Retailer Logic

Not that long ago I was looking at the Sydney Morning Herald before boarding a flight to Brisbane to spend another week watching a company flush itself down the toilet when I ran across this piece.

Lingerie chain may cut jobs as trading hits 20-year low

Bras N Things say that “the mounting burdens of higher wages, restrictive industrial relations policies and competition from online shopping could force it to cut staff”.

You’ll notice that the only reason that Bras N Things are in trouble is because of the three great evils - higher wages, industrial relations and online shopping.

I also noticed in the article that the company shelved its IPO earlier this year.

As I remember it when you’re going for an IPO you generally pump up the size of the business by opening lots of new stores to get the top line revenue up - in the case of retail that means getting into high traffic shopping centres (with stupidly high rents), carrying all the stock that your potential customers may want and having stores, lots and lots of stores. In fact, earlier this year they opened their 200th store.

Hell, they even trumpeted their online presence in this piece.

So let me get this straight, in an economic environment where everyone has been complaining about the retail environment Bras N Things have been growing at a rate of 50 stores a year. The Global Financial Crisis hit us in what 2008 and things have been in the crapper ever since? Dollar plummeted against the US back in whenever it was to around 67c and they opened 50 stores a year.

Now that they’ve grown and grown, making the business look good for people wanting to invest their hard earned in a float they discover “Whoops. Retail isn’t doing so good and our results don’t look so good”.

Maybe we need to wait for a better time to float, make our mountains of money and do a Myer to the investors.

Now since it can’t possibly be the fact that the business has been on a growth trajectory that isn’t supported by economic conditions it must be that the economy ate their homework, probably helped by the internet.

Wake up to yourselves! You’ve got your hand on the tiller, you’re responsible for the mess you’ve got yourselves into. If you didn’t realise what was happening then you shouldn’t be running the company and if you did and you got yourselves into this situation, you shouldn’t be running the company.

It really is that simple.