Megastore goes from BiG to bust in 6 months

[BobaFett]

LAST year, electronics and lifestyle megastore BiG at HarbourFront Centre recorded a healthy turnover of $48 million. But business plummeted in just six months, leading to its sudden closure two weeks ago.

 

So what happened?

 

The simple answer, according to managing director Robert Young: The working capital, or the money needed to keep the store going,had been miscalculated.

 

'I pumped in $10 million but it was not enough, and we couldn't get any more from the banks,' he told The Straits Times. Even a boost last year did not help - the taps ran dry, delaying payments and, in turn, slowing the arrival of goods.

 

Mr Young continued trying to keep the store afloat, but one creditor went to court in June, sending things into a tailspin.

 

'I guess one thing led to another...other creditors started pulling merchandise, and my lawyers said that if I didn't get in a provisional liquidator to exercise some control, things would be very chaotic,'' said the former investment banker, who is in his late 40s.

 

So now, the man who bought over Safe Superstore when it went into receivership in 2003 - with big plans to turn it around - is finding himself in the same boat.

 

BiG owes some $21.2 million to creditors, including landlord Mapletree Investments, suppliers, and even contractors.

 

KPMG Business Advisory, which provides tax, financial and audit services, has been asked to manage the proper disposal of its assets and is expected to be formally appointed liquidators at a creditors' meeting on Wednesday.

 

BiG's misfortunes did not begin with the usual suspects such as an out-of-the-way location, said Mr Young. In fact, its spot at the HarbourFront Centre ensured high traffic and brisk sales.

 

So what went wrong?

 

Mr Young said the company made the mistake of changing its business strategy early this year.

 

BiG is the latest incarnation of Safe Superstore, first founded as SAF Enterprises in the 1970s, selling affordable household goods to army personnel.

 

Although the store is no longer linked to the army, Mr Young adopted a 'low margin, high volume' strategy, offering low prices to customers.

 

But early this year, the store veered away from that and tried to earn bigger margins while bringing in fewer goods, although that meant paying suppliers a higher price, he explained.

 

Turnover took a hit, plummeting to $12 million in the first six months of this year. Cash-flow issues became an even bigger problem.

 

The slew of competing megastores which have opened across the island and at nearby VivoCity gave it little breathing space.

 

The company fell behind on payments, including rent for the 80,000 sq ft outlet. At $3.60 per sq ft, rent set it back just under $300,000 a month. BiG's landlord, Mapletree Investments, tried to help out by organising instalment payments, but the downward spiral could not be stopped.

 

Then, Mr Young conceded, another wrong move was made - the company decided to sell off its Credit Instalment Scheme. This consumer finance part of the business -

 

allowing customers to buy on credit, with their interest payments going towards the store's takings - is usually a cash cow.

 

The store had been in talks with Safe Money, a subsidiary of TT International. The sale was completed on June 27, three weeks before BiG went bust, TT International executive director Julia Tong said.

 

Customers have been assured that their instalment plans will be transferred to Safe Money, and they can use their unused credit at all consumer electronics, lifestyle and furniture stores owned by TT, which makes the Akira range of electronic appliances and owns Novena Holdings' seven brands, including Natural Living.

 

Mr Young said the store is now dealing with its creditors as it goes into liquidation. But it is also trying to assist some 300 customers who have been left stranded.

 

KPMG Business Advisory said some have paid in full for items in advance, and if these are still in stock, they will be able to collect them.

 

Mr Young said Safe Money has volunteered to try and help some of the other customers left in the lurch.

 

For Mr Jonathan Wong, that is good news. He paid BiG $4,699 in cash for a 50-inch Hitachi plasma television set in June but wanted it delivered only this month.

 

Existing warranties provided by BiG will be honoured, said Mr Yeap Lam Kheng, executive director of KPMG Business Advisory.

 

http://news.asiaone.com/News/The+Straits+Times/Story/Megastore+goes+from+BiG+to+bust+in+6+months.html

 

[Smooth1624705821]

And for your info, I have the membership card expiring Mar 2008 still in my wallet. ;D

[MC_Hammer]

'I pumped in $10 million

 

former investment banker, who is in his late 40s.

 

BiG owes some $21.2 million to creditors,

 

 

rent for the 80,000 sq ft outlet. At $3.60 per sq ft, rent set it back just under $300,000 a month.

 

He's not a Very Good Investment  Banker I must say ! But I respect his "B A L L S "

 

If he had invested $10 million into Properties or stock market...he would have easily made more than $20 million..now he's down $21.2 million instead.

 

Crazy to pay $288,000 for monthly rental...in my opinion..it's his Rental that Kills him...Simple business theory...Keep the COSTS LOW ! :'(

 

Small Is Beautiful !

[myhifisystem]

I wonder who will be the next victim??

 

Regards

 

 

[MC_Hammer]

Harvey Norman is oredi scaling down......

 

Giant n Carrefour killing one another

[Heng]

Courts Mega Store so big also don't seem to draw many ppl...

 

 

[YANG]

it's his Rental that Kills him...Simple business theory...Keep the COSTS LOW ! :'(

 

MUATAFA are selling electrical appliances as well, even though their profit margin are low, they can still be able to expand their business...why...BETTER PLAN WITH YOUR HEAD LAH!!!

 

I gotta say, some of us singaporean are greedy...especially after some success.

 

When we earn a little amount of money, we get ourself big sedans, big house, and other big stuff...

(definately with more money onhand, there will be some individuals look for small tight stuffs as well...you know i know lah...no need elaborate...)

Follows by making big move so that more money can roll in. Earn ourself bigger reputation is much more important than putting the little knowledge and experience to work. This is Singapore lah... no reputation, the big banks will give you big thumb for loan???

 

With that first earning, BiG could easily buy themselves a place or some kind of space so that they can move their business when their good sales situation takes a big hit. No need to get themselves into deep shit until ending their business...

 

Sigh... again... who to blame?

[synthesis1624705793]

No, Mustafa profit margin is not low. Their price is not that cheap compared to last time. Many of their electronics items are really outdated and they still don't clear them off by offering good discount. You can easily get better clearance deals from other mega stores. They know the rent is high that's why they cramp everything such that there's no space for alleys. 

[MC_Hammer]

No, Mustafa profit margin is not low. Their price is not that cheap compared to last time. Many of their electronics items are really outdated and they still don't clear them off by offering good discount. You can easily get better clearance deals from other mega stores. They know the rent is high that's why they cramp everything such that there's no space for alleys. 

 

Mustafa is lucky that they are located in their own Niche market...Little India..so they will survive...yes I agree that some of the stuffs inside are so outdated...but the Indians there are still buying so they should be OK !

 

Courts n Giant recently opened Mega Stores in Tampines, Hopefully Rental there is more Economical....Good Luck to them

 

IKEA seams to have their own winning Formula n System going for a Long Long Time...I recently went to Visit IKEA at Tampines...I was actually Quite Impressed...everything was very efficient..n smooth going...Crowd was GOOD !...Things are Cheap !...Property Boom means IKEA also Boom Town Charlie !

 

 

[ysl]

He's not a Very Good Investment  Banker I must say ! But I respect his "B A L L S "

 

If he had invested $10 million into Properties or stock market...he would have easily made more than $20 million..now he's down $21.2 million instead.

 

Crazy to pay $288,000 for monthly rental...in my opinion..it's his Rental that Kills him...Simple business theory...Keep the COSTS LOW ! :'(

 

Small Is Beautiful !

 

many businesses are weigh down by rental, with greedy landlords. Remember the $1.99 shop ? The first chance to up the rent or when things seemed to look up, rental goes up. But Singapore is relatively not that bad, in another country increase can be in 100, 200 or even 300%.

[ysl]

MUATAFA are selling electrical appliances as well, even though their profit margin are low, they can still be able to expand their business...why...BETTER PLAN WITH YOUR HEAD LAH!!!

 

I gotta say, some of us singaporean are greedy...especially after some success.

 

When we earn a little amount of money, we get ourself big sedans, big house, and other big stuff...

(definately with more money onhand, there will be some individuals look for small tight stuffs as well...you know i know lah...no need elaborate...)

Follows by making big move so that more money can roll in. Earn ourself bigger reputation is much more important than putting the little knowledge and experience to work. This is Singapore lah... no reputation, the big banks will give you big thumb for loan???

 

With that first earning, BiG could easily buy themselves a place or some kind of space so that they can move their business when their good sales situation takes a big hit. No need to get themselves into deep nuts until ending their business...

 

Sigh... again... who to blame?

 

I know of a grad, who after 5 years of work and earnings, was getting first big pay cheque and into the next income bracket. Went into a condo and a big car. When the income tax bill came, he had to get OD to pay off his tax.

[warmasterhorus11]

Its all about Asset & Liabilities management.  ::)

 

 

[boseguru]

MUATAFA are selling electrical appliances as well, even though their profit margin are low, they can still be able to expand their business...why...BETTER PLAN WITH YOUR HEAD LAH!!!

 

I gotta say, some of us singaporean are greedy...especially after some success.

 

When we earn a little amount of money, we get ourself big sedans, big house, and other big stuff...

(definately with more money onhand, there will be some individuals look for small tight stuffs as well...you know i know lah...no need elaborate...)

Follows by making big move so that more money can roll in. Earn ourself bigger reputation is much more important than putting the little knowledge and experience to work. This is Singapore lah... no reputation, the big banks will give you big thumb for loan???

 

With that first earning, BiG could easily buy themselves a place or some kind of space so that they can move their business when their good sales situation takes a big hit. No need to get themselves into deep nuts until ending their business...

 

Sigh... again... who to blame?

 

You've got that right!