Interest rate rises and the push to halt discretionary spend is having a rapid impact on businesses, according to Melbourne retailer Design A Space.
The company has announced it will cease its retail operations next month, after 17 years in business.
"We had a very successful business pre-covid and we always believed we could get the business back on track however, over the past few months with interest rate rises and inflation we now know it is simply not possible," co-founder Rebecca Lutz told Ragtrader. "The message out there is to stop discretionary spending which has extremely affected our business. We want to close while we can still pay staff entitlements and designer sales and that time is now."
Design A Space operates as a multi-brand retail store, where Australian designers rent space to sell garments at retail prices.
"In order for the designers to stay in store you need to see steady sales," Lutz said. "When every aspect of your business has a rise in cost from rent to packaging and courier costs yet we can’t charge our designers more rent as they will no longer benefit from the concept we have a problem."
Melbourne retailers have been particularly affected, following strict lockdown regulations during the COVID-19 pandemic.
"Retail was hit immensely," Lutz confirmed. "I will never forget the restaurant next door being open for customers to come in and dine yet our shoppers were not allowed in our front door. The momentum slowed and never bounced back the way we had hoped.
"We have some other businesses that we would like to put more energy into including an online fashion brand called Harvest Lane and we have many creative ideas for new businesses in the future.
"We feel for everyone doing it tough in retail right now throughout Australia. We believe it is important to determine what your customers need and how you can meet those needs. Keep chatting to your customers and try to find a niche offering."
Established in 2006, Design A Space stocked over 170 local independent designers across men’s, women’s and children’s fashion and accessories, homewares and artwork.