By James Wells and Claire Reilly
Retravision Western has announced it will wind up its business, shift its brand to Narta and move its 180 stores into either the Narta or Leading Edge buying groups from April 2013, saying that it is “no longer able to support a stand-alone national or state business model for the Retravision brand”.
Narta will acquire the Retravision brand as of 1 April 2013, though the Retravision name is only expected to live on in Western Australia after Retravision CEO Paul Holt said “given the significant damage to the Retravision brand in Victoria (preceded by the damage that occurred with the demise of Retravision NSW), it is likely that the Retravision brand will be replaced in all of the Eastern seaboard states”.
Of Retravision’s 180 shopfronts, 100 are trading below $1.5 million in annual purchases, meaning they may be excluded from any shift to Narta and will most likely be added to Leading Edge’s 38-store network. However, Holt said both groups would “collaborate…to deliver benefit to members”.
“It is proposed that Narta or Leading Edge will provide support services for advertising, IT and price negotiation to stores, depending on the brand option that is selected for each of the stores in question,” Holt said.
Holt blamed the decision to wind down the Retravision Western business on poor trading conditions, with the company's business down 25 per cent year-on-year, and the difficulties for members to trade individually with suppliers following the end to the retailer’s central accounting. He said that ongoing issues with securing store credit and competitive pricing from suppliers as well as difficult market conditions led to the “significant and serious” decision.
Holt announced a ‘brand rationalisation project’ will take place in two parts – a more detailed plan will be completed prior to Christmas and this is estimated to take between six to nine months to fully execute.
“We anticipate a more detailed plan will be completed within the next 6 to 8 weeks and be ready for communication to all stores in early January,” said Holt. “This plan will outline the group that your store will be invited to join and an indication of when the transition for your store will take place in the New Year."
Holt warned that Retravision’s failure to make decisive plans for member stores with this "rationalisation project” could result in the “real prospect of another Retravision State company going into administration without any return to members”.
Given the significance of today’s news, Holt conceded that some member stores may “receive offers from other parties” regarding movements to competing buying groups and said “we strongly encourage you to carefully consider such offers and await the full details of our plan before making any decisions”.
Today’s news follows months of turmoil for the retailer after talks of a unification of Retravision Southern, Western and Northern failed, and the Retravision Southern head office entered into administration earlier this year. Many southern New South Wales and Victorian stores were forced to close down or move to competing groups such as Betta Stores Retail and Bi-Rite when support from their local Retravision office dried up.
Those Retravision Southern stores that moved to the national Retravision group will now face similarly uncertainty, along with their peers, as Retravision looks to move them to Narta or the smaller Leading Edge group.
According to Holt, today’s announcement was the only viable option for Retravision’s future.
“It is clear that to remain on our own without access to substantial public funds or being part of a multi-billion dollar buying group, is no longer viable,” he said.