Masters takes products offline: The complexities of liquidating stock
Thursday, September 29, 2016/
Masters Home Improvement customers have been contacting stores in confusion this week after the online product portal of the closing hardware chain ceased operation.
Shoppers took to Facebook and store customer service lines to ask why they could no longer see advertised sale products or search for items on the chain’s main Facebook page.
Masters advised that due to the quick moving nature of sale prices, the online store could no longer accurately outline what items remained available in the $500 million selldown of stock.
Woolworths itself is no longer overseeing the stock, with GA Australia providing an underwritten recovery of Masters stock and taken responsible for managing the selldown of inventory in the lead up to a proposed closure date of December 11.
SmartCompany has attempted to contact GA Australia for an update on the sale but has not received a response.
GA Australia is a subsidiary of Great American Group. On its website it outlines that it will manage the going out of business sale at all 63 Masters stores.
Over the past few weeks customers have expressed outrage at poor customer service and confusion over pricing on the floor of the hardware stores, while staff have told SmartCompany about the significant amount of pressure they have been under in the face of uncertain employment futures.
What happens when you liquidate a business
Insolvency experts told SmartCompany this morning that going out of business sales are incredibly complex, and some of the specifics on the Masters arrangement are not known.
In broad terms, selling stock to a liquidator could lead to that liquidator setting prices and deciding on the amounts at which items are discounted to maximise the amount recouped – then communicating the prices and information to a company’s staff if they are still involved in operating the business.
“What they’re doing is a controlled sell down – they’re trying to sell as much stock at the best price that they can,” managing director at Insolvency Guardian Jarrod Sierocki says.
“If Masters has set an end date of December, I’d say they will fire sale everything right up until that time.”
Gess Rambaldi, partner in the business recovery and insolvency team at Pitcher Partners, says a liquidation process doesn’t have to have a formal time frame attached to it.
“It’s about the professional judgement about the time taken,” he says.
If a public end date for a business is set, but all the stock is not sold by that time, it is possible for a liquidator to look at other ways of selling stock.
“It could be sold through the use of other agents, brought to different markets to different forums,” says Rambaldi.
“One of the things that can happen is that they can remove the stock from the businesses and sell them off site.”
Many Masters customers have expressed disappointment about the lack of information available about the sale, claiming they can see from poor customer service on display why the store is shutting down.
But store employees say they are doing their jobs based on information being passed down by senior management about the process of the sale, and are dealing with a large amount of changing information each day.
Signs are being displayed in stores reminding customers to be polite in their dealings with staff, and highlighting that there is no scope for staff to offer further discounting than ticketed items, because they are not in control of pricing.
“Please understand that our store staff are not authorised to offer discounts beyond those displayed,” the signs read.
The retailer is now telling customers that the best way to establish whether a product is available is to head into their closest store. The Masters website currently provides a store locator and frequently asked questions section that outlines the process for returns and kitchen installation and deliveries.
Orders made online before August 24 are currently being fulfilled, Masters says on its website.
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