Australian Retail in Trouble 2019


Another Aussie retailer has collapsed. Popular women’s fashion brand, Bardot, has
become one of the latest victims of the cluttered retail sector in Australia and called in the
administrators. CEO Basil Artemides commented, “Despite double-digit growth in online sales,
and our highly successful expansion into the US and Europe, Bardot’s retail stores in
Australia are competing in a highly cluttered, and increasingly discount-driven market. Operating a national retail network in its
current state is no longer sustainable. However, I can confirm that Bardot store trading
will continue on a business-as-usual basis while we undertake an immediate assessment
of the business. Both gift cards and credit notes will also
be honoured.” Bardot was launched in 1996, and has opened
72 stores across Australia employing 800 staff. I guess it would be wise for the staff to
start looking for a new job. CEOs language often include a lot of feigned
optimism. Earlier in the year, menswear retailer Ed
Harry also went into voluntary administration. That came soon after the closure of veteran
menswear brand Roger David in late 2018. Actually, it’s one year to the day since
Roger David went bust on the 2nd December 2018. In March this year, cult fashion startup Shoes
of Prey went into liquidation. It offered shoppers ways to customise and
design their own footwear, and attracted a number of high-profile investors. It sounded like an interesting idea, but was
mired with controversy and months of uncertainty. Co-founder Jodie Fox suggested that their
downfall was due to them listening to their customer base. It sounds counter-intuitive, but apparently,
customers don’t know what they want. You have to be very careful when listening
to their suggestions. One high-profile example that comes to mind
is New Coke which was launched back in 1985. Coca-Cola famously tried to reformulate its
iconic drink based on market research where customers indicated they preferred something
sweeter. However, the backlash was swift, and the new
drink was pulled from shelves just 79 days after launching. Time Magazine’s resident food critic at
the time, Mimi Sheraton, described New Coke as, “… sweeter than the original formula and
also has a body that could best be described as lighter. It tastes a little like classic Coca-Cola
that has been diluted by melting ice.” Ooh, harsh. Big companies have to remember that customers
aren’t business people and so their opinions should be taken with a grain of salt. In 1982, someone on the Apple Mac team suggested
to “do some market research to see what customers want”. Steve Jobs famously replied, “No, because
customers don’t know what they want until we’ve shown them.” Jobs has also been quoted as saying, “Some people say, ‘Give customers what
they want.’ But that’s not my approach. Our job is to figure out what they’re going
to want before they do. I think Henry Ford once said, ‘If I’d
asked customers what they wanted, they would have told me, “A faster horse!”‘ People don’t know what they want until you
show it to them. That’s why I never rely on market research.” And consequently, we have a bankrupt shoe
retailer in Australia that listened to their customers who said they wanted to customise
and design their own shoes. In practice, that’s not want they wanted
at all. Also in January 2019, Napoleon Perdis Cosmetics
also went into administration. Half of its 56 stores were closed and the
chain put up for sale. Mr Perdis blamed falling foot traffic and
rising costs as the reasons for calling in the administrators. It’s not just fashion retailers that have
been suffering. Food outlets have also been failing. In October this year, celebrity chef Shannon
Bennett’s Melbourne burger chain Benny Burger went into liquidation owing almost $170,000
to suppliers and the Australian Taxation Office. Also in October, Red Rooster closed seven
of its stores in Queensland after a franchisee went into voluntary administration. Hundreds of thousands of dollars of wages
were owed to staff with more than a hundred thousand dollars outstanding in superannuation
and annual leave. It’s understood that the parent company,
Craveable Brands, has covered these costs. Pizza chain, Criniti’s, also went under
just last month. Employees were told that several of the 13
sites across the country will be closed for good but administrators are yet to announce
which will survive the reshuffle. Co-founder, Rima Criniti, who left the business
in 2009, commented on the collapse, “It takes more than fantastic food and hospitality
to make a restaurant group a success. It also requires smart management. There are very high costs involved in the
hospitality industry, and if this is met with poor business decisions, then the business,
its staff, and customers, will all suffer – as we now see with Criniti’s.” Also in November, online furniture shop Zanui
collapsed after suddenly entering voluntary administration. In recent years, many commentators have blamed
the shift to online sales for the retail slump, but Zanui was an online retailer, and it still
went under. So perhaps online retail is being used as
a bit of a scapegoat. Popular fitness store Muscle Coach also collapsed
last month. It’s said to be almost $1,000,000 in debt. Iconic Australian discount retailer Dimmey’s
is also closing its doors. Despite having traded for more than 166 years,
it too has succumbed in this struggling retail environment. Dimmey’s is believed to be the oldest ongoing
retail company in Australia. Clearly, no one is immune. Obviously, it’s not just Aussie companies
going under. In September this year, US fashion retailer
Forever 21 filed for bankruptcy. This is just the latest in a long chain of
collapses and store closures of US retailers including Toys ‘R’ Us, Sears, and Barneys,
just to name a few. The situation has been described as a “Retail
Apocalypse” with US retail giants such as JCPenney and Macy’s all suffering. Aussie department store giants aren’t immune. Both Myer and David Jones are in decline having
been described as being in a “death spiral”. Credit Suisse analyst Grant Saligari says
that department stores around the world have been on a downturn for quite a long time. He said, “Shopping habits have changed. We’ve seen growth in different category
pillars, and there’s been an evolution in online shopping. There’s no light at the end of the tunnel. It’s a structural decline.” Personally, I think there’s one major reason
for this retail slump — debt! Australians are swimming in it! Here’s a chart from the RBA. Debt has been dramatically rising over the
last three decades. It’s just been going up and up and up. What effect does this have on retail spending? In this chart, we can see that consumption
is going down. Disposable income is going down, and household
savings are going down. Although Coles Supermarkets have dropped their
“Down, Down” advertising campaign, they were right on the money in that along with
their prices going down down, so too were Australians’ ability to purchase anything. Income down. Savings down. Consumption down. No wonder Australian retail is in trouble.

12 comments on “Australian Retail in Trouble 2019

  1. Shoes of Prey…a weirdly wonderful name for the business model that couldn't manage its customers. LOL You made this up! Good vid

  2. It's no secret that we are heading for a recession even Peter Costello said it indirectly himself. This is the beginning stages of it its not much longer now when jobs will be scarce and debt levels high.

  3. BUT the economy is great
    houses people cant afford
    2% wage increases
    shops closing and those open no foot traffic and always discounting
    im saving and NOT buying anything not even fast food

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