Distributors of high-end audio are not bothering with niceties during the Coronavirus epidemic, with at least two major distributors moving this week to collect stock from retailers who cannot pay their outstanding bills, some of these retailers who have sold consignment stock and then not paid for it have been sent 30-day letters of demand.
ChannelNews knows the name of these distributors which we are not naming at this stage, as it could create more pain for retailers who could be identified as their customers.
One Melbourne based distributor has already moved to lay off staff because of a lack of capital.
One major distributor said “Several retailers that we have approached have said that they cannot pay for stock we have supplied. This is not an issue associated with the Coronavirus, it’s stock that was in stores before the Coronavirus epidemic.”.
“Several Hi Fi debtors, including several leading audio and custom install retailers are now surviving hand to mouth, day to day. They are refusing to pay for stock that has been sold so we are now moving to reposes stock. With others that have sold our stock we have already issued 30-day letters of demand”.
“Our banks are now asking why we have been so lenient with retailers with the extension of credit and the provision of consignment stock”.
“we will have no hesitation moving to bankrupt dealers who can’t pay amounts as small as $20 to $30,000 dollars. Distributors have to protect their position, or we face the risk of their insurance being denied or stopped all together”.
Another Melbourne based distributor who has moved to recover stock said “Retailers have allowed debt to build up, they have also pocketed revenues and then turned around to suppliers claiming they are struggling”.
They added “So are distributors and if means a total shakeout of the industry so be it”.
ChannelNews has also been told that three key distributors are exploring the concept of creating a joint venture with shared warehousing and support staff.
The move is seen as a “smart way forward” for distributors that are under pressure from failing retailers.
Two retailers that ChannelNews have approached have refused to comment.
Last month the Sydney based Lifestyle store was able to clear a tax liability with capital being injected into the business by distributors who also supplied the Company with stock.
Earlier today it was revealed that urther coronavirus restrictions and rocketing unemployment are weighed on consumer confidence resulting in Hi Fi retailers coming under additional pressure. Retailers who saw a slump in sales in January and February due to the Bushfires are now battling a new slump in consumer sentiment.
The ANZ said that consumer confidence has slumped to it’s lowest level in almost 50-year history.
The data released this morning showed a 9.8 per cent decline in consumer confidence for the past week to 65.3.
The weakest component of the survey was ‘current economic conditions’, falling by 9.5 per cent following the previous week’s 37pc decline.
“Current economic conditions’ fell more than 9pc and are down close to 50pc over two weeks, to the lowest ever level,” ANZ head of Australian economics David Plank says.
“And most other aspects of the survey are exceptionally weak. The announcement of the largest fiscal package yet may stabilise confidence, but much will depend on the how the pandemic evolves.