By Patrick Avenell
In a major change to its business model, Retravision WA and Retravision Northern will soon move from central billing to individual store accounts. This structural change decided in response to several insurance companies drastically reducing the amount of coverage it will extend to the two groups after the collapse of Retravision Southern last week.
Insurance brokers began writing to suppliers almost immediately after Retravision Southern was placed in administration, informing them that due to similarities in the business model, if not the solvency of the buying groups, they would be unable to secure insurance for stock held on credit.
Current.com.au understands that QBE insurance, one of the largest providers of stock-credit insurance, slashed its exposure by 50 per cent almost immediately.
“QBETC [QBE Trade Credit] is reducing cover across the board by 50 per cent on this entity [Retravision] due to the failure of Retravision Southern Limited, the current condition of the retail sector and that this is a similar business model as ‘Southern’, and they are not prepared to support the current levels of cover,” wrote one broker to a major appliance supplier this week.
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The inability of Retravision WA and Retravision Northern to secure enough stock to sell in stores, in addition to suspension of supply by leading brands such as Sony, Samsung and Whirlpool, forced CEOs Paul Holt (WA) and Phil Scarf (Northern) to act.
In an email sent to members last night, the two CEOs outlined the change that is to come for the two Retravisions and the Southern members that choose to migrate over.
“The purpose of this letter then is to advise that the members within the Retravision groups in the Western and Northern regions must transition their businesses to direct store accounting at the earliest date possible,” wrote Holt and Scarf.
“Irrespective of this change, the rewards for remaining in the Retravision group for all members, including those in the Southern group, will continue to be attractive.”
Holt and Scarf explained that whilst suppliers had been supporting of the two extant Retravisions, the lack of sufficient credit insurance was already beginning to cripple the companies.
“The two issues critical to our ongoing success are the support of the trade credit insurers who underwrite the electrical goods industry and the ongoing support of our suppliers,” co-wrote the CEOs.
“The credit insurers have reacted swiftly and aggressively to the demise of the Southern business model. They have laid the blame at our feet and have significantly reduced credit limits with most suppliers and removed them entirely with a number of others.”