Focus on Retail

February 24, 2017

2016 was a challenging year, even for some of New Zealand’s larger retailers. We saw the Receivership and subsequent Liquidations of Dick Smith Electronics and the Valleygirl and Temt stores, the Liquidation of Nicholas Jermyn, and the Voluntary Administration and Receivership of Pumpkin Patch.

 

In recent times, Nexia New Zealand’s Liquidators have also dealt with several retail outlets including a Womens’ Clothing Boutique and a Lotto Outlet and Gift Shop (the liquidation of this company was in no way related to Lotto NZ and the store simply acted as a Lotto sales agent).

 

With each of these companies, the main reasons cited for failure were increased competition from online retailers, exchange rate fluctuations, and excessive investment in stock, all compounded by poor sales. This resulted in reduced cashflow which created pressure to meet expenses including high lease costs for store premises.

 

Given the changes taking place in the retail industry and the ease at which products can be purchased online, we predict that 2017 will continue to be challenging for many retailers.  While Statistics New Zealand tells us that retail spending has increased [1], the increases are mostly in hardware, building and garden supplies (for obvious reasons).  However, the ease at which products can be purchased online from both domestic and international stores will continue to put local retailers under pressure in 2017 and not all will survive.  

 

If your business is struggling to keep up with a competitive retail industry and you are finding yourself having to make challenging business decisions, get in contact with us. We would be happy to talk with you about your business and ‘crunch the numbers’ while looking at how we may be able to make those decisions a little less challenging for you.

 

[1] Retail Trade Survey: June 2016 quarter http://www.stats.govt.nz/browse_for_stats/industry_sectors/RetailTrade/RetailTradeSurvey_HOTPJun16qtr.aspx

 

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