Take-over benefits described

Press, 21 November 1979, Page 3

Take-over benefits described

PA Wellington i Opposition from the Textile and Garment Manufacturers' Federation to theproposed take-over of! McKenzies variety stores could only have been made in a spirit of “enlightened self-interest,” the Commerce Commission was told yesterday. Mr R. F. Parsons, marketing director of Woolworths, appealing in support of L. D. Nathan and Company’s proposed take-over, was commenting on a resolution passed by 120 members of the federation at its annual ; conference.

“It is just as important to [ I the consumer that the retail-1 ier has a chance to negotiate! !between efficient and com-' ipeting manufacturers to get; [the most competitive ! [prices,” Mr Parsons said. ■ I [ “All efficient manufac-1 tur e r s producing for' i McKenzies will, in my opin-' litfn, achieve benefits from! the take-over,” he said. i [ The benefits would come! [from bigger orders, better! : production planning, better use of plant and equipment, land lower distribution costs. [ Woolworths dealt with 'B3O supplier-manufacturers [ for its variety stores, Mr Parsons said. Woolworths had an “open door” policy to any manufacturer, and if they were (able to supply on com-1 'petitive terms with regard to! quality, variety, and delivery ■ :would continue to do so, he I !said. | “But some find that our! [directness and drive for| (lower prices is against their [liking and/or the cosy mar-[ ket conditions to which they' [aspire.” [ Mr Parsons said that thej I proposed take-over would! not reduce competition. The merger would not let (prices rise or competitiveness drop, because, 'other department stores,' specialty stores, and super-1 markets would get Woolworths and McKenzies cus-[ tomers, he said. The traditional market of[ the variety store had been undercut by supermarkets on some lines, he said, and specialist firms were com-1 peting strongly with variety stores.

“Department store chains and specialist stores actively and aggressively compete with Woolworths and McKenzies for the consumer dollar,” Mr Parsons said' “In many cases the range of selection is far greater than Woolworths, and with growing consumer awareness specialty stores are attracting an increasing share of[ the retail market for general! [merchandise.” The Examiner of Com-! mercial Practices, who had opposed the take-over, had not recognised the great [ ,degree of competition from! [other retailers in his report,: Mr Parsons said. Prices were fixed nationally by the Woolworths head office in Auckland, where the most aggressive competition existed in New Zealand, he' said, so the rest of New (Zealand benefited from this strong competitiveness, and [even when the value of cer-i tain lines sold by both: McKenzies and Woolworths was combined the market share did not exceed 15 per cent.

Competition would be increased and the customer provided with better facilities and prices if the proposal was accepted, Mr Parsons said.