Dick Smith’s receivers have announced none of the offers to buy the company were adequate, so all of its New Zealand and Australian stores will shut down over the next eight weeks. We asked the experts what the human and economic cost of over 400 retail staff being left jobless is.rn
Receivers from Ferrier Hodgson said there were a significant number of expressions of interest from local and overseas parties.
However, the offers were either below liquidation values or highly conditional.
As a result, the remaining 301 stores in Australia and 62 stores in New Zealand will close in the next eight weeks.
The folding of Dick Smith means nearly 3000 workers will lose their jobs, including 430 staff within New Zealand.
New Zealand employees’ who are made redundant will will rank ahead of secured creditors and will be paid in full up to $22,160.
Receiver James Stewart said the job loss was a disappointing outcome for employees that had been loyal to the business.
“We would particularly like to thank the Dick Smith employees for their support and patience during the receivership process.”
The human cost
When looking at the bigger picture economically, 430 jobs cut isn’t a significant portion of the retail market.
The Household Labour Force survey found that 362,000 people worked in the retail sector in 2015, while the New Zealand economy as a whole has about two million jobs in it.
Infometrics senior economist Matt Nolan says in this respect, 430 jobs being lost has no real economic impact, especially when the business they worked at was unable to create value.
However, he notes that it’s significant as a group of people are suddenly losing their livelihood.
“Retail firms do predominately hire second earners in a household, or young employees, and many of these people will be able to comfortably segue into either new work or other non-market activity: study, work around the house,” he says.
“However, this is not the case for everyone. Given that there will be a core of people with retail specific skills who relied on that job, we also need to think about their ability to move into similar work.”
He says the outlook isn’t great for jobs, but it’s better than it would’ve been a year ago.
“Overall, the data suggests that even though it is the best time to be looking for this sort of work since 2008 it is hardly going to be easy to find new work.”
Westpac senior economist Satish Ranchhod said it’s always unfortunate to see job losses of this scale, but on the upside there’s a reasonably firm outlook for the New Zealand labour market.
“430 is a not a small number, it will be spread nationwide, but it’s at a time when the economy is starting to strengthen so there is the possibility that there will be jobs in retail and other sectors,” Ranchhod says.
First Retail managing director Chris Wilkinson says there’s an eight-week window ahead for staff, so with general industry churn some will naturally gain jobs across the sector.
However, he said finding another job could be challenging in the vulnerable areas, such as some provincial towns.
“Some staff may have to look outside the consumer electronics segment,” he says.
A number of retail developments underway will result in new jobs being created, he said.
“Looking at upcoming openings, there are a number of Countdown Supermarkets under construction now, new Bunning’s branches near to opening and other large retailers close to committing to new sites or takeovers of smaller retailers that are in the wind.
“Essentially the retail sector is highly dynamic at the moment – which is good in terms of career opportunities.”
In Australia, a government inquiry is being led by Senator Nick Xenophon into the collapse of Dick Smith.
Questions will be asked about Woolworths’ sale of Dick Smith and corporate and consumer watchdogs not stepping in.
There are no plans to investigate its demise this side of the ditch.
Read former Warehouse Group CEO Mark Powell’s perspective on the Dick Smith saga here.