The remaining Crazy Clark’s and Sam’s Warehouse retail stores are expected to close by the end of August, after receivers KordaMentha were unable to find a buyer for the troubled discount retail chain.
As of next Sunday, August 17, there will be just 15 outlets still operating in the Retail Adventures chain, the parent company of which, DSG Holdings, was placed in administration at the start of July.
But receiver Rohul Goyal said in a statement late last week “there has been no buyer for the group or any sizeable part of the group” and the last of the chain’s stores will close on August 31.
While a spokesperson for KordaMentha told SmartCompany this morning it is possible someone may purchase one or a few of the remaining outlets, 90% of the chain’s stores have already been closed or are in the process of closing.
The latest round of store closures, announced on Thursday, brings the total number of stores closures to 128 and the total number of employees affected to nearly 1800.
KordaMentha has also closed the DSG Holdings distribution centre at the Port of Brisbane, where 30 people worked.
The receivers previously said they hope to pay employee entitlements, amounting to $10 million, by the end of September.
While Retail Adventures has survived two previous administrations, with former BRW Rich Lister Jan Cameron buying the company out of administration on two occasions, it appears the chain, which relied on a high-volume, low-price strategy, has come to the end of its line.
Brian Walker, chief executive of the Retail Doctor Group, told SmartCompany the result isn’t surprising, as general discount retailers such as Crazy Clark’s and Sam’s Warehouse rely on a “fragile model” of “high volume and low overheads, in good locations”.
While Walker says these chains may have had “some good performing stores with good numbers”, strong results in a few locations are often not enough to carry a whole chain.
“They have such thin margins to start with, and faced with rising costs, it is very hard to differentiate themselves against the big players with bigger advertising muscle,” says Walker.
Walker says the likes of Target and Big W have made “inroads” in the discount market through their pricing and merchandising strategies, in much the same way the supermarket sector is now dominated by Coles and Woolworths.
“And then we have the whole world of online,” he says.