The retail and hospitality businesses that went bust last year

Friday, 12 January 2024

Online supermarket Supie, started by Sarah Balle, collapsed in October.

Grocery start-up Supie failed trying to take on the supermarket duopoly, wishful thinking couldn’t keep lunchbar chain Wishbone in business and all was not rosie for ready-made deli foods manufacturer Rosa Foods which also went under last year.

These were just three of many businesses that succumbed to the challenges of a troubled economy last year and experts say the year ahead is looking to be a lot worse for failures and liquidations.

In the year to November, Centrix recorded 1448 liquidations, up from 1382 in the year to December 2022.

Chief operating officer Monika Lacey expects liquidations to continue to rise through the year.

“IR have started chasing outstanding GST, which wasn’t happening before, which is putting a bit of pressure on businesses.”

Ezibuy was one of the well-known brands lost in 2023.

Some big-name brands failed to make it through last year. The cookie base crumbled for dessert brand Sara Lee, and the year was particularly troublesome for beer makers.

Craft brewer Deep Creek Brewing was placed into liquidation in October, as were Brothers Beer and Epic Brewing, both of which were bought and ultimately saved in the months following.

Once a giant among retail chains, Ezibuy was a casualty along with plus-size activewear brand Lulah Collective and Wellington raincoat maker Okewa Rainwear.

Popular children’s footwear brand Bobux went into receivership, but was saved by Australia’s Munro Footwear Group.

Wishbone closed its network of stores and factory in August.

Another struggling business that was saved was social enterprise Nisa, initially set up to employ refugees and migrants.

Other insolvencies this year included homewares chain Redcurrent, and even British luxury retailer Mulberry’s NZ franchise couldn’t remain viable.

Puree baby food company Gourmet Baby and baby accessories brand Made By Chelsea shut down, along with takeaway chain Dubba Dubba Morocco. Top restaurateur Nic Watts was forced to close his award-winning restaurant Inca, having exhausted all financial options to remain open.

Hawke’s Bay clothing factory Made It Here, which supplies boutique retailer Kilt, told staff in December it could no longer afford to keep the factory running.

Outdoor goods and furniture retailer 4 Seasons was placed into liquidation, then saved at the last hour, trading despite owing thousands of dollars to customers left out of pocket for deposits for spa pools and BBQs.

Insolvency and restructuring firm McGrathNicol’s annual In Retail report released in August outlined that cost of living pressures and interest rate rises had reduced consumer discretionary budgets, compounded by consumers redirecting spending to travel and experiences.

The report said with little GDP growth forecast over the next year, and given inflation and mortgage rate increases would continue, retail was expected to continue to struggle.

Children’s shoe company Bobux was placed into receivership in April and acquired by Australian shoe company Munro Footwear Group a month later. It owed creditors $4.3 million.

“The post-Covid boost in spending is over and the years ahead look to be challenging for retailers,” the report said.

“Retailers will need to carefully manage stock, staffing, store, and working capital decisions, with scenario analysis for demand forecasting and inventory management to mitigate these risks.”

Core retail spending growth was 0.3% in the year to August, compared with GDP growth of 2.4%. Inflation is the driver of top-line retail growth currently.

Chris Wilkinson, managing director of First Retail Group, talking about what consumers can expect from Black Friday this year.

McGrathNicol partner Andrew Grenfell expected this year to be “harder on businesses”.

That was partly as a result of higher interest rates, but there were a variety of factors at play, still including Covid, he said.

Businesses in the construction and property sectors, along with retail and hospitality sectors had been particularly affected, Grenfell said, and he believed the trend of under-performing businesses was set to continue.

“It is going to become across the board. It was an issue that started in the construction sector and it has spread. The retail and the hospitality ones tend to be put on the front page, but there are lots of others out there.

“From March onwards it is going to be tough.

“I put it down to the high interest rates finally transmitting through the economy. What’s kept things going so far is people’s perception that there is low unemployment, but I think that’s changing slowly.

“When people aren’t confident in their employment, they tend to stop spending.”

Retail expert Chris Wilkinson said the recent downturn had been troublesome in New Zealand and Australia, though nowhere near as bad as it had been in Britain, where the high streets and malls had been hollowed out.

“A pretty buoyant post-pandemic period meant that many retail businesses did particularly well. However, as consumer confidence has declined, disposable spending has become more scarce.

“Many of those businesses that went under showed indications of stress or were in highly vulnerable markets that were likely to be impacted by changes in consumer demands or cost pressures,” Wilkinson said.

“Operational cost increases have been constant and impactful, with many retailers not able to keep up with these in terms of adjusting their pricing and operational models. It doesn't take long before those impacts on already thin margins, begin to bite.

“Most retailers have got over the skills and labour shortages but the staffing costs have risen so productivity is especially important. Businesses that haven't been able to get that balance right have been caught.”