Going under … Down Under

Point Zero did not yet have a store in Australia, but the Canadian fashion retailer already saw the continent’s market as a potential launching pad for bigger plans.

“If we do well in Australia, we will expand to New Zealand, too, then to Singapore and Malaysia,� Point Zero vice-president (international) Guy Oiknine told Australian Financial Review in April 2012.

The Montreal-based retailer told reporters that after years of discussions and several 30-hour flights back and forth, its ambition for Australia was coming to fruition. Point Zero, said to have $200 million in revenues in 2012, had reached an agreement with an Australian licensee run by a Montrealer who was especially bullish about the market Down Under.

The licensee, recently created Retail Expansion Pty. Ltd., would open three stores in March 2013: one for Point Zero, and one each for other interested Montreal chains, La Vie en Rose and Joshua Perets. But that was going to be just the start, Retail Expansion director Joseph Waknine said at the time, recounting his $8-million, 100-store growth strategy.

Waknine even bragged to reporters that he could teach local retailers a thing or two.

“They should learn from us how important customer service is and how lacking it is in Australia,� Waknine told a Melbourne-based web publication in November 2012. “We have over 25 people in the team who are very experienced in retail, from merchandising to management to customer service.�

But by September 2013, Retail Expansion’s first three stores, at Rundle Place shopping centre in the South Australian city of Adelaide, were shut. They had barely lasted six months.

Mall owners quickly seized Retail Expansion’s stock, but news reports said the mall was left with more than $193,000 ($200,000 Australian dollars) in unpaid rent.

Soon after, Retail Expansion’s listed directors — including Waknine and Tarik Mihoubi, a former special adviser to former Montreal mayor Pierre Bourque — became increasingly difficult to reach, an Australian freight forwarding company told The Gazette. “It was a case where we couldn’t contact them, they (just) changed phone numbers,� said Walter Futschik, managing director of Specific Freight Pty Ltd., who claims Retail Expansion owes him about $69,000 for transporting the goods to Australia. Reached by The Gazette, Waknine denied owing the shopping centre any money. He said Specific Freight is owed about $40,000, but added that the failed venture has left him “broke.�

Point Zero, La Vie en Rose and Joshua Perets attribute the collapse of Waknine’s bold plan for Australia to a dispute between Retail Expansion’s directors.

“Apparently, there was a feud, an unfortunate feud, and the stores closed,� said Annie Hakim, director of operations at Joshua Perets Group, which operates 28 teen fashion retail stores in Canada.

But even as Retail Expansion’s directors blame each other, the demise of their Australian venture serves as a cautionary tale at a time when retailers are increasingly expanding across borders.

U.S.-based Target Corp. entered Canada last year through a $1.8-billion corporate deal to acquire as many as 220 Zellers store leases. Canadian retailers Lululemon, Dynamite and Garage have grown south of the border through new corporately-owned stores.

But other chains — such as lingerie retailer La Vie en Rose and Point Zero — are choosing to expand through agreements with licensees, which can sell their clothes and open stores under their banner, but remain a separate legal entity. Similar to licensing is franchising, where the head office is still legally separate but is said to be more involved with the partner, and may help with such things as site selection, explained Brent Houlden, a retailing specialist and partner at professional services firm Deloitte Canada.

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