Australia's retail apocalypse

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mr friendly guy
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Australia's retail apocalypse

Post by mr friendly guy » 2020-01-15 09:26pm

https://www.news.com.au/finance/busines ... 2310a12056
Inside Australia’s 2020 retail bloodbath as brands rocked by mass closures by mid-January
We’re only halfway through January, but dozens of popular stores have already announced they’re shutting up shop. So what’s really going on?

Inside Australia’s 2020 retail bloodbath as brands rocked by mass closures by mid-January
We’re only halfway through January, but dozens of popular stores have already announced they’re shutting up shop. So what’s really going on?

This week, it also emerged Curious Planet – the educational retailer previously known as Australian Geographic, which is owned by parent company Co-op Bookshop – would pull 63 stores across Australia after failing to find a buyer for the brand.

And just yesterday news broke Jeanswest had entered voluntary administration, leaving 988 jobs at 146 stores in doubt and with KPMG blaming “current tough market conditions and pressure from online competition”.

According to Queensland University of Technology retail expert Dr Gary Mortimer, it has been a shocking start to the new decade – and the crisis is far from over.

“It has been a nightmare, and I think we’ll see this continue to happen over the next month,” he said.

“There would have been retailers out there hoping and banking on a strong Christmas, but unfortunately, I don’t think that has happened.

“We’re seeing this emerging trend (of retail closures) and commentators are terming it a ‘retail apocalypse’.”

Dr Mortimer said while it wasn’t “the End of Days” for the retail industry as a whole, we were now well and truly in the grip of a “market correction” which he likened to Australia’s economic downturn in the 1990s, which was famously described as “the recession we had to have”.

LAZY RETAILERS

Dr Mortimer said there was an element of “lazy retailing” among some of the companies that had collapsed recently.

“Look at the two big supermarkets, Coles and Woolies. They were lazy retailers for decades and didn’t really compete with each other – there were no price wars until Aldi turned up and made them think to invest in stores, improve distribution and expand their private labels,” he said.

“Now it’s the fashion and footwear categories that are exposed to not just competition from fast fashion, but also a much more improved discount department store offer.”

Dr Mortimer said a number of fashion and footwear brands were mistakenly hoping to rely on their longevity in the market or heavy discounting to ride out the increased competition.

“There’s a sense that it’s all too hard, and instead of sourcing better products and improving staff training, they just discount which is a lazy way to try and respond to competitive threats,” he said.

“When you discount by 20 or 30 per cent, all it means is you have to sell more inventory just to get to the same sales levels as last year, but there are more logistics and costs involved with sales, which means things continue to deteriorate and eventually you go out of business.”

Dr Mortimer said he was certain other retailers would fall over in January and February, but that global fast fashion brands had the money and power behind them to survive.

“It’s the middle-tier fashion retailers in the sector that are feeling the heat – those male and female middle-market retailers selling at price points of between $29 and $49 that have no point of difference from what you’d get from H&M or Target,” he said.

WORRYING SIGNS

Dr Mortimer said there were specific signs to watch out for when it comes to predicting other future retail victims.

“Footwear retailers that are constantly doing ‘buy a second pair half price’ promotions, kitchen retailers with constant 70 per cent off sales and retail categories that are exposed to digital disruption are at risk – if I can download a game or movie or sit at home and binge-watch Netflix, I don’t need to buy a physical box set of DVDs,” he said.

Dr Mortimer said that in 1983, Grace Brothers – now Myer – released an ad promoting a radical new concept: just two sales only per year.

But today, it has become commonplace to see sales of 40 to 60 per cent off throughout the year – a sign Dr Mortimer said was “always concerning”.

“It’s becoming the norm these days, and customers are becoming conditioned to never pay full price,” he said.

He said it was especially concerning to see fashion stores heavily discounting their stock during the peak spring racing carnival period.

“If you can’t sell at full price then, then you never will,” he said.

RETAIL WOES

2020s first dismal fortnight follows a horror 2019 that brought the collapse of a slew of Aussie businesses, with some international players also folding in recent months.

Last January, menswear retailer Ed Harry went into voluntary administration, and a week later, Aussie sportswear favourite Skins also revealed it was on the brink of failure after applying for bankruptcy in a Swiss court.

At the end of the month, the Napoleon Perdis beauty empire announced the cult make-up chain’s 56 Aussie stores had closed for stocktake. Administrators were appointed, and scores of stores have since collapsed.

Footwear trailblazer Shoes of Prey also met its demise in March last year along with British fashion giant Karen Millen, which in September revealed it would soon shut all Aussie stores, leaving around 80 jobs in peril.

In October, celebrity chef Shannon Bennett’s Melbourne burger chain Benny Burger was also placed into administration, followed by seven Red Rooster outlets in Queensland just days later and then Aussie activewear sensation Stylerunner, which has since been sold to Accent Group Limited.

In November, it was revealed that popular furniture and homewares company Zanui was in trouble after it abruptly entered voluntary administration, leaving angry customers in the lurch.

Later that month, Muscle Coach, a leading fitness company, was put into voluntary administration after a director received a devastating diagnosis and the company racked up debts of almost $1 million.

Then it was the famous Criniti’s restaurant chain’s turn to enter into voluntary administration, with several of the 13 sites across the country set to close for good. It was closely followed by discount legend Dimmeys.

Australian department store Harris Scarfe was also placed into voluntary administration in mid-December.
The decline of the malls continue. Sad about Criniti's since I eat there.

Personally I go to shopping centres / malls mainly for cinema and food. Oh its nice to wonder around, but I rarely buy goods which aren't movie tickets or food. Most groceries I get from the closer shops, and I don't buy many DVDs these days. In fact, I think the stores which might do well, are certain niche markets. For example grocery stores catering to foreign cuisines. There are lots of Asian grocery stores in Australia. Another store I visit is one which specialises in South American cuisine - trying my hand at Colombian Ajiaco soup, but you need a special herb which you can't buy from local supermarkets, so I head there even though its a 25 minute drive.

I would love to buy from local stores if I get the good quicker than online and its only slightly more expensive. The thing is, I suspect either a) you can't get it right away and it needs to be ordered in (for example a book I wanted which was niche, and the local book shop had to order it in, in which case I could order it online, delivered to my house and at a cheaper price) or b) its not slightly more expensive, but way more, like twice the cost of online (this was with a shaver, the difference between its online store and its brick and mortar one).

On top of all the natural disasters, I am afraid we might be heading to a recession, the first one we had for ages.
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Re: Australia's retail apocalypse

Post by His Divine Shadow » 2020-01-16 03:19am

It is nice to wander around malls? I have absolutely the opposite experience. I hate malls. I feel god awful spending time in them, it's such a fake bleak ass world in there, everything is about consumption of this or that. Like a church of capitalism. Even the people in there look like they are faking it, like they have been told all their lives, that this is what you should want from life, but buried deep inside they know...

I live outside a city, I don't watch TV and I got adblockers so I guess for me who is not used to be being constantly bombarded by commercials as soon as I step outside the door or watch any mass media, going to a mall is what it feels like to a person that has not been numbed and calloused by our modern hyperconsumerist society.
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Re: Australia's retail apocalypse

Post by Broomstick » 2020-01-16 04:35am

I think that the upcoming generation is less fixated on things and more on experiences. Also much more comfortable about streaming and e-books so they don't accumulate as much stuff related to entertainment. They aren't buying dinner sets for 12. They aren't buying the book shelves they don't need anymore. Then you have the down-sizing in the older generation, Marie Kondo's followers, and the like.

People are simply (finally) buying less.

Which is good for the planet, but the entire retail model is based on BUY BUY BUY!!!

When people stop buying retailers stop thriving.

I'm not entirely sure it's a bad thing, but definitely there is some rough road ahead as adjustments occur. And the "next day shipping" for on-line shopping of material things isn't the greatest thing for the planet, either. An additional problem is that so many jobs these days are in retail that the loss of brick-and-mortar stores is going to result in more unemployment.
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Re: Australia's retail apocalypse

Post by LadyTevar » 2020-01-17 06:49pm

Does Australia have the same problem as the US with falling wages? If you don't have money to buy, you won't buy.
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Re: Australia's retail apocalypse

Post by Gandalf » 2020-01-17 07:29pm

LadyTevar wrote:
2020-01-17 06:49pm
Does Australia have the same problem as the US with falling wages? If you don't have money to buy, you won't buy.
Somewhat. Also, costs of living (especially housing) are just fucking brutal.
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Re: Australia's retail apocalypse

Post by Starglider » 2020-01-17 09:13pm

His Divine Shadow wrote:
2020-01-16 03:19am
It is nice to wander around malls? I have absolutely the opposite experience. I hate malls.
Modern malls are fairly awful. The one under Canary Wharf is somewhat entertaining in a 'people actually buy this stuff' kind of way but that's it. Malls in the UK used to be a lot better though. For example, the MetroCentre, built in the mid 1980s:

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Warm earth tones, in the clay tiled floors and brick sections, with copious plants, fountains and bright whimsical decorations, which both brightened the place up and absorbed background noise to a low murmur. Giant chess & chequers sets in the malls (that people actually played), intricate and varied fountains in each junction, lots of seating. Carts and restaurant areas with postmodern/sculptural or fantasy designs.

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Carefully themed areas for further variety and motivation to visit the whole complex, and a sizable indoor funfair / theme park for children on top of the usual cinema, bowling, arcade etc. The branding design was also excellent; a custom, somewhat whimsical yet carefully considered design language worked into all the fittings, from the railings to the doorknobs to the trolley shelters in the car park, tying the whole thing together as a unique place.

Of course this all got ripped out in the late 2000s as 'dated', and progressively replaced with the usual 2010s psuedo-minimalist fake-premium ultra-bland crap. The new owners decided to 'center the shopping experience' and remove all possible distractions from the racks of merchandise.

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Cold white tile & glass, no plants or fountains, almost no seating or decorations (just a couple of tacky chandeliers). No visual interest and much higher background noise levels, on the rare days where it's actually as full as it used to be. All the carefully designed ironwork ripped out and replaced with bland chrome, branding/identity now reduced to oversize Intu logos plastered on the walls. Funfair shut down and replaced with bigger cinema screens, all theming ripped out and replaced with either mismatched restaurants or empty lots. The only reason you might visit is if you want to try on clothes but avoid the traffic and parking fees of the nearby city centre.

This is an extreme example but it's a general trend; a particularly stupid one as this was just when the marketeers were popularising the whole 'millenials want experiences not goods' mantra. Yet somehow it still makes sense to remove every part of the experience except bare-bones retail, from a supposedly family attraction with high fixed costs (and thus no ability to compete on price alone).

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Re: Australia's retail apocalypse

Post by Broomstick » 2020-01-18 05:59am

>sigh< I remember when one of the attractions of a mall in winter was going somewhere where there were actual live plants growing. It was like a bit of spring or summer in the midst of snow, ice, and cold.
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Now I did a job. I got nothing but trouble since I did it, not to mention more than a few unkind words as regard to my character so let me make this abundantly clear. I do the job. And then I get paid.- Malcolm Reynolds, Captain of Serenity, which sums up my feelings regarding the lawsuit discussed here.

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Re: Australia's retail apocalypse

Post by Vendetta » 2020-01-18 06:51am

Yeah, but you've to employ humans to look after the plants, and that's an unnecessary personnel cost (cleaners are cheaper).

One of the major problems a lot of physical retail has is that nobody wants to invest money into the environment it happens in, but that environment is the competitive advantage over online retail. Stores need to be a nice place to interact with products and malls need to be a nice place to go between shops.

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Re: Australia's retail apocalypse

Post by Gandalf » 2020-01-18 07:42am

Vendetta wrote:
2020-01-18 06:51am
One of the major problems a lot of physical retail has is that nobody wants to invest money into the environment it happens in, but that environment is the competitive advantage over online retail. Stores need to be a nice place to interact with products and malls need to be a nice place to go between shops.
On the other hand, that cost of experience needs to go somewhere, and I'm not sure I'd pay more for some retail theme park when I can get something online.
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Re: Australia's retail apocalypse

Post by Vendetta » 2020-01-18 08:02am

Depends on the product.

The bigger and rarer the purchase, the more valuable it is to people to be able to poke and prod it before they commit to buying it.

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Re: Australia's retail apocalypse

Post by Bedlam » 2020-01-18 01:07pm

Vendetta wrote:
2020-01-18 08:02am
Depends on the product.

The bigger and rarer the purchase, the more valuable it is to people to be able to poke and prod it before they commit to buying it.
The issue is that they will often poke and prod it in physical space, then go off and buy it cheaper on line so that the shop is to some extent subsidising the internet.

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Re: Australia's retail apocalypse

Post by Vendetta » 2020-01-18 06:09pm

Bedlam wrote:
2020-01-18 01:07pm
Vendetta wrote:
2020-01-18 08:02am
Depends on the product.

The bigger and rarer the purchase, the more valuable it is to people to be able to poke and prod it before they commit to buying it.
The issue is that they will often poke and prod it in physical space, then go off and buy it cheaper on line so that the shop is to some extent subsidising the internet.
Yeah, that's why a retail chain needs vertical integration with its online presence now. Get people to go into your shop, see your product, and then buy it on your website. Possibly there and then on their phone.

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Re: Australia's retail apocalypse

Post by Enigma » 2020-01-18 09:33pm

Maybe it is my perpetual tiredness or my annoyance of other shoppers but I loathe going into brick and mortar stores. If I can do all of my shopping online I would.
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Re: Australia's retail apocalypse

Post by bilateralrope » 2020-01-18 09:42pm

Vendetta wrote:
2020-01-18 06:09pm
Bedlam wrote:
2020-01-18 01:07pm
Vendetta wrote:
2020-01-18 08:02am
Depends on the product.

The bigger and rarer the purchase, the more valuable it is to people to be able to poke and prod it before they commit to buying it.
The issue is that they will often poke and prod it in physical space, then go off and buy it cheaper on line so that the shop is to some extent subsidising the internet.
Yeah, that's why a retail chain needs vertical integration with its online presence now. Get people to go into your shop, see your product, and then buy it on your website. Possibly there and then on their phone.
That plan requires your online store to be cheaper than the stores that don't have to pay the cost of having physical stores.

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Re: Australia's retail apocalypse

Post by Batman » 2020-01-18 10:24pm

But not necessarily all the way. I'm perfectly willing to pay a 'bit' more for being able to get my hands on the purchase beforehand to find out if it looks the way the pictures showed, to see if it fits, to see if it has the right kind of plug, there's tons of reasons to prefer physical stores...for items where that matters and if the price differential is small enough. I'm not paying extra to be able to feel a freaking paperback
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Re: Australia's retail apocalypse

Post by mr friendly guy » 2020-01-19 12:20am

Some books IMO are worth it to have a physical copy because it would look good on my shelf as well as great to read. Otherwise I think an electronic copy if better value for money. Especially with novels which are value for money at kindle prices, but most probably not that enjoyable to justify hardback or paperback editions. Plus I think I got a lot of novels on my book shelf already.
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Re: Australia's retail apocalypse

Post by Batman » 2020-01-19 12:32am

You understand me mis. I absolutely WILL buy the physical paperback because I hate reading on the PC. I'm just not paying extra to be able to prod it in a store in person before buying.
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Re: Australia's retail apocalypse

Post by Gandalf » 2020-01-19 12:54am

I'm the opposite with media. Every new book/film takes up space, so now I get them all digitally. That's also why shopping centres have taken massive hits, as media shops just can't be what they were ten or so years ago. The products just don't exist like they did.
"Oh no, oh yeah, tell me how can it be so fair
That we dying younger hiding from the police man over there
Just for breathing in the air they wanna leave me in the chair
Electric shocking body rocking beat streeting me to death"

- A.B. Original, Report to the Mist

"I think it’s the duty of the comedian to find out where the line is drawn and cross it deliberately."
- George Carlin

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Re: Australia's retail apocalypse

Post by bilateralrope » 2020-01-19 01:28pm

Batman wrote:
2020-01-18 10:24pm
But not necessarily all the way. I'm perfectly willing to pay a 'bit' more for being able to get my hands on the purchase beforehand to find out if it looks the way the pictures showed, to see if it fits, to see if it has the right kind of plug, there's tons of reasons to prefer physical stores...for items where that matters and if the price differential is small enough. I'm not paying extra to be able to feel a freaking paperback
The problem I'm trying to describe is someone going to one store to check out an expensive product to make sure they want it. Then buying that exact model online from whoever is cheapest, which probably won't be the company that's paying to run physical stores.

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