Big W not that big

The current economic environment is taking no prisoners. Already in the last 12 months we’ve seen the collapse of such retail stalwarts as Roger David and Ed Harry and now, on the back of sustained losses over the past 18 months, Big W is being forced to close 30 of its stores over the next 3 years.

There’s an obvious economic downturn afoot, yet there are positives to be drawn from this. Driven by a combination of online competition and changing consumer needs, the market is currently undergoing one of the largest restructures of recent times. We’re seeing this at a retail level with stores beginning to emphasise the experiential aspect of shopping. Barbershops are a great example of this, with plenty now offering a beer or coffee along with a trim. Likewise, shopping centres are listening to consumers and remodelling, going as far as to open sprawling entertainment precincts – all in an attempt to lure consumers away from their online shopping baskets and the relative luxury of their sofas. It’s becoming clearer that the future of retail lies not so much in the traditional ‘build it and they will come’ approach, but in an experience that outdoes the comfort of pyjamas.

There are few chains in Australia that could sustain $100 million losses and still have time to restructure -one of the benefits of being backed by the Woolworths Group- but what does this mean for the Mum & Pop retailers of Australia?

There are few businesses that will emerge unscathed, but it presents an opportunity for smaller, savvier retailers to gain a larger market share, differentiate themselves from their competitors and grow. The ‘mid-size’ companies often lack the agility of their smaller competitors and so may feel the brunt of changing consumer preferences more profoundly. The same is true of the behemoths of the industry but, as we can see from Big W, they are far more capable of weathering these losses with one eye on the future. It will still take them time though to restructure and reshape, time which cunning smaller retailers might use to their advantage to get a head start.

While business innovation is and forever will be the most important part of running a business, innovative lease negotiation is a vastly undervalued aspect that can add great profitability. For the first time in over a decade, the retail landscape is undergoing a contraction; property values are falling and the leases, if properly negotiated, should too. This is why it’s especially important to know your rights as a tenant, and to have a retail leasing consultant properly advocating for you.


By James Kolacz