities for growth and innovation.
O’Brien highlighted the 2011 acquisition of direct and online wine retailer Cellarmasters as an example of where this strategy has worked before.
The EziBuy team will be remain with the business and the deal is subject to approval from New Zealand’s Overseas Investment Office.
The EziBuy deal will no doubt buoy the owners of the likes of Catch Group and Deals Direct. While neither business has the catalogue and contact centre offerings of EziBuy, their online presence is arguably stronger, and this deal underlines how valuable strong online retailers could become.