Oroton joins the long list of Australian retailers in voluntary administration

Posted: 30 November 2017 1:13 pm News

oroton administration

News has circulated this morning that Oroton is now in voluntary administration. This is the second Australian brand this week. What's up with Australian retail?

Australian leather goods retailer Oroton this morning announced that it was entering into voluntary administration. According to Oroton, its eight-month turnaround plan didn't pan out, leading to the company appointing Deloitte Restructuring Services as its administrator. At this stage, Oroton's physical and online stores will continue to trade as normal.

So what happened? Well, Oroton sales have been declining for some time now and in 2017, the company recorded a $14.2 million loss. The share price has reflected the company's problems. According to SMH, the Oroton share price was up around $7.80 in 2013 and dropped to $2.44 a year ago. This week the price was as low at 43 cents.

The recent strategic acquisition of millennial-cool brand The Daily Edited hasn't managed to turn things around for Oroton. In addition, partnering with influencers like Talisa Sutton and Sara Crampton (née Donaldson) hasn't managed to breathe new life into the brand and lift sales to where they need to be.

According to interim chief executive Ross Lane, “We have made every effort to avoid making this decision but have been unable to source a viable solution which could achieve a better outcome than voluntary administration."

“The board is disappointed that it has had to take this step after running such a comprehensive process. However, having carefully considered the options available to the company at the conclusion of its strategic review, it is apparent that voluntary administration is necessary to protect the Oroton business and the future of this iconic Australian brand.”

This is a dark time for Australian retail. Oroton is one of Australia's most iconic brands and has been for most of the 79 years that the brand has been trading. It seems that even well-established brands like Oroton can't keep their foothold in the Aussie market.

Oroton is the second brand this week to announced it's entry into voluntary administration. Australian designer brand Lover announced that it was in trouble on Tuesday and has appointed Ferrier Hodgson as its administrator.

The list continues. In the last 18 months we've also seen SurfStitch, the Aussie branch of Topshop, Marcs, David Lawrence, Payless Shoes, Herringbone and Rhodes & Beckett all falter under the weight of the tough Aussie market.

So where has it all gone wrong for these retailers? A report put together by SMH detailed six reasons why Topshop didn't succeed in Australia, and some of these hypotheses stand out from the rest, including a lack of investment in online sales and high prices.

If we look at the brands that have suffered, many of them are certainly some of the higher-priced brands in Australia, especially Oroton, Marcs and Herringbone. And in a world with low-cost fashion retailers like H&M and international outlets like eBay, it's tough for the pricier retailers to compete.

Online availability is also a key driver of success in this era. A brand without an attractive and user-friendly ecommerce is a brand that might not survive long.

And things are only going to get tougher with the coming launch of Amazon Australia. Although Amazon has traditionally been seen as a source for electronics, home items and groceries, some sources suggest that Amazon Australia will enter into the market with a highly competitive fashion offering.

With retailers like Myer also reportedly in financial strife, the face of Australian retail is evolving and there are sure to be more casualties along the way.

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