Late last week a report from SV Partners surfaced with the suggestion that a number of Australian retailers are facing collapse.

Reference was made to the recent demise of Dick Smith and Laura Ashley.

SV Partners described this as just the ‘tip of the iceberg’, and stated that there are 11 Australian retailers with turnovers of over $100 million – and three with turnovers of over $500 million – that could suffer the same fate.

Since there are not that many retailers with a turnover of $100 million, it is not too difficult to determine those retailers that SV Partners suggests may be facing difficulties. Apparently there are three that are high risk and several others in serious financial trouble.

Dick Smith – the man, not the business – is recently on record issuing a warning to Gerry Harvey. Dick believes Harvey Norman could be under threat – and I agree. The model is antiquated and needs a total overhaul. If one does not reinvent oneself from time to time, it is inevitable that retail rot sets in.

In the case of Harvey Norman, Gerry himself has been an inspiration in retail. And he is big enough to eat humble pie, which he did when he initially wrote off online selling as a non-entity. But no man is an island, and Harvey Norman is starting to look jaded. The advertising goes from worse to much worse and is exceedingly boring – due to an internal advertising department no doubt.

In light of the above gloom and doom, I visited the Impact Retailing archives and in 2011 we approached two retailers that we perceived desperately needed help. One was Retail Adventures (led by Jan Cameron), who had previously had one of the big four consulting firms work with her for a considerable period of time.

We first approached Jan in February, 2011 and continued to request an audience until November 2011. Regrettably, we never managed to engage Jan, and shortly thereafter Retail Adventures went belly up.

The other retailer was David Jones (at the time led Paul Zahra). In September 2011 Paul had been quoted as saying that DJs’ traffic and transactions had declined as never seen before. We agreed that retail was going through a tough period. We pointed out that retail, more so than many other industries, was undergoing unprecedented change – the most significant in many decades.

We suggested that it was appropriate to look at how the changing business environment was affecting David Jones and how to get executives to pull together as a team into the new world. Again, we could not engage partly due to DJs having their own strategy department. And the rest is history. Paul did not survive and nor did DJs in their then format.

Those retailers identified by SV Partners will hopefully benefit from the lessons that should have been learnt, namely:

1. Be wary of engaging one of the big consulting firms. They often have little direct retail experience, and as we all know, retail is “different”.
2. Do not wait until it is too late. Call in external help before the proverbial hits the fan.
3. Never have internal strategy departments. It is incestuous and they will tell you what you want to hear – because they’ll be out of a job if they don’t.

Stuart Bennie is a retail consultant at Impact Retailing and can be contacted at [email protected] or 0414 631 702.

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