Tasmania, the island state 150 miles south of Continental Australia, is currently suffering from employment cuts and profit losses. The discount retail chain, Chickenfeed, has already shut down 20 of its 28 stores. Tasmania?s own version of Walmart has already lost approximately $35 million from May 2011 to June 2012, due to disputes over rent between the chain stores and the landlords. The closing down of these retail stores has affected and will continue to increase Tasmania?s unemployment rate.
Debate over Rent between Chickenfeed and Landlords
Tasmanian retail store, Chickenfeed, going out of business in the later part of 2012. Credit: Flickr user iwishmynamewasmarsha
Hostility between Chickenfeed and its landlords plays a large part in the closing of the retail stores. Due to Chickenfeed?s consistent loss in revenue, storeowners began to fall behind on paying rent. Chickenfeed stores? franchise owners have attributed their failure to the overly expensive rent prices set by the landlord. North Hobart?s Chickenfeed manager explained the reasons why her branch had to close down were because of the high rent price and the competition from the landlords?who also run a business, Shiploads, in competition with Chickenfeed. ?When your competition is also your landlord, that is a challenge,? said Sue Gilbert, communications manager of Chickenfeed, North Hobart.[1] On the other hand, the landlords claim that Chickenfeed of Hobart still owes $50,000 and has a lease until December 31.[2]
Decrease in Jobs, Increase in Unemployment
Unemployment in Tasmania continues to increase from the closing of Chickenfeed stores throughout the island. With a population of just over 500,000, Tasmania suffers significantly from the closing of the 20 Chickenfeed stores. In the next week, over 100 people will lose their jobs from the shutting down of 12 more Chickenfeed chains. With the closing of these 20 stores, the Tasmanian economy will have to spend over $13 million in annual wages and salaries to make up for the loss. Throughout the island of Tasmania, employees have reacted angrily to such short notice being given over the closures. The staff members who have already lost or will lose their jobs will need to hunt for new jobs in the next few months.[3]
Settling Differences or Suffering Consequences
The Tasmanian economy is currently in a downward spiral. While the larger part of Australia has been steadily increasing in retail trade for the past year, Tasmania experienced a -2.6 percent decrease from the previous year. Due to its small size, the Tasmanian economy shifts substantially from any slight changes in its different economic sectors. For this reason, the Tasmanian government should be concerned over the hostile competitors in its economy and help them find common ground. Without government intervention, Tasmania could face greater damage in its current economy. [4]
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[1] Clark, Nick. ?Chickenfeed flies the coop??TheMercury.com.au. September 22, 2012 .
[2] Clark, Nick. ?We?re not happy, Jan??TheMercury.com.au. October 19, 2012.
[3] Clark, Nick. ?Chickenfeed woes grow??TheMercury.com.au. October 20, 2012.
[4] Australia. Department of Treasury and Finance, Tasmania. Retail Trade, October 2012. N.p.: n.p., 2012.
About April Zhao
April is a first-year writer in the APAC region. She is a freshman in Stern majoring in Finance and Accounting with a minor in Urban Design & Architecture. April was born in Hong Kong and grew up in Los Angeles, CA. Being Asian American, April wants to take a deeper look at international business with a focus on Asia which is an area she sees herself developing her career ten years down the road. She has a passion for large cities and urban life which ultimately brought her to NYU. April enjoys traveling and has been to countires such as China, Korea, Japan, Mexico, and Canada.Source: http://nyuiba.com/ibj/2013/01/tasmanian-retail-trade-falters-with-closing-of-chickenfeed/
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