After the REDGroup, owners of the retail chains Borders and Angus & Robinson went into voluntary administration in February, many people tried to divine what it would mean for traditional book-selling. Was it a win for the little bookshop operator so long in competition with the book mega-marts or was it the death knell for book retailers everywhere succumbing to the competition of online competitors and E-books?
Looking at what has emerged on the financial structure of the REDGroup there’s good reason to think unrealistic management had much to do with the collapse. It’s owner the private equity owners Pacific Equity Partners appears to have overloaded the company with debt (as described in Glen Dyer’s piece for Crikey, 19 Feb) making it unable to survive the recent economic downturn that saw sales fall and increased price competition from international online retailers. That combined with a strong Australian dollar and excess stocks meant that reportedly there was only $1m in the bank but employee entitlements totalled $7.8 million at the time REDGroup went into receivership. Since then we’ve seen ongoing fall out as stores close, jobs have been shed and flow on nervousness about the effects it will have on big shopping centres, such as Westfield.
