Last week, KPMG was appointed voluntary administrators of Australian clothing retailer, Jeanswest, which has been operating for 48 years. KPMG retail restructuring practice lead, James Stewart said like many other retailers, Jeanswest had been challenged by tough market conditions and pressure from online competition.
Employing 988 staff in 146 stores across Australia, the retailer will continue to operate while the administrators conduct an urgent analysis of the business with consideration of restructure and sale options. The administrators are currently seeking expressions of interest from parties interested in acquiring or investing in the business.
Shannon Ingrey vice president and general manager – APAC of enterprise ecommerce solution company, BigCommerce told Retailbiz that the collapse of Jeanswest is a testament to the shifting nature of the retail and ecommerce industry in Australia, where simply having an online presence is no longer enough.
“Well-known brands with long-lasting customer followings are just as answerable to the expectations of consumers as smaller pure-play online businesses. Consumers are engaging with retailers from more touchpoints than ever before – and they expect a cohesive, personalised and seamless shopping experience at every stage of the journey.”
The announcement from Jeanswest, along with the collapse of other Australian retailers like Karen Millen, Curious Planet, Bardot and Harris Scarfe in the last 12 months alone, shows that it’s now critical for Australian retailers to better understand their customers and invest in providing a differentiated experience, he said.
“On the other hand, as the retail climate shifts, local businesses are assessing their processes, streamlining their operations and evaluating their legacy systems to keep them competitive and profitable. EB Games recently closed 19 underperforming stores (they still have over 300). These kinds of changes – including the closing of underperforming stores – are part of running a healthy business and it’s highly likely that we’ll see them open new stores in 2020.”
Insolvency specialist says Aussie retailers must evolve in 2020
Australian retailers need to evolve their business models – otherwise we will see more retail insolvencies in 2020, according to Andrew Spring, partner at insolvency and business recovery firm, Jirsch Sutherland.
“Retail failures aren’t new and it’s not a situation that’s likely to change unless many retailers make changes,” he said.
“Retail is a tough environment to be successful in over the long term. However, there are things that retailers – large and small – can do to set themselves up for success rather than failure.”
A key issue is understanding obsolescence and the need for companies to read customer trends and evolve their businesses to stay ahead of the curve.
“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. A more recent example is the Australian textbook retailer, the Co-op Bookshop, 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.”
Spring believes a failure to adopt an e-commerce platform continues to hamper many retailers, particularly with the growth in online shopping. “E-commerce is a necessity, not a point of difference. However, some retailers are being left behind or have not sufficiently invested in their e-commerce platforms, and they find that the fixed costs of having a bricks-and-mortar presence alone are too high.”