The Warehouse is planning to boost wages for employees who stick with the company.
The retailer says its scheme takes into account analysis by the recent Living Wage campaign on how much money is needed to support a household, which called for a minimum wage of $18 an hour.
The Warehouse chief executive Mark Powell says the aim is to boost skills-based pay, better training, and improved staff retention and engagement with customers.
The scheme will be open to staff with about three years experience and is intended to pay qualifying staff $18.50 to $20 an hour.
Mr Powell says this will cost the group $2 million - $2.5 million a year but will produce savings from lower staff turnover and higher productivity.
The Warehouse employs about 10,000 people of which 8,000 work in its stores.
It has staff turnover of between 20% and 40% a year, depending on the role.
Mr Powell estimates a 1% improvement in staff turnover could save the company up to $250,000 a year.
The plan has been welcomed by the First trade union, which represents shop workers.
Retail secretary Maxine Gay says she is delighted the company is raising the bar on retail wages.
"If you start to pay a living wage, in a pre-eminent retailer like The Warehouse, it will put some real pressure on other major chain retailers to start to lift their game."
Ms Gay says this could make retail respected for the skilled work it is.
