Amazon, Airbnb drive retail insolvencies

AMAZON_LANDING_PAGE_AUCompetition from online giants such as Amazon and Airbnb is behind an increase in the number of Australian retailers going bust in recent years, according to new research.

While overall numbers of insolvencies are falling, data from global information group Equifax shows bankruptcy in sectors including retail, accommodation and food services is trending higher.

Equifax general manager commercial and property products Neil Shilbury says the businesses that are unable to pay their debts are, in many cases, those facing disruption from new market entrants.

He said handbag maker Oroton and apparel brands Marcs and David Lawrence suffered financially due to the likes of Amazon and Alibaba as consumers shift to online.

“Similarly, the accommodation and food services industry has been grappling with the impact of peer-to-peer sites such as Airbnb, or tech-first delivery services like UberEats and Deliveroo,” Shilbury said.

“These kinds of disruptors put a lot of pressure on the industry, and particularly on small and independent businesses.”

In response to these changes, small food retailers are restructuring business models to accommodate for delivery businesses, Shilbury said.

“The whole source of revenue is changing and you have to adjust your cost model to reflect that because if you don’t, in my experience, it will lead to difficulty.”

Retail spending fell 0.5 per cent in December and had a quiet start to 2018, rising 0.1 per cent in January – well short of the 0.4 per cent rise the market was expecting.

The household goods sector, and sales at cafes, restaurants, and takeaway food outlets, both rose just 0.1 per cent in the first month of 2018.

Despite these challenges, external insolvencies dropped significantly in the construction industry in the three years thanks to a surge in building developments in several major cities.

Insolvencies in manufacturing, financial and insurance services, wholesale trade and professional, scientific and technical services also fell significantly.

Shilbury said the reduction in bankruptcy levels across Australia was helped, in part, by the performance of the mining states as they continue to recover and stabilise following the end of the mining boom and improved economic conditions.

But he said, there is still “some way to go” before the impact of the mining boom is completely left behind.

AAP

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