One of Australia’s most recognizable retail brands has announced that it is to shut down its operations bringing to a close a long period of time spent on shopping strips and in suburban shopping centers as pressure continues to mount on retail.
It had stated that it would effectively close the rest of its stores due to the inability to form a viable prospect within the changing scenario where costs have increased and consumer spend has reduced.
The closure of the company will see the culmination of several decades of operation and the brand which has remained an integral part of Australian life for several decades.
In a statement the retailer acknowledged that clearly the news will be disappointing to our customers and our staff. However, the reality is that it is no longer avoidable.
Rises in rents, energy costs and wages together with a moderation of discretionary spend have presented significant challenges to our business.
It is the latest high profile departure in a series of exits that have shaken Australia’s retail industry particularly in the mid market and specialist chains that had based their operations on bricks and mortar stores.
Whilst larger food supermarkets and discount department stores have been able to fall back on size and price advantages smaller retailers have found it difficult to translate costs without alienating customers.
According to industry analysts, this move also re emphasizes how challenging the environment remains for non essential retailers at a time when inflation has begun to ease.
Shopping center landlords are being increasingly criticized retailers making their dissatisfaction with leases and escalating rent transparent.
There have been a few closers due to the failure of negotiations on rent concessions and/or leasing agreements.
This is because the leasing agreement paradigm does not fit the current economics of retail.
Workers are left with renewed worries about job security in a sector that happens to be among Australia’s biggest private sector employers.
The company plans to discuss the matter with its employees though it could not give an indication of the timeframe for the closure of the retail outlets and the number of employees who will lose their jobs.
However, according to trade unions retail workers are often one of the groups that find themselves most vulnerable in this process with many retail workers being casual or part time employees.
The unions called for better communications and access to redundancy payments.
Both state and federal governments have repeatedly pointed out the need for the support of small and medium sized businesses during the transition to the digital economy although they have not interfered in specific cases of business failure.
This according to the government is the nature of a competitive market in the process of adjusting to consumer behavior.
With the shutting of yet another iconic chain the industry has a clear message to survive it is necessary to scale to be agile and to devise a business model which is resistant to economic and consumer trends.
Otherwise it doesn’t matter how historic the business may be, failure is certain to come.
