Discount grocery chain NQR has become the latest retail casualty of 2018, with the 18-store supermarket network placed into voluntary administration last Wednesday.
NQR Pty Ltd, which was rescued from administration by the founders of Bakers Delight, the Gillespie family, in 2009, appointed Luke Targett and Bruno Secatore of Cor Cordis as administrators on January 24.
Fairfax reports the business is still owned by the Gillespie family, employs 351 staff and had total liabilities of $23 million at June 30, 2017.
The business will be put up for sales as a going concern, reports Fairfax, but some unprofitable stores will face closures.
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Cor Cordis managing partner and NQR administrator Bruno Secatore tells SmartCompany a decision about store closures will be made later today.
“We are in the process of finalising the review of each store’s profitability and a decision regarding any closures will be made later today and relayed to the relevant stores accordingly,” he says.
Secatore says the total liabilities for the business are still being reviewed, and an indication of the amount owed should be available by mid-week.
On the NQR Facebook page, customers have recently expressed disappointment about store closures that occurred prior to the appointment of administrators.
The Coburg store, which is not listed on NQR’s website as one of the 18 remaining stores, closed on December 22, according to the company’s Facebook page.
The Facebook page also confirmed the Lilydale store will be closing due to “end of lease”.
The Lilydale store is currently listed as one of the 18 stores in operation on the company’s website.
Challenging times to compete on price
The administration of NQR is not the only instance of a retailer falling on hard times in January, with fashion imprint Maggie T and the producer of shoe brands Zensu and RMK both calling in the administrators this month.
The news also comes as retail analysts say price competition in the supermarket sector led to a slight decline in grocery revenue in the 2017 financial year.
IBISWorld analysts reported last October the $101 billion in grocery sales was softer than expected over the past year, but the industry is expected to grow by 1% in 2018 to $101.1 billion.
Discount supermarket Aldi had secured an 8.6% market share in 2017, according to IBISWorld, with senior industry analyst Nathan Cloutman observing last year that price competition between Aldi, Woolworths and Coles had lead to “pressure on smaller retailers”.
In a 2017 report on Australia’s supermarket sector, IBISWorld also pointed to strong competition on the low-cost, “private label” grocery space, highlighting that Aldi has pushed Coles and Woolworths to develop low-cost options and that private label items now account for “approximately one quarter of all supermarket sales”.
Retail expert and associate professor at Queensland University of Technology, Gary Mortimer, says the collapse of NQR so early in the year speaks to the expectation that customers can now get quality, low cost groceries wherever they go.
“When you’ve got Aldi consistently low on price, Woolies and Coles also cutting prices, you’d think NQR would have been great ten years ago. But now people are saying ‘I can pay about the same anywhere and get really good products’.”
“You can’t just rely on brand or just price now — what customers are looking for is a point of difference.”