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Even before the uncertainty generated by the Coronavirus crisis, many retailers in Australia and overseas were already heading into stormy waters. The crisis is already having a devastating impact on the sector globally, but many warning signs were there even before it hit. Laura Ashley had pulled out of Australia in 2018, and are now in administration. While Coronavirus has been cited, the warnings signs had evidently been there for a while.

The handbag and accessories chain Collette by Collette Hayman and homeware chain ISHKA are just some of the latest in a line of collapses, although the likes of Harris Scarfe and Jeanswest have managed to find buyers to keep them going – for now at least. Still, there have been a host of retail chain collapses and withdrawals from the Australian market in the last few years.

 

Restaurant chains such as Criniti’s have also encountered difficulties, with similar factors being cited, resulting in the closure of a number of its stores. Many a restaurant chain in Australia have fallen by the wayside, with Sizzler’s now down to just nine stores in Australia, mirroring the decline of its American parent. This can be down to changing tastes and eating habits, and the chains have not moved with the times.

 Department stores, likewise, have fallen on difficult times globally. Australia’s two major chains, Myer and David Jones, have struggled to cope with changing trends and shopping patterns. Myer in particular has not performed well in the current climate, while David Jones fares a little better. Their struggles mirror those of long-established chains in Europe and North America, while some old independent stores have also closed. On the other hand, there are some independent stores still doing a reasonable trade and will hopefully remain around.

 Already, many established Australian brands such as Katies are a shadow of themselves, their footprint much diminished today from a time when they were a sight in most town centres and shopping malls. On the other hand, there have been retail chains that have thrived because they appear to get the moment – City Chic appears to be one example defying the retail gloom.

 Even those chains that have been resurrected in some way or another emerge much smaller than they once were. After Toys “R” Us filed for bankruptcy in 2017, it closed stores in many markets including the USA, Australia and Europe. The name has now come under the ownership of Tru Kids, with just two locations in the USA.

While the uncertain economic climate is a factor in retail woes, in my view it is only one of several factors and it is necessary to identify why there retail chains fail. They may be down to intense competition, poor product planning, poor quality service or poor value for money. But many have also failed to adapt themselves to changing trends in people’s buying habits and tastes.

 This has especially been cited in the restaurant industry. While Sizzler’s decline is a textbook case, in not keeping up with changing times, those in speciality areas such as cafes, gourmet burgers and yoghurt bars (the last two being major crazes in the last decade) are also vulnerable due to intense competition. Being seen as failing to stand out or offer good value for money can prove fatal in the long term. Some chains can survive the expiration of perceived short-lived fads while others will fall.

 Criniti’s woes are a case in point. Criniti’s became something of a Sydney dining icon, but many customers felt that it offered poor value for money. But also cited was its rapid expansion, which proved unsustainable in the long run.

 In short, many retail chains have failed not simply because of the economic climate, but also of factors of their own making – a failure to articulate a sound strategy in terms of product and service, or a failure to offer good value for money and customer service, engaging with customers in a way that will retain long-term loyalty. This is certainly important in both the food and fashion sectors.

 The situation was already volatile before the latest global crisis, and it will be difficult to predict what the shape of retail will be like when the crisis ends.