Brown Sugar downfall highlights shifting consumer habits
Friday, August 5, 2011/
Mid-range fashion chain Brown Sugar has become the latest victim of the tough retail climate by entering into voluntary administration, with experts claiming that older demographics are driving the downturn.
It’s been revealed Brown Sugar has appointed Deloitte Corporate Reorganisation Group as voluntary administrators, throwing into doubt the future of the 40-strong chain.
Deloitte has appointed Sal Algeri and Tim Norman as joint voluntary administrators. They will assess the company’s financial position and seek expressions of interest from potential buyers.
Established in 1975, Brown Sugar has 50 full-time staff, and 170 part-time and casual staff, across 40 stores in Victoria, NSW, South Australia, Tasmania and WA.
Algeri says the company has suffered from successive management changes since 2009.
“Despite the current management team working to restore the company’s trading position, adverse trading conditions and falling consumer sentiment have continued to hamper the company’s return to profitable trade,” he said in a statement.
A creditors’ meeting will be held on August 12, where the voluntary administrators will outline their initial findings and the role of the voluntary administrator.
“Our first priority is to try and achieve the best possible outcome for all stakeholders – employees, creditors and customers,” Algeri says.
Algeri says while the company continued to trade, all ongoing employees’ salaries and benefits would be honoured.
Brown Sugar’s downfall is the latest in a long line of retailers that have suffered similar fates, including fashion label Bettina Liano, bookstore chains Borders and Angus & Robertson, and outdoor clothing company Colorado.
Brown Sugar targets a slightly older demographic, suggesting they are more protected from the rise of online retail, but experts say older customers are changing their spending habits more than any other age group.
Michael Lonie, a spokesperson for the National Retailers Association, says the ageing population has become a dominant factor for many struggling retailers.
“[The older generations] traditionally spent money on retail,” Lonie says.
“Now they’re into food and travel – they’re not buying fashion or appliances for the household, so those retailers now have to look at different markets.”
Laura Smyth, Federal member for the Victorian seat of LaTrobe, says small businesses have an opportunity to appeal to older consumers’ desire for domestic travel.
“Boutique accommodation, alongside the food and wine experience, can be a magnet for local economic growth,” Smyth said in a statement.
Meanwhile, Small Business Minister Nick Sherry has flagged new government funding to help local tourism operators become more innovative and competitive.
“Over the next four years, $40 million is available for projects that develop innovative and strategic tourism products,” Sherry has said.