Heathcote’s: Not all hot air and bloody idiots

By Merv Robertson December 11, 2012 Retail Icon

This retailer has succeeded since the 1940s by taking risks and being top of mind with the consumer. This issue’s iconic retailer is Heathcote Appliances. Merv Robertson reports.

To view a PDF of the complete feature as it appeared in Wares magazine, click the download button at the bottom of this page.

The land on which Morrinsville now stands was originally purchased from Wiremu Tamihana prior to the New Zealand land wars of the 1860s. It was a very swampy area and the Morrin brothers from Scotland, hired navvies from the nearby goldfields to lay an extensive network of drains and eventually they managed to dry the place out.

Two years before the railway arrived in October 1884, Thomas Morrin laid out a settlement and it became known as Morrinsville, a town which eventually saw the birth of this issue’s iconic retailer – 100% Heathcote Appliances, or Heathcote & Wills as it was known originally.

Heathcote & Wills was a family affair from the start. Clarrie Wills, a farmer, started the ball rolling when he married Patricia Heathcote in 1939. Soon, Clarrie would serve his country and Patricia’s brother, Dick Heathcote, an electrician by trade, was set to do the same. But Dick wore glasses and was called out at the final parade, deemed to be too short sighted to fight.

Clarrie Wills was invalided out of action and, on returning home, he and brother in law Dick Heathcote got to talking about going into business. One Bert Robson had a radio shop on Thames Street in Morrinsville and, almost as a precursor of things to come, he backed up his retail side with a very good repair service. Discussions took place, a price was agreed to and Heathcote & Wills opened for business in 1946.

 

Electrical work booms post-war

The pair quickly set about expansion: Clarrie Wills looked after the shop while trained sparky Dick Heathcote set about cranking up servicing to take advantage of the burgeoning demand for electrical wiring, wartime supplies of which were severely limited.

Today, Grant Heathcote recalls his father built the workforce up to about 30 electricians, who were flat out wiring up the many new schools which sprang up all over the Waikato. “Business boomed in those post-war years.”

Grant’s brother, Martin Heathcote, adds: “They landed a Housing Corporation contract as well and even today our guys will go into old state houses which still have the original Heathcote & Wills stickers on the switchboards.”

Although all this contracting was going on, retail wasn’t neglected and it seemed logical to Clarrie and Dick to add musical instruments to the mix. Soon they were selling saxophones, piano accordions, recorders (in big demand throughout the schools), ukuleles, guitars, mouth organs and bongo drums. They even opened a specialist piano shop around the corner in Moorehouse Street and a music shop in Te Aroha, but both were closed within a year or two in order to focus on Thames Street.

Post-war, widespread stock shortages continued for some time. But refrigerators and washing machines were declared to be essential commodities and import restrictions were lifted. Although prices were very steep, demand was high, so whiteware, predominantly Whirlpool and Frigidaire, was added to the Morrinsville store’s line-up.

Heathcote & Wills did extremely well but, around 1949 when the Government moved to protect local manufacturing, easy sales came to a grinding halt and the company had to make do with brands such as Norge, HMV, Champion and Beatty. Apart from Beatty washers, quality was dubious.

But Fisher & Paykel by this time was going from strength to strength, producing around 600 washing machines and 500 refrigerators a month from its new Carlaw Park Lane factory in Auckland. F&P had developed a fine reputation and, with F&P franchises at Farmers and Wright Stephenson in close proximity, Heathcote & Wills’ whiteware sales were tough.

Having its own service department helped immensely and then, with the introduction of radiograms, reel-to-reel tape recorders, record players and of course, 78 and 331/3 RPM records, retail was strong through the next decade, even if service and contracting were the backbone of the business.

 

Television brings tremendous demand

1960 was a momentous year for not only Heathcote & Wills, but appliance retailers all over New Zealand, with black & white television beaming out from the NZBC studios in Auckland. Excitement was unbounded and demand bordered on the hysterical, despite the cost.

Brands stocked by Heathcotes were Philips, Pye, La Gloria, Bell & Admiral. A basic Bell 23” Consolette retailed at £185 ($7,800 today, using the Reserve Bank Inflation Calculator) and, with Waikato’s only available transmission coming from Auckland for the first year or so, the end cost was much higher as a huge aerial was needed in order to drag in any sort of signal – big five-element antennas were mounted on pipes up to 10 metres high and lashed to chimneys…

And then there was the TV licence which you had to buy before you were allowed a receiver; these cost £4, or $169 today. In 1960, an income of £20 per week (about $44,000 annually today) was considered to be really good but in fact, the average hourly wage, including overtime and/or bonuses was just 50 pence ($1.70).

Around 1962, Clarrie Wills, who was quite a bit older than Dick, decided to retire and sold his shareholding to Brian Townson, the company accountant. During the next eight years the business did OK but there was no significant growth and Townson decided to opt out, lining up a retired farmer in his 60s to buy him out. But Dick Heathcote was having none of that and made an SOS call to elder son, Grant, who takes up the story.

“I was living in Auckland and was carving out a career for myself with Union Carbide. In fact, only a month before dad’s phone call came out of the blue, they had sent me to Sydney and then offered me a job over there. Family loyalty I guess but, against my better judgement, my wife Trish and I decided to move back to Morrinsville and give it a go for 12 months.”

This was in 1970 and the business was still heavily reliant on service and contracting, even though the number of electricians was down to half a dozen or so. “We just had to grow retail,” says Grant. “Bond & Bond was across the road selling Frigidaire, Farmers was only a few doors down the street with F&P and Wrightson Appliances was in the next block, also with F&P. We were up against it, although by this time we had Prestcold, which was definitely superior to the previous brands dad had to cope with!

“I knew that if we couldn’t expand the business considerably, there would be no point staying around. So, without letting on to anyone, I started to plan. Farmers and Wrightson were both Kelvinator dealers but there was no Leonard dealer in town. Leonard was the alternative F&P big brand but I was sure they wouldn’t let us have it as long as we stayed in this shitty little shop. Coupled with that, stock was always short and we were stymied because of the allocation system in place at the time.”

 

Finding the wherewithal to expand

Colin Reynolds was a local accountant and something of an entrepreneur who Grant had met up with and poured out his frustrations to. Reynolds had heard that Hamilton Hardware, a large retail and builders supply place on the corner of Thames and Studholme Streets was for sale. It was owned by Odlins Timber & Hardware out of Wellington and, with the emergence of Placemakers, Odlins wanted out.

Off his own bat, young Grant Heathcote, aged just 25, called Odlins’ General Manager, a Mr Hill, saying Heathcote & Wills did not want to buy the business but was interested in taking over the building. A cheeky offer however went down like a lead balloon!

“At that stage,” continues Grant, “I wasn’t feeling terribly happy. But, six months later Colin and I were having a beer and we decided it was time to approach Odlins again. So I called Mr Hill and he said he would be in Morrinsville the next week and we could meet.

“Now, I hadn’t even discussed this with my dad, let alone any bankers, so I had to come clean. Reluctantly, he agreed to the meeting. We pleaded poverty, Hill admitted they really wanted rid of it and we shook hands at $52,500 (just under $700k).”

After the meeting, Heathcote senior let rip: “’Where the bloody hell do you think we will get that sort of money from?’ he said. He was right. I hadn’t even spoken with our bank but now I had to front. We had banked with ANZ forever but they just rubbished me so I went to the other big three who were all receptive because the price was only half the GV – not much risk.

“Within a week we had closed our account with ANZ and put all our eggs in the BNZ basket, with a small second mortgage from AMP and we have been with BNZ ever since.” That was 1971 and, with the new premises secured, the next step was to go after a full F&P franchise.

Grant continues: “Mike Barker was the F&P rep who had been calling on us and he was extremely supportive. His boss was Glynn Jenkins and Glynn wasn’t so sure. This was a big shop, we had to stock it and no way did I want to do it without Fisher & Paykel’s support.

“We had a prime, high profile site, almost triangular in shape so it was clearly visible however you came up or down Thames Street. We were the only appliance retailer in town with a service department and whatever sign writing we did on the place would stand out.

“I asked Jenkins if I should just put Prestcold on the frontage or would he prefer to see Fisher & Paykel branding? Despite objections from the other dealers, we opened that shop as a full F&P dealer, the only Leonard outlet in Morrinsville. With vertical branding enabling us to sell Leonard refrigeration and laundry and a new shop we had a big immediate surge in turnover, at margins which are just a memory now.” Five years later Heathcote & Wills went Kelvinator.

 

Memories of margins in the 70s

Colour television launched in New Zealand in 1973 and appliance retailers throughout the country experienced another boom. For most brands, demand far outstripped supply for a few years retailers were all frustrated to have waiting lists which they could not fulfil, especially for the Philips K9 which, in the consumer’s mind, was the pre-eminent CTV.

Grant Heathcote wistfully remembers the gross margins during those heady times: “We had Philips, Pye and Ultimate as well as Murphy from Fisher & Paykel and even then we couldn’t get enough stock. With waiting lists of several months we had to buy in Sanyo to get some extra numbers.”

Then, in 1976, the Muldoon Government moved to slow down demand as it believed the best interests of the economy were not served by having so much spending on one sector. Suddenly, says Grant Heathcote, “Our customers suddenly had to front with a 60% deposit for hire purchase on colour TV. This overnight decision shocked everyone and demand fell away dramatically. Suddenly suppliers had heaps of surplus stock!”

Two years later Muldoon dropped another bombshell when from the 60% rule, all restrictions came off and little or no deposit and extended credit terms became the norm. Very quickly, suppliers again could not keep up with demand and Heathcote & Wills was back to allocations again…

Martin Heathcote had been doing an apprenticeship with McAlpines in Auckland and, after five years learning his trade in domestic and commercial refrigeration, he returned to Morrinsville and joined the family business in 1974.

Given the expectations of a public buying from a company that “serviced what it sold”, Martin set about building the whiteware servicing expertise to a very high standard. The electricians were still on board (farm maintenance remained an important profit centre!) and, with qualified refrigeration engineers in place, the company forged a strong relationship with the Tatua Dairy Company, maintaining its farm vats.

Martin would spend the next 20 years driving the service department before crossing into retail in the mid 1990s.

 

In the hands of “bloody idiots”

Dick Heathcote was 72 years of age when he retired from the day to day business in 1986. Grant and Martin were excited with the progress the business had made and were very ambitious. At one stage they shared their forward thinking plans with Dick, who promptly told them they were “bloody idiots”.

In 1987, LD Nathan sold the Bond & Bond chain to Eric Faesenkloet, who promptly disposed of all the rural stores, among others. Some, including Matamata and Morrinsville, were purchased by the Gisborne-based Christies who soon went into receivership.

The Heathcotes moved quickly and purchased both shops from the receivers, rebranding Matamata as Heathcote & Wills and sub-letting the Morrinsville lease to a women’s fashion house. The Heathcote lads were off on their dream, having taken out two competitors in the process.

In the late 1980s Fletchers disposed of Wrightson Appliances. Many shops were purchased by managers and, coupled with the defunct Arthur H Nathan group, they resurfaced as Selectrix. But this brand didn’t last and finished up in 1991 with Heathcotes purchasing the Waikato outlets apart from Cambridge and Morrinsville, and Te Awamutu which had been bought by the manager, Graham Crowe.

The Heathcotes shifted their Matamata operation into the much larger premises vacated by Selectrix and moved into the big time by re-badging the three Hamilton shops. These were in King Street, Frankton, next to Forlongs, and Centre Place, a mid-city mall.

Another competitor taken out of the running but, as the 1990s approached, the time for dreams was over. Heathcote & Wills was hitting the Waikato in force and reality was the name of the game.

Patriarch Dick was not in favour of the Hamilton move and at this stage it was decided that a new company would be formed. Heathcote senior was by far the majority shareholder of Heathcote & Wills and, to protect his 45-year investment, this company name was changed to Heathcote Appliances Ltd in May 1991, operating in Morrinsville and Matamata only.

Simultaneously, Grant and Martin founded Heathcote Appliances (Hamilton) Ltd as joint shareholders and this company took sole responsibility for the three Hamilton stores. This was a very big undertaking and, as Martin so delicately puts it, “We borrowed a truckload of money and put our balls on the line.”

Huntly followed a few years later but was not profitable and shut down in 1996. Frankton was also only a two-year flirtation and, in co-operation with Terry Forlong, who wanted the building as part of the Forlongs expansion, the Heathcotes were able to pull out.

 

100% beckons, getting high on hot air

F&P’s Richard Papworth was well aware, not only of the upcoming demise of Selectrix, but of the ambitions driving Grant and Martin Heathcote, who had discussed the possibility of a Hamilton franchise with him. The timing was perfect. “In Grant & Martin,” recalls Pappy, “I saw two men with excellent appliance backgrounds, they were service-orientated and both had fire in the belly. Certainly I had no doubt they would succeed and, as we can see today, they did.”

In West Auckland at the time there was a long established family appliance business called Jorgensen Appliances, by then run by David Jorgensen, son of the founder. “Jorgy” was recognised as an astute retailer and to get cost efficiencies and access to better supplier pricing, he cobbled together a group of 12 independent F&P dealers in the upper North Island and the Home Team was born. This group became known to competitors as the “Dirty Dozen”.

And so it was that Heathcote Appliances, whilst keeping its own name to the fore, added the Home Team to all communications – sign writing, advertising and promotion, uniforms and stationery. Only in November 1995, after 100% Your Electric Store was incorporated nationally as part of Fapay, was the Home Team name dropped to become part of 100% YES.

A big priority for the Heathcotes, once open in Hamilton, was to establish a profile. Sure, they were strong in Morrinsville and Matamata but Hamiltonians don’t shop out there. Advertising was one thing but the boys knew they had to make a noise, announce themselves in some emphatic way.

Graham Hannah launched the Waikato Balloon Fiesta in 1991, capturing the imagination of people from far and wide and in 1992, the year the Heathcotes opened a branch in Te Awamutu, he offered Heathcote Appliances the naming rights.

This may well have been the most ambitious appliance dealer promotion ever at that time. With supplier assistance, especially F&P, this became a reality and the Heathcote Appliances Balloon Fiesta hit the Waikato with a bang.

The investment paid off big time with a photo of the Heathcote balloon appearing on the front page of the New Zealand Herald. Gary Paykel called Grant, saying “Congratulations, we have had our money’s worth on the first day.” Heathcote’s sponsored the event for five years and the Balloon Fiesta played a major part in the positioning of the business through the 1990s.

1997: A watershed for the Hamilton operations. “Our plan had always been to consolidate our Hamilton businesses into just one big shop” and this came to fruition in September when the new purpose-built large format store “took off like a rocket”

End of the 1990s – new blood, new scale

John Heathcote, son of Grant, always had an interest in appliances and, as a boy, used to go down to the Morrinsville shop and make up extension leads. Attending high school and then Waikato University in Hamilton, he would work at Centre Place as a salesman in weekends and in school holidays.

With a Bachelor of Management Studies degree in his pocket, John had a couple of OEs before joining the family firm full time in 1997 after the Hamilton opening. Cutting his teeth as a salesman for a year he became an Assistant Buyer in 1998 before heading up the buying team from 2001. John took on the role of Marketing Manager in 2006.

1997 was something of a watershed for the Heathcote Hamilton operations. A long lease on Centre Place ran until 1997, when it was closed. Grant Heathcote: “Our plan had always been to consolidate our Hamilton businesses into just one big shop and this came to fruition in September 1997 when we opened a purpose-built ‘large format’ store on the corner of Tristram & Thackeray Streets.”

This new store “took off like a rocket” and within a few years, it was reckoned to have the highest single store turnover in the country. “One of the innovations introduced into the new shop was a comprehensive, self-contained cookware section, moving away from free standing stoves and we were probably one of the first appliance shops in the country to do so. Again, Richard Papworth’s vision was a big help.”

With a massive range of kitchen appliances from F&P, Electrolux, Westinghouse, Simpson, Smeg, Bosch, DéLonghi, Miele and Classique the store was quoting and supplying complete kitchen packages. “And of course once that was done we would invariably get the laundry gear as well,” says Grant.

 

The 2000s – getting bigger and better

With big box retail sweeping the country and a new shopping centre rapidly taking shape in Te Rapa, just a few kilometres north of Hamilton City, the Heathcotes made the decision to expand further with a flagship branch in a new destination complex called The Base.

Negotiations with the developers took the best part of a year to conclude but, in 2008, Grant and Martin signed on the dotted line and locked themselves in. When the 2008 recession hit in October, there was cause for real concern but there was no turning back and the 100% Heathcote store at The Base opened its doors in December that year.

As Grant recalls only too well, the first two years were particularly tough. “We had future-proofed ourselves by opting for such a big store and of course this came with associated high overheads. However we believed that the EDA would eventually be scrapped and we needed to prepare for a much larger range and this would require space. Also, we had to keep up with the evolution of technology products. Again, more space. Thankfully we fought through those tough early stages and The Base is performing very well for us.”

From the outset way back in 1946, service has been a key element in the success of the Heathcote organisation and that’s no different today, under the stewardship of Martin Heathcote.

“We maintained a full service back-up in Morrinsville until 2010 at which point everything was centralised back into Tristram Street where 22 staff look after the whole Waikato region. It’s a big facility immediately behind the retail shop and covers all aspects of whiteware and air conditioning as well as providing a whiteware spare parts department, the only one in Hamilton.”

Of the founders, Dick Heathcote was honoured with an OBE on 31 December 1980 for Services to the Community & Local Body Services. He passed away on 16 October 2006. Clarrie Wills died on 27 January 1985.

Some 66 years have passed since Dick Heathcote and Clarrie Wills first opened that tiny shop in Morrinsville. Now, Heathcote’s is a giant on the Waikato retail landscape with two Supa Stores in Hamilton as well as branches in Morrinsville, Matamata and Te Awamutu.

Add to this an aggressive online offering and you can see that this iconic retailer sits very comfortably as a major player in our industry. Grant & Martin are joint Managing Directors while John, since 2010 is Sales & Marketing Manager with all Branch Managers, Buyers and marketing staff reporting to him.

share this