The collapse of Kleins jewellery retailer provides two lessons for all businesses – stay relevant and respond quickly to any downturn in sales.
As announced in SmartCompany yesterday, the Victorian-based jeweller collapsed with debts of $20 million.
As the administrators of collapsed Kleins jewellery business look for a buyer for the $40 million revenue business, questions are being asked by franchisees about why problems were not flagged earlier.
One franchisee says she had heard rumours for six to 12 months that things were not right. Jo Berthon, who runs a store in Sydney’s western suburbs, told the ABC that she had witnessed a decline in stock deliveries.
But when she questioned headquarters she was told everything was fine. She would then rely on the fact that the owners of the business Greg and Terry Campbell had had 20 years in the business and knew what they were doing.
So what was at the heart of the collapse? While discount retailers are doing it hard in the current downturn, there were other signs that Kleins had just not kept up. The Kleins website is a good indication. The brand of the discount jeweller that sold under the catch cry “Looking good costs so little” looked old fashioned and dowdy.
Its product range was far too broad and confusing and included everything from hair accessories, miniature clocks and cubic zirconia earings. And competitors like Diva entered the market and offered the consumer a bolder, more contemporary brand.
The administrators, Ferrier Hodgson’s partners James Stewart and George Georges, are selling the Kleins brand and the franchise network (of the 200 outlets, 150 are franchised stores). They are hoping to sell the business as an ongoing concern but will carve it up if they have to.
Meanwhile unhappy creditors who had been withholding goods from stores will not be holding back at next Monday’s creditors meetings.