Melbourne-born stationery business kikki.K was placed into voluntary administration on Tuesday, putting 450 employees and 65 stores fates up in the air.
Chief executive Paul Lacy said the business had been caught in a perfect storm – feeling the impact of Brexit in the United Kingdom, the Hong Kong protests in its Asian arm, the bushfires in Australia, and the global threat of coronavirus.
“This unprecedented line-up of external events, particularly in recent weeks, has really taken its toll,” Lacy said.
“As we looked ahead we just didn’t have the certainty we could keep going so we have had to take this decision.”
The business appointed Jim Downey of J.P. Downey & Co. as administrator, and Cor Cordis’s Barry Wight and Bruno Secatore as receivers.
For the time being the business will continue to run as usual while its future is determined – with founder Kristina Karlsson hoping to find a new home and partner for the brand.
“The last few weeks have been some of the most challenging of our lives but we remain determined to find the right new partner to continue chasing our dream, so we can get back on track for all the people including our wonderful team who rely in some way on this beautiful brand,” Karlsson said.
According to Wight, administrators are now urgently working with management to plan a restructure of the business, while investigating potential sale options.
“kikki.K has unfortunately joined what has now become a long list of financially distressed retailers, given softening consumer spending, high leasing costs, compounded by a disappointing December and January trading period,” Wight said.
At its peak the business traded across 100 global stores, though the impact of a disastrous international expansion to the UK and the continued spectre of low consumer confidence took its toll.
Swinburne Business School’s lecturer of marketing Dr. Jason Pallant told Inside Retail there are many challenges factors across the retail sector at the moment, particularly for a brand as internationally exposed as kikki.K.
“Recent events have highlighted how challenging retail now is, particularly as brands expand their footprints,” Dr. Pallant said.
The brand also suffered from a product offering that become less unique over time, with both discount operators and upmarket alternatives stocking similar options as the business matured. And digital alternatives to its core products are now readily and freely accessible on smartphones and computers.
“It creates a challenging position to stand out, particularly as the middle-class continues to decline, and is a further example of the need to compete beyond just products or core services,” Dr. Pallant said.
“I hope they can find a suitable buyer to keep the brand in Australia. If they do I would expect them to follow the lead of other retailers by reducing the offer and footprint to try to reduce costs and focus on the core customer base.”
According to The General Store partner and CEO Matt Newell retailers can struggle with juggling the difficulties of a global expansion alongside keeping their offer fresh and exciting for existing customers.
“Kikki.K were executing a pretty ambitious global expansion program which would have sucked out a lot of the capital required to weather difficult trading conditions,” Newell told IR.
“You have to admire what kikki.K created since they launched in the 1990’s. They totally redefined customer expectations in the stationery category and grew a global brand that retailed in 140 countries worldwide.”
Additional reporting by Jo-Anne Hui-Miller.