Suppliers warned about role in high street failures
As Jessops goes into administration, suppliers thinking about tightening their credit terms have been warned about their role in the closure of retailers.
According to Christine Elliott, chief executive of the Institute for Turnaround, camera chain Jessops was actually turning itself around after a difficult period. The collapse came, Elliot said, when suppliers changed credit terms.
"Having faced severe financial difficulties in 2009, Jessops was an example of a 'zombie' company which had started to turn itself around," she explained.
"This progress has come to a sudden halt because its suppliers have sharply tightened their credit terms. They seem to have done that in response to the collapse of Comet last November, not because of any deterioration in Jessops' financial position.
"This does nothing to help the already fragile retail sector. Suppliers and other stakeholders need to differentiate between failing companies and those 'zombie' companies which are in fact capable of becoming viable businesses.
"In Jessops' case, the company had a significant market share which will be extremely difficult to replicate. Suppliers who may be thinking of acting in a similar manner, should consider that such actions may have the unintended consequence of damaging their own interests. Jessops and its employees now face a bleak future despite, and not because of, the way the business responded to its zombie challenge."