Lessons in Failure of Retail Giants

Lessons in Failure of Retail Giants

This article is from the September 21 issue of The Geelong Advertiser Digital Edition. To subscribe, click here.

INSIGHTS into the challenges ahead for business around the world were shared at an online forum hosted by Rodgers Reidy last week.

The online whip-around of the organisation’s international insolvency network gave a snapshot of the winners and losers under COVID-19 , labour market issues and the impact on commercial property. A common thread was how the easing of government stimulus and relief packages would impact on struggling businesses.

Combined with a variety of “safe harbour” laws, there has been little pressure on “zombie companies” to pay down debt. Leaders in the field from the US, Canada, Malaysia, Hong Kong and New Zealand joined Rodgers Reidy leaders from all states in Australia in addressing the online forum on Wednesday.

Ian Ratner, of Reilly Financial Advisors, in the US, said there were many large retailers, such as J.C. Penney, that had gone out of business. “We are talking about thousand of stores that are going to be liquidated and people out of jobs,” Mr Ratner said.

He said there would be a major correction in the office and shopping centre markets in the US, where the commercial-backed mortgage securities market saw $12.1bn of loans go into default in the first half of the year. Rodgers Reidy Geelong office director David Holton said the forum helped to understand that business impacts around the globe were largely the same as those being experienced in Victoria, with insights from North America a crystal ball to what might transpire in commercial real estate, hotels and the bricks and mortar retail industry.

“Of particular interest in Geelong will be the various government offices around central Geelong and when or if they return to the office and the impact on the various hotel proposals in Geelong with limited international tourism,” Mr Holton said.

“Our focus will be to assist businesses to turn around and recover if possible.

“However, I have a fear that the JobKeeper program and the insolvency moratoriums offered will have created many zombie companies that will ultimately fall into liquidation and cause a crippling domino effect to many creditors.

“We would encourage all business owners to act early to try to preserve the value in their business.”

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