Bedding and homewares brand Moss River has collapsed into voluntary administration with 65 creditors owed more than $2 million, just over two years after the business first fell into the hands of administrators in July 2015.
BDO partners Andrew Sallway and James White were appointed on September 6 as administrators to Fineline Home Products Pty Ltd, which operates eight Moss River stores and an online store, and employs around 40 people, mostly along Australia’s east coast.
The 39-year-old business sells linen and homewares items, and previously went into administration in 2015 when it was then owned by an entity called Residential Homewares.
Administrator Andrew Sallway tells SmartCompany challenging retail conditions led to the latest voluntary administration for the retailer, and three stores have already been closed.
Meanwhile, an informal process has begun for a sale of the company’s assets, including intellectual property and stock.
“There’s a lot of stock, there’s the store fit-outs, the brand, and all the business names and trademarks,” Sallway says, noting that there have already been expressions of interest in the business.
SmartCompany understands the closure of the three Moss River stores at Hyde Park in South Australia, Hawkesburn in Victoria and Mona Vale in New South Wales has resulted in three redundancies.
The stores that have not been sold are continuing to trade, as does the Moss River online store, which Sallway describes as “easily the best revenue generator” and the best performing asset in the group.
Moss River has approximately 65 creditors, and BDO says on first estimates these parties are owed $2.6 million. Sallway says the search for a suitable buyer for the business will continue.
Retail expert at Queensland University of Technology associate professor Gary Mortimer says in general terms, the next few years are likely to be tough for small retailers in the homewares space.
The discount department store market is generating one fifth of its sales from homewares, according to latest IBISWorld data, while analysts from the market research firm highlight that the market is full of a range of chain offerings, from Kmart to Harris Scarfe.
Even discount grocer Aldi is making a move into the increasingly crowded space.
Mortimer says there is little chance the discount department store space will back off from linens and other home furnishings any time soon.
“You see the likes of Kmart moving away from music and books, and they’re continuing to focus on sections of the market they can dominate,” he says.
In the meantime, boutique and independent homewares retailers face a big challenge of being stuck in the middle, he says.
“At the top end of the market, to be successful what you need is a really strong brand — think of the likes of Sheridan, and its brand quality,” says Mortimer.
“If you find yourself stuck in the middle, all you have to run on is price. And it is very tough if you are in this space.”
Consumer interest and sales in the home furnishing space is growing, but the challenge for businesses is negotiating the competitive landscape at at time when customers are fixated on making low cost purchases.
“Consumers will now often look to these kind of home furnishing options; throws, curtains, that kind of thing. But they’re more likely to want to spend under $60 for a decorator table. They’re really looking for value coming from low-cost operators,” Mortimer says.
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