Heightened online competition and “a retail sector verging on recession” have caused a chain of shoe stores to collapse into liquidation, as the sector braces for even more consolidation.
NSW-based Shoe Box operated five stores across Sydney and employed 14 staff members, who will all be paid their entitlements, according to liquidator Paul Gidley.
The business was placed in the hands of liquidators Shaw Gidley on May 14, according to a notice filed with the Australian Securities and Investments Commission. The five stores have ceased trading, as has the retailer’s online store.
According to financial records seen by Inside Retail, Shoe Box’s parent company, Hatexio Pty Ltd, owes $3.32 million to unsecured creditors. This includes $2.17 million in loans to family members associated with the company and $1.15 million to suppliers and landlords.
Paul Gidley told SmartCompany the liquidation was prompted by increased competition from online operators and the tough times facing the entire retail sector in Australia.
The company had been trading for 30 years and according to reports, once had as many as 15 outlets.
Its liquidation comes at a time when retailers of all sizes are coming under sustained pressure. At the big end of town, the likes of Myer have warned about a slow start to winter sales, while toys retailer Toys ‘R’ Us and fashion brand Metalicus have both called in external administrators this month.
In the footwear sector, Shoe Box competitor Payless Shoes collapsed in 2016, and other key players in the sector have made moves to shore up their positions. In January, Diana Ferrari made the decision to close its bricks-and-mortar stores, and parent company Munro Footwear Group took over 22 of Betts- and Airflex-branded retail sites in March through an acquisition deal.
Dr Gary Mortimer, a retail expert and associate professor at Queensland University of Technology, believes we’ll see even more consolidation or “right-sizing” across the retail sector as the year progresses, particularly among retailers that have been operating for some time.
“There’s retailers who have probably grown and opened stores in shopping centres all around Australia when the market was relatively stable 20 years ago,” he tells SmartCompany.
“But in the last decade, we’ve seen a lot of changes in marketplaces.”
These retailers may have 30 or 40 stores in their network, says Mortimer, but the combination of consumers facing increasing costs of living and the entrance of global fast fashion retailers means it’s no longer viable to run a retail network of that size when, say, 15 of their stores are making a loss.
This will lead to more buyouts, store closures and brands moving to pure-play online models, he says, and one of the results will be shopping centres with even more empty shopfronts.
It’s retailers in the fashion, footwear and accessories space that are being hit hardest, says Mortimer, who describes the Australian retail industry as having “splintered” into three key areas: “cheap and cheerful”, where the discount department stores are dominating; “fast and fashionable”, where international players like Zara and H&M are leading the pack; and the “top end”, where luxury retail brands are still “insulated” from the cost-of-living pressures now facing many consumers.
Each of these segments connect with a different type of consumer, says Mortimer.
“The problem you’ve got is, if you’re not in one of those groups, what’s your value proposition?” he says.
You can help keep SmartCompany free for everyone to read
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany Supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.
And it’s not all one-way traffic either. SmartCompany Super Supporters get to dial into our monthly editor’s meeting and attend a monthly, invite-only webinar with a big-name entrepreneur.