Retailers collapse after make or break Christmas trade

The collapse of established brands like Jeanswest and Harris Scarfe may be just the beginning with one retail expert tipping more chaos will come to the struggling industry.

THE high-profile collapse of Jeanswest and Harris Scarfe will be the tip of the iceberg, with more mass sackings and store closures expected in what’s becoming known as the retail killing season.

For many stores, the tills have stopped ringing with the short-term Christmas sugar hit over as customers return their focus to work and back to school.

Retailers that didn’t get a financial shot in the arm during the busy trading period are now on their knees, calling for help or closing stores as sales crumble.

Few recall a time when Australia’s $325 billion retail sector suffered through such significant turbulence.

This month some of the most established Australian brands felt the brunt of tough economic conditions, with Jeanswest, Curious Planet, EB Games and Bardot the latest to call in administrators or close stores.

Clothing brand Jeanswest put into administration

Country Road to close DFO Brisbane Airport store

Harris Scarfe to close 21 stores across five states, including six in Queensland

Boxing Day shoppers hit Brisbane City for bargains. Pic: Annette Dew

At 1.3 million workers, retail is the nation’s second largest private-sector employer behind health.

Now the once-great pillar of the Australian economy has been eroded as online shopping, low consumer confidence and a lack of evolution chips away at its foundation.

The closure of more well-known brands and niche stores will dominate headlines for weeks to come, retail insolvency expert Andrew Spring believes.

“Seeing retail failures is not likely to change,” he said.

“Retail is a tough environment to be successful in over the long term.”

Mr Spring, a partner with insolvency and business recovery firm Jirsch Sutherland, says retailers often weathered low sales throughout the year and held on for the usual Christmas boost.

Billions of dollars were tipped to flow through shop coffers between December 21 and 24, the three busiest shopping days of the year.

He said the retailers that desperately waited for a Christmas sales jump, only to find it never came, were now calling in administrators.

“What can happen is they’ve mismanaged their forecasts and there’s an overspend or sales don’t hit the targets they set,” he said.

Jeanswest’s 146 stores and 988 staff face an uncertain future after the company was put into administration on Wednesday.

Last year was sluggish for retailers despite measures to stimulate the sector including low interest rates and the Federal Government’s $1084 tax rebate.

Diabolical figures for the September quarter revealed retail trade fell 0.2 per cent, the first negative movement since Australia’s last recession in 1991.

Desperate retailers recorded a slight reprieve in November, with Black Friday, Cyber Monday and Click Frenzy sales events growing in popularity to force open consumers’ wallets.

Retail spending in November, when the sale events were held, jumped 0.5 per cent in Queensland, but National Retail Association boss Dominique Lamb said the true Christmas spending story would only be told when December spending figures were released.

“Although Black Friday is being mostly credited with the sharp increase in turnover, it does conform to a growing trend whereby Australians are looking to do their Christmas shopping earlier than usual,” she said.

“We eagerly anticipate the December results, which will be released in early February, but in the meantime, we hope this is a good omen for 2020.”

Harris Scarfe is closing six of its eight Queensland stores. PICTURE: BRENDAN RADKE

With more competition than ever before, Mr Spring said it was vital retailers evolve.

“You only have to look at well-known examples of companies like Encyclopedia Britannica, Blockbuster and Kodak, whose products became redundant because the companies didn’t keep on top of changing trends,” he said.

“A more recent example is the Australian textbook retailer, the Co-op Bookshop (Curious Planet), which for decades used to be the place to buy your university textbooks but sadly went into administration after, among other reasons, over-the-counter textbook sales plummeted.”

Australian Retail Association spokesman Yale Stephens said the December spending figures would reveal whether November was a spending resurgence or a blip on the radar.

He said the effects of catastrophic bushfires on the east coast of Australia could cause retail spending to go up or down.

In 2009 retail spending jumped in the aftermath of Victoria’s deadly Black Saturday blazes.

“We don’t know what effect these bushfires are now going to have,” he said.

Mr Stephens said despite a downturn the retail sector remained a resilient piece of the economic and employment puzzle.

“It provides jobs to young people, it’s a big employer of women … and it’s a great employer of older people winding down in their working life,” he said of the sector. “It’s one of the pillars of the economy … and at some point, the wind will turn.”