Big retail collapse tipped for this year
HUNDREDS of Queensland retailers are at risk of ruin this calendar year, due to a sluggish economy, stagnant wages and high costs.
SV Partners’ 2019 Commercial Risk Outlook Report is warning that 203 retail businesses, or 3 per cent of retailers statewide, face financial failure in the next 12 months.
The data comes as ABS figures show the economy has fallen into a GDP per-capita recession.
Household consumption growth is also below average, squeezing the retail sector further. High-profile collapses in Australia over the past 12 months have included Roger David, Napoleon Perdis and Toys “R” Us.
SV Partners director David Stimpson said the most at-risk segments were franchisees and businesses whose profit margins were already on the line.
Mr Stimpson said stricter lending after royal commissions into banking and franchising, as well as competition from online and overseas, were putting the squeeze on smaller businesses.
“The banks and the TOWNSVILLE-BASED real estate brand Explore Property is venturing further into the Queensland market with plans to establish at Cairns and the Sunshine Coast.
The group, founded by Townsville agent Andrew Acton in 2014, held its annual Exploration Day conference in the city yesterday attended by 60 agents from Townsville, the Gold Coast, Brisbane, the Sunshine Coast, fran- chisors are going to pass that onto the retailers, to the businesses, and the businesses are caught between a rock and a hard place,” he said.
“They have increasing costs, but they can’t increase their prices, because they’ll fail to compete properly.”
He said rental prices and pressure to increase wages were also forcing retailers to raise prices, making them less attractive to consumers happy to shop online.
Mr Stimpson said about 125 Queensland retailers had failed annually in the past three years, but he expected 2019 to Mackay and Cairns. Mr Acton agreed he had taken on some risk and effort to establish a new brand in a regional city and expand to other markets. There had also been times when a move to Brisbane had been considered.
“I nearly did. But I’m proud to be able to do it from Townsville. We have stuck with it and we’ll keep going,” Mr Acton said.
The brand has a presence in be worse because of sluggish growth weighing on household spending.
“A decrease in foot traffic, that’s a result of high household debt,” he said.
“The first thing you do when you save is you don’t go and spend money on entertainment and retail.”
The SV Partners report comes a week after Deloitte Access Economics warned retail growth would slow to a meagre 1.6 per cent this year after a disappointing 2018.
Deloitte pointed to spending outstripping disposable income as evidence households Townsville, Mackay, the Gold Coast and Brisbane and is “very close” to having a presence in Cairns. The Sunshine Coast is also an option.
Its Mackay agency has been very successful, attaining about 20 per cent market share, and achieving the number one agency title in the state outside Brisbane.
While brand recognition was important, Mr Acton said good people were the key to success. were dipping into savings accounts.
National Retail Association chief executive Dominque Lamb said the first three months of each year were historically the quietest, and that she was sceptical of the predictions for doom and gloom.
“At this stage, I haven’t certainly seen increases in insolvencies, they are just weathering the storm,” she said.
QUT Business School associate professor Gary Mortimer said fashion, footwear and accessory retailers were particularly vulnerable this year.
“You can go to every single town and the top agency will be a different brand,” he said.
“The pattern is every single company has a very good leader.
“We are not out to have numbers everywhere. We align with quality people.
“We are going to keep seeking to align with people who are good leaders and help them reach their potential.”