When Athan Papoulias closed his two Designer Homeware showrooms, in inner-city Camperdown and Chatswood on Sydney’s affluent middle north shore, for a Christmas break on 21 December 2013, he fully expected to reopen in the New Year.
Although turnover was down and debt was mounting, Papoulias was confident he could find the financial backing during this shutdown in order to open for business, as expected and advertised, on 2 January 2014.
Unfortunately for Papoulias and his staff, however, a liquidator was appointed instead.
“I was talking to a couple of major players over the Christmas break and if I had received a cash injection of not much money, I would have pulled it off,” Papoulias said in an exclusive interview with Appliance Retailer. “But the people I spoke to weren’t prepared to take the risk or to back me so I appointed the liquidator on 2 January 2014.”
The main reason for this closure, Papoulias said, was reduced turnover due to increased competition. Unlike other retailers that have been forced to close, Papoulias said it was competition from bricks and mortar rivals, rather than online opponents, that have cut into his business. In the end, he couldn’t battle against the tide without a cash injection to fuel a restructure.
“I gave up the fight,” he said. “I didn’t want to keep at it anymore – it got too hard – I couldn’t bring down the debt and it was hard to trade because I was on COD (cash on delivery) with a few people and the floor traffic had diminished.”
When Designer Homeware started, Papoulias said, it was successful because customers would travel from across Sydney and surrounding country areas because he was stocking such a wide range of premium brands with limited distribution. Over time, as these brands became more commonplace, the suppliers broadened their distribution networks, using pro forma agencies to maintain prices.
“People weren’t travelling and my operation was geared to more volume than I was doing, so when people stopped coming from all over Sydney, because all the satellite shops were there, my turnover dropped — my margin never did — and I couldn’t fund the operation.”
Papoulis said internet retailing didn’t play a part in Designer Homeware’s closure because, in the appliance industry, “online is shit” and that “there is no money online”.
Unusually for the appliance industry, Designer Homeware was not a member of any buying groups. Several similar independent upmarket retailers with small footprints are members of the Narta Group. I asked Papoulias if he regretted never joining a buying group:
“No – that’s irrelevant,” he said. “To join a buying group and give them a proportion of my margin to be a member of a group? I don’t think so.
“If you don’t know how to do it, if you can’t negotiate and you don’t believe you’re getting the right price, then you need power behind you, but I thought I was doing alright.”
Whenever a retailer of any shape or size is liquidated, concern is held for staff and suppliers; that they are not left out of pocket. Papoulias reported that all his staff have received their entitlements and that most have already secure new jobs. The prognosis for suppliers, however, is not as positive.
“I owe suppliers money,” Papoulias confirmed, “but it’s a piss in the ocean in the big picture.”
“What I owe them (suppliers) compared to what I have made them is a piss in the ocean. If I have been in business for 30 years, work out what you’ve made off me compared to what you’ve lost. The contribution Designer Homeware has made at the top-end market is massive.”