Retravision Southern enters voluntary administration

May 21, 2012

Another electronics retailer has succumbed to a slowdown in consumer spending and a shift to online shopping with Retravision Southern being placed into voluntary administration this morning.

The retailer’s demise is the latest blow for the sector which has been under increasing pressure and has seen a string of profit drops and store closures in recent months.

The traditional retailing business model has been challenged by consumers’ embrace of online – rather than store-based – purchasing, with the strong dollar accelerating the trend.

Bryan Webster and Leanne Chesser of KordaMentha have been appointed as administrators of the company which supplies products and support to 104 privately owned franchises in Victoria, Tasmania and southern New South Wales.

“The company’s ability to operate as a going concern had been impacted by the industry wide decrease in consumer discretionary spending being experienced by retailers,” said Mr Webster in a statement to the media.

Retravision Southern customers should contact their local stores about orders and lay-bys, he said. Existing gift cards “will be honoured” said Mr Webster.

“There is no reason why manufacturers’ warranties would be affected,” he said. The announcement follows rumours that the company was unable to pay creditors. Representatives of the company had met with owners of the franchises late last week to discuss plans.

Retravision Southern is the support centre for the franchised stores, under a model used to support a total of 350 locations nationwide. Profit at the group fell 8.1 per cent in 2011 to $357,000 on sales of $340 million.

Independent Retravision Southern stores would continue to operate, said KordaMentha.

But KordaMentha spokesman Mike Smith said that following the administration, franchisees could no longer place orders for products through Retravision Southern.

The locations also have to make separate credit arrangements, he said.

“It’s up to the businesses themselves where they go from here.”

The administration does not affect Retravision Western or Retravision Northern which operate in Western Australia and northern New South Wales and Queensland.

KordaMentha said the first creditor’s meeting would be held within eight business days.

Retailers generally and electronics retailers specifically have been undermined by the shifts in consumer buying habits in recent years. Customers routinely rely more on comparing prices for electronics online, and in many cases purchases good through the internet – often from overseas websites.

JB Hi-Fi has flagged profit falls recently, while Harvey Norman announced a 25 per cent plunge in profits in the nine months to March, amid the rapidly deteriorating sector for domestic retail spending.

Woolworths is also spinning off or closing down its 400 store Dick Smith chain, in response to the change in the industry.
The demise of Australia’s electronics retailers follows an earlier collapse of Australia’s chain bookstores in 2011, after years of ineffective competition against lower book prices overseas.

Australia’s leading department stores, David Jones and Myer, have also found themselves under pressure and have been forced to adapt to new business models that will engage with customers online and through mobile devices.

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