Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

If you compete with the Reject Shop…

Mark Fletcher
May 24th, 2019 · No Comments

The Reject Shop appears to be in challenging times, according to a report in The Age.

The Reject Shop will part ways with its chief executive and has revealed it is heading for a full-year loss, as sales evaporate and it cuts prices amid fierce competition from supermarkets and department stores.

The discount retail chain on Thursday said it now expected to run at a loss of $1 million to $2 million this year – a downgrade from earlier guidance for a profit of $3 million to $4 million.

The ASX announcement from the business has more details:

In addition, Gross Margins have fallen as the expected benefits from Sales and Merchandise related initiatives have not landed with consumers during the half. This margin pressure has been exacerbated by the competitive pricing pressure placed on a number of key Sales Departments from both the major Supermarkets (FMCG) and the Department Stores (General Discretionary Merchandise), forcing price roll-backs across a number of key lines as the business looks to maintain its price gap in the market.

Non-product related costs including Store Wages, Occupancy Costs and Head Office Costs have been well controlled during the half, with material cash reductions on rent renewals still being delivered.

This will be good news to newsagents competing with the discount retailer. I have been tracking them this year because of their creeping into more areas in the gift, card and related categories. I thought they were doing well in the context of their type of retail.

For what it’s worth and thinking about today’s news, I think the Reject Shop is encountering challenges because of renewed focus from K-Mart, supermarkets and because the Reject Shop approach to retail is not what shoppers look for today.

The days of retail shelves being full as a sales approach are over for now. Shoppers want engagement, experiences. Give them this and sales will increase.

I visit a couple of Reject Shops regularly to watch their changes and offering experiences is not something I see.


Category: Competition · retail

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