Mid-market retailers strain in tough times
Women's clothing chain Shanton Retail was put into receivership this week, the latest in a list of apparel company receiverships in a tough retail environment. Other recent ones include Colorado and Jean Jones.
Commentators say mid-market retailers are most at risk and need to reinvent themselves or diversify online to appeal to today's shopper.
Virginia Wilkinson, research director at Coriolis Research, said Shanton was "another mid-market statistic".
"[Clothing retail] is just so fickle. There are new concepts constantly coming along, new stores opening, old ones closing. You either have to reinvent yourself - like the KFC story - to move with your customers or be attractive to a new market, or you perish.
"It's fashion, too. It's easy to get wrong."
Mid-market retailers were more vulnerable than lower and top end retailers, which had more defined and stable clientele, Wilkinson said. Electronics retailers were also in one of the trickiest retail sectors. "It's hugely competitive and prices have come down astronomically. They've got to be hurting."
Retailers Association spokeswoman Louise Evans-McDonald said clothing retail was a particularly competitive area, and required many outlets.
Unreliable weather made selling clothing difficult, with hot or cool weather typically arriving just as that season's stock needed to be cleared to make way for the next. Retailers across the board were also suffering higher external costs, including building insurance following the Christchurch earthquakes. Evans-McDonald said the association expected year-on-year retail sales growth this Christmas, "but that will be at a conservative level".
Retailers could no longer rely on Christmas to make up for a poor year, and those budgeting to sell all their stock at full margin could find themselves in trouble, she said. "We've created a new consumer that's now expecting to see decent sales. Now a 10 per cent sale is just not going to cut it, 20 per cent may get a look and if it's 50 per cent they'll consider that a sale."
There was less pressure on retailers with a point of difference to reinvent themselves, but mid-market retailers needed to stand out.
The association put online sales at about 6 per cent of total online spend, with two-thirds going overseas. Clothing retail was one category losing out.
Wilkinson said it would still be a fierce fight between retailers for customers' Christmas coin, and there would be more of the pre-Christmas sales seen in recent years, she said.
"They're going to try and get people in the stores before the Christmas rush. But people are busy. If it's a really good sale they might come in but otherwise they'll leave it to the last minute like they usually do."
The strong kiwi dollar, lower or zero shipping costs and quick turnaround was making e-shopping more attractive.
Market commentator Arthur Lim said there had been a massive shake-out in retail.
Demand for retail stocks showed investors expected "a recovery in future for those that have been able to survive the shake-out", he said.
■ There were 33,110 retail outlets in New Zealand as of February 2011, 38 fewer than February 2010.
■ 3886, or 12 per cent, of those were clothing stores, up 0.3 per cent year on year, and 51 per cent on February 2000.
■ Supermarkets and grocery stores accounted for 3270, or 10 per cent, of all outlets, up 0.7 per cent year on year.
Source: Retailers Association.
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