A litany of retail failures, and how to benefit

AKA: RIP Retail Australia (or not)

It is easier to be pessimistic than optimistic, and one can find stats to support either view.

But here is my take on the retail landscape:

Average of 44 small businesses closing their doors each day, according to Australian Bureau of Statistics data

Small business failures up 48 per cent

Sales have been flat, like forever: The latest ABS Retail Trade figures show that Australian retail turnover rose 0.1 per cent in November, seasonally adjusted, following a rise of 0.4 per cent in October 2014.

Online eating our lunch. Total online retail trade, in original terms, rose 5.2 percent in November following a rise of 9.8 per cent in October 2014 and a rise of 8.7 per cent in September 201

The consumer is not coming to the rescue: Total household debt stood at $1.84 trillion at the end of 2013, equivalent to $79,000 for every person living in Australia at that time. This was higher than it had been at any time in the previous 25 years, even after making adjustments to remove the effect of general price inflation

And this won’t change soon: In 2012, Australia's household debt level was equivalent to 1.73 times Australia's 2012 gross disposable household income, whereas household debt in both Italy and Germany was less than a year's worth of gross disposable household income (at 82% and 93% respectively).

Sales growth is declining. Like forever - see graph.

Our retail landscape is littered with failures – from outright bankruptcy to strategic retreats. And failure defies any classification, as you can see from the range:

Small (Treehouse Children’s Decor) and large (Crazy Clark's and Sam's Warehouse). Food (Pie Face) and Fashion (Ksubi, Man 2 Man) and Homewares (Clive Peeters, Kleenmaid). Luxury (Perfume Empire) or Basics (Payless Shoes). Local (Darrell Lea) or International (Starbucks, Krispy Kreme) or franchised (Video Ezy).

But the purpose of this post is not to lament the state of the industry, but rather to make the point that failure is a fact of life. None of those organisations or the people involved with them need to be ashamed of the end result.

The problem with failure is that we run away from it and don’t confront it well enough to actually learn from it.

Melbourne angel investor Frank Cooper believes there is still some resistance to supporting an entrepreneur with an uneven track record. “Attitudes are changing, but there’s still a long way to go before we get to the American acceptance of failure,” Cooper says. (Follow the link to read the story of Franz Madlener and Villa & Hut and what he took from it.)

Over the coming weeks I hope to go some way towards bringing failure out of the closet.

Have fun

Dennis

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