News this week that prolific mailing and catalog mailing retailer Ezibuy has been put into administration by its Australian owners is likely to be the end of the line for the business, industry commentators say.
Announcing the move to the Australian stock market on Monday afternoon, owner Mosaic Brands said Ezibuy’s sales had fallen 51% year-on-year in the first half of the fiscal year and it was taking action.
“The extent of Ezibuy’s sales decline, particularly in the context of the group’s broader positive portfolio of online performance, prompted the board to undertake a strategic review of its operating and cost structure,” it said.
“The board determined that it was in the best interest of the group as a whole for the Ezibuy business to be restructured. As a result, Ezibuy has appointed Katherine Elizabeth Barnet and Damien Mark Hodgkinson as administrators.
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He said the board intended to propose a restructuring that would mean Ezibuy would emerge as a streamlined, profitable and cash-generating online operation that was more in line with its successful digital strategies at its other brands. Mosaic also owns Millers and Katies.
Ezibuy currently has five stores in New Zealand, but is only online in Australia.
It was founded by Peter and Gerard Gillespie in the 1970s and was bought by Woolworths in 2013 for NZ$350 million. At the time, it was reported that Woolworths wanted to use it to increase its online capabilities.
But in 2017, Woolworths sold Ezibuy to Alceon Group, a major shareholder in Mosaic Brands, for A$30m (NZ$32m). Then, in 2019, Mosaic bought a 50.1% stake in Ezibuy from Alceon for $1, with an option to acquire the remaining 49.9% for A$11 million, which it did in October 2021.
At the time of the Woolworths purchase, the company was reported to have 500 employees. When he claimed $2.28 million in wage subsidy during the pandemic, he reported 354 employees.
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E tū union represents staff at the Palmerston North distribution center and a spokesperson said that currently everything was running as usual for them.
Other retailers have reported hard times: The Warehouse said last month that its profit fell 60.9% in the first half of the business year. Hallenstein Glassons noted that early winter trading had been challenging as the cost of living put pressure on buyers.
Greg Smith, head of retail sales at Devon Funds Management, said online sales had fallen across the board since their Covid peak and the market was “extremely difficult” and consumer spending had slowed significantly.
“At the same time, the cost of doing business is rising, making things difficult for retailers, both online and in physical stores. “
Retail commentator Chris Wilkinson, managing director of First Retail Group, said there were other factors at play for Ezibuy.
“For many years he was the darling of the market: they owned the catalog market. (But) as his clients aged and their preferences changed, he did not morph with them. He got a little lost. The younger audience…didn’t understand what his proposal was.”
He said it had been a forerunner of “fast fashion” in parts of New Zealand when there weren’t many options available.
“Fast fashion is now prevalent in much of New Zealand and Australia, especially in those areas where Ezibuy used to be successful, the provinces and rural areas. I think we also know that the apparel sector has been one of the hardest hit in terms of spending, as people have shifted their preferences from products to experiences.”
He said it was probably the end of the line for Ezibuy. “They have a massive database that someone could tap into, but I don’t see a future for it.”
Damien Mather, a senior lecturer at the University of Otago business school, said Ezibuy had been a forerunner in the development of database marketing, but lately it didn’t seem to be using best practices to target customers effectively. . He “He Set the template for how digital marketing companies survive today in terms of best practices and maximum profitability”.
He said he might have suffered from being one of the first to move. “He succeeded when he didn’t have to compete too much with the many digital marketing businesses out there now.
“They went online, but suddenly they were competing in the same space as a lot of other players and some just do it better.”
He said many companies had also suffered from rising costs in recent years and problems with distribution.
“They were an icon, it’s a real shame.”