Turmoil in mass retail in the US continues with the filing for chapter 11 bankruptcy protection by Sears overnight. Reports say Sears will close an additional 142 stores, on top of the 33 stores already announced to close, which included 13 Kmart stores.
While there does not appear to be an obvious Australian connection, this can take time to evolve. Look at Toys R Us.
What I find interesting is that occupancy and labour costs in Australia are significantly higher. I also heard somewhere, but cannot recall where, that we have more retail space per capita than the US. Combine this information and add the growing migration of purchases to online, it makes sense that department type stores, big and small, stores that are not overly specialist, stores that struggle with a USP, these stores are vulnerable.
In some way, I think newsagency closures in Australia, around 15% this year, is for reasons similar to US department store closures.
As for Australian department stores, I look at Myer, Myer, David Jones, Big W and Target and owner which of those will be first to significantly downsize or close. I don’t include Aussie Kmart yet because they are on a streak of success right now.
I think it would be a mistake to look at the US story and say it is a US story just as it would be a mistake to look at Aussie mass retailers waiting for them to fail or trip. The reality of retail today is that every day we have to fight, be our best, specialise and make today, and every day, our payday.
Footnote: the 15% is a figure key national suppliers agreed was how we were tracking in terms of closure in 2018. I was at a workshop for newsagency channel national suppliers where this was discussed. We shared data and the 15% number was agreed, unfortunately. However, we all know what we know, and we all see what we see. The 15% in real terms is 495 shops. That is the chilling number. It concerns me that too many are sitting and watching it happen here in our own channel, and not acting themselves.
Myers and Target are both toast. To use industry jargon, they are now property plays, nobody has a plan to rescue there business models.
15% newsagency closures and 10%+ falls of year on year magazine sales means GG and other channel suppliers are looking at 25% revenue falls. Something has to give, declines of this magnitude cannot just be managed.
Public relations and stock market rules means nobody can be honest about true trading positions but the truth is there for all to see. Stand by for seismic change.
I would think next year will be even bloodier for Newsagency closures particularly if we get the expected start of the interest rate rises and the spending starts to dry up as a result.
Newsagencies are good businesses to own… you idiot Fletcher!
Ken, I am not sure how your comment is relevant to this post for in this post I do not say newsagencies are good businesses to own.
I can see why you would say that with you presiding over your businesses going broke. However, I think that experience is about you more sop than challenges of the channel.