By Claire Reilly
When Retravision Southern confirmed it was entering voluntary administration last week, it sounded the death knell for another facet of the retail industry in Australia. While it certainly won’t mean the end of Retravision’s presence in Australia, there are plenty of individual retailers at the local level that will no longer be financially viable and will be forced to shut their doors.
As Current.com.au today revealed, many Retravision stores have already shut up shop or moved to other buying groups. A close look at two such retailers reveals a story of declining margins, increasing costs and a retail industry struggling to stay afloat.
According to Paul Watson of Watson’s Recreation & Furniture (formerly Watson’s Retravision) in Chinchilla, Queensland, it’s not just Retravision Southern that was doing it tough.
“Everything’s pretty tough up here in Queensland as well,” said Watson. “I was thinking about leaving Retravision 12 months ago and I wish I did then, because waiting around another 12 months didn’t really change much as far as the margins go. So I decided to get out.
“I heard the rumours that the amalgamation may be happening, but whether it was going to or not, I got out. And now all this [Retravision Southern going into administration] has happened as well.
“Why Southern actually went down I don’t know – they really shouldn’t have any major debts because of the tightening of all the credit limits. I find it very strange why it’s actually happened.”
Watson made the decision to leave the Retravision group and exit electrical altogether, in order to focus on other categories such as furniture and camping products. He said it wasn’t simply because of issues with Retravision.
“It’s the whole industry, full stop. There’s no money in it.”
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Down in Victoria, it’s the same story. Peter Cassidy, the owner of the now closed Cassidy’s Furniture & Electrical in Castlemaine, says the industry was far too tough.
“I closed at Christmas with Retravision. That’s the way it is,” he said.
“It’s an industry-wide problem — we know everyone else has got the same issue — it’s just not viable. Woollies went and closed 100 Dick Smith stores, obviously the smaller ones, because the smaller you are, the tougher it is. I mean, the fees are the same for us as they are for a large store.
“The thing is, everything’s getting cheaper and small stores can’t put $4,000 TVs in and try to get some gross profit back. We haven’t got enough room. So you’ve got the advertised lines and that’s killing you, so to speak.
“The prices are just so ridiculous now with the technology and the dollar, it’s just come down so fast. So the boxes were still going out the door, but at half the value. And everything’s going up, so it’s not a good recipe.”
While he was part of Retravision, like Watson, Cassidy’s decision to close his store was largely not an issue with Retravision itself.
“It’s a general thing, it’s nothing personal, it’s not even a Retravision thing — it’s an industry issue,” he said. “We’ve just watched the decline in price, that’s the bottom line. And of course our overheads are going up as well: our wages are going up, power goes up and the margins are obviously down because the value of the goods are down.
“I know back at the changeover to digital, we sold about 50 per cent more TVs and the value was less than the year before. That was sort of the indication a couple of years ago, and it just got worse faster.
“I know if you go down the main road in Richmond there are just shops empty and for lease everywhere,” he said. “So it’s been a bit of a sad old story for a while.”