What next for Harris Scarfe as people close their wallets?

 

THREE years after Harris Scarfe declared the traditional department store was not dead, the 170-year-old icon has called in receivers amid a brutal downturn in the retail sector.

The retailer, which has eight stores in Queensland, is now under the control of administrators from Deloitte, which said trading would continue as normal over the Christmas period and employees will continue to be paid by the receivers.

The move comes less than a month after Harris Scarfe was sold to a private equity group Allegro Funds that specialises in turnarounds.

The retailer employs more than 1800 people across network of 66 stores, generating annual sales of $380 million.

Deloitte Restructuring Services partner Vaughan Strawbridge said he was confident there was more than sufficient assets to meet all employees' entitlements.

The receivers intend to sell the business as a going concern and preserve the employment of as many people as possible, he said.

Harris Scarfe’s flag ship in Rundle Mall, Adelaide
Harris Scarfe’s flag ship in Rundle Mall, Adelaide

"Harris Scarfe is a longstanding retail institution," Mr Strawbridge said.

"We will be making every effort to secure a future for the business and intend to commence an immediate sale of business process."

Gift cards and lay-by deposits will be honoured in full, Mr Strawbridge said.

Allegro also bought fellow discount department store chain Best & Less from household goods retailer Greenlit Brands in the deal for Harris Scarfe struck late last month.

QUT retail expert Dr Gary Mortimer said Harris Scarfe had been squeezed out by "cheap and cheerful" retail operators such as Big W, Target and Kmart which sold private label brands sourced from China and other low-cost manufacturing countries.

By contrast, Harris Scarfe sold branded products, including fashion label Vera Wang and Scanlon cookware, that were often heavily discounted.

"Once you get into that cycle of discounting you can never get out," said Dr Mortimer.

"It is a race to the bottom because customers never expect to pay full price."

He said Harris Scarfe's stablemate Best & Less was now also exposed and facing similar competitive pressures.

Harris Scarfe's Queensland outlets included Townsville, Cairns, Mackay, Rockhampton, Hervey Bay, Morayfield, Chermside and Carindale.

In 2016, the retailer renewed a push into the increasingly tough Queensland market and was upbeat about the future of the traditional department store.

The store, which placed itself in the middle of the market between Target and Myer, operated with separate departments for fashion, homewares, manchester


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