Suggestions have surfaced that the dwindling profitability of the retail sector is the result of an excessive number of retailers operating in a crowded marketplace.
The Australian Financial Review (AFR) put forward the idea recently, using the case of Myer as a prime example. The department store has seen its share price crash amid falling foot traffic and lower than expected sales figures.
Just six months ago, Myer announced its sales had posted a slight fall in net profit last financial year, and announced plans to ramp up closure of stores nationally.
“Since the launch of New Myer in September 2015, we have closed or announced the closure of 74,670m2 of store space overall,” Myers CEO and managing director Richard Umbers said at the time, adding: “We will not be renewing leases at Colonnades, Belconnen and Hornsby.”
Since the AFR originally published its article, Myer’s CEO fell on his sword and announced he had quit the retailer.
It comes after a horror year for the retail sector more broadly, with many high-profile retailers calling in the administrators, including Oroton, Lover Clothing, Marcs, Rhodes & Beckett and Herringbone.
And earlier this month, a Sydney-based manufacturer and retailer fell into administration after almost 70 years in business.
Insolvency figures were also on the up in 2017, with the June quarter alone posting a concerning 28 per cent spike in the number of cases.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.