by Emily Naumoska

Retail experts and insolvency practitioners alike have announced that even large, well-known local Australian retailers are not above the risk of insolvency.

Recently a number of high profile Australian retailers entered into administration including one of Australia’s most exclusive brands Oroton, in late 2017. Other recent collapses include Dick Smith, Toys R Us, Metalicus, Kangaroo Tent City & BBQs, along with Australia’s plus-size clothing fashion retailer Maggie T in 2018.

Small businesses will continue to be hit the hardest by insolvencies, as global giants begin to rise in Australia, pushing aside the Australian competition. Companies such as H&M and Zara have challenged not only small businesses but also large Australian retailers.

The Australian Securities and Investment Commission has reported the following statistics (as at 30 June 2017) about insolvencies relating to small entities:

  • 8 percent of all insolvent companies were in the retail sector
  • 84 per cent of all insolvent companies had assets of $100,000 or less
  • 79 per cent of all insolvent companies had fewer than 20 employees; and
  • 43 per cent of all insolvent companies had liabilities of $250,000 or less.

As online shopping has expanded in recent years, consumers are now spending more of their money offshore, which is potentially jeopardising all Australian retailers. Larger local brands could have limited options to streamline or downsize their stores.

Based on the struggle Australian retailers face when trading online and from traditional physical stores, the obvious question has to be “who will be the next major Australian retailer to head into administration?”

If you are unsure of your business’ position and need professional advice, Veritas Advisory is able to assist with issues like these.

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