There is more to life after administration than simply closing poorly performing stores. There are rules that should be followed.
So here’s the deal. We’re not doing very well, so let’s put the company into administration and then buy it back from the administrators and ditch the stores that have been letting us down. We’ll have to alter our name (a bit) and we may let down a few of our creditors, but on the on the other hand we’ve have a viable business model.
Sound familiar? Well if it doesn’t, you really haven’t been reading the retail press as diligently as might be advisable. And while the outlined modus operandi may sound like a possible way forward, it ignores one thing. If a business is not all that, then it’s probably not all that even with fewer stores. Add to this the fact that suppliers may well become a mite more cautious about giving a business of this kind credit and before a phoenix retailer knows it, it may be right back where it started - at the door of the administrator.
The point perhaps is that if a reborn business is to thrive, something has to be done to make the shops the kind of place that shoppers will wish to visit - rather than offering a beefed up (or otherwise) version of what was already there. There’s usually a pretty good reason why a business descends into administration and more usually than not it will be because it operates in the same way as others, but less efficiently, and its stores are not shopper magnets.
So what should and can be done? In the first instance, when closing stores, take a look at what they look like. Are they any different from the better performing branches? If the answer is no, and it usually will be in a chain operation, then perhaps it’s time to assess what is going to be done with the rump.
This need not involve huge amounts of money, but it should be aimed at making the stores better places to visit. If a tick can be put in the improved shops box, then consider how to do something about the stock. Trying to sell merchandise from a stockroom really won’t work, so concentrate on not overbuying - easily said, less easily achieved.
If neither of these look possible, then perhaps it’s time to start thinking about not trying to raise the dead. There is little point in throwing (other people’s) good money after bad. And if you’re looking for an example of all of this, think about a Scottish discount fashion retailer that has recently been repurchased by its owners.
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