Bennetts managing director Mike Jones speaks out on how things went wrong
PUBLISHED: 16:44 12 March 2011 | UPDATED: 16:48 12 March 2011
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The trigger for the appointment of administrators at Bennetts was the withdrawal of support by a credit insurer, costing millions in lost sales over the key Christmas period.
But managing director Mike Jones said weak consumer confidence and changing shopping habits had also been major contributors to the firm’s problems.
Mr Jones, who joined the company in 1981, said the electronics sector had gone from a “soft” market five years ago to a “hard, replacement” market.
He said: “People are only buying if they really have to because their appliance or television isn’t working any more, as opposed to someone who decides to buy a plasma screen television because the Champions League is going to be on.”
And he warned retailers with physical stores faced a tough challenge with more people buying online.
While Bennetts had ventured online, Mr Jones said the firm’s internet sales had fallen in recent years faced with competition from specialist “e-tailers”, who operated without the overheads of stores, warehouses and sales staff.
As a result of the challenges, Bennetts saw a decline over several years, plus pressure on prices and “diminishing margins”, Mr Jones said.
He said the company had made cuts and delivered efficiencies in the business, and hopes of a positive Christmas were lifted by strong sales at the firm’s Hi Tech Show in Norwich in October.
Then came November, and the withdrawal of support from the credit insurer, which meant Bennetts was unable to secure new orders from suppliers – followed by the snow.
“Christmas was nothing like we had expected,” Mr Jones said. “There was a dynamic downturn in sales which, in turn, had its effect on our cash. Some stock was on its way but got turned around. We saw millions of pounds in lost sales in what is our busiest trading period by a long margin.”
Administrators PKF are seeking buyers for Bennetts’ assets, and a number of potential buyers have come forward. They include the retailer’s managers who are seeking to put a bid together.Whether that happens is expected to be decided in the next two weeks. Whatever the outcome, Mr Jones said he and his fellow directors had been overwhelmed by the support of staff, some of whom had even said they would put money into any new venture.