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Credit + Insurance Set To Tighten Following Collapse Of 3 Retailers This Week

Credit rating agencies used by retailers, manufacturers and distributors to check the financial health of the consumer electronics and appliance industry are working overtime as serious questions are being raised about the viability of smaller operators in the market and the exposure of suppliers to the collapse of operations such as 2nds World, Radio Rentals in South Australia and RT Edwards in Queensland.

Some are tipping a “significant” tightening up of insurance premiums with some distributors set to struggle to get cover as the specialist audio channel and small State retailers come under pressure.

The collapse of smaller players is set to strengthen traffic for the likes of The Good Guys, JB Hi Fi and Harvey Norman.

The chief executive of Thorn Group, which operates 64 Radio Rentals and Rentlo Reinvented stores and a large consumer finance business, told the Financial Review that the group isn’t worried about the increasing might of JB Hi-Fi and Harvey Norman.

Tim Luce claims that there are no direct implications for the company from the looming closure of 12 stores in South Australia that trade under the Radio Rentals banner and are owned by a separate, private company not connected to Thorn.

“I don’t think there’s anything that can be drawn from that,” Mr Luce says.

Mr Luce also says that Thorn operates a vastly different model to the large superstores of Harvey Norman and JB Hi-Fi, with rentals to customers the core part of the Thorn business. “It really is a different segment we play in,” Mr Luce says.

The Radio Rentals business run by Thorn has a heavy skew to the NSW and Queensland market. Radio Rentals has 23 retail outlets in NSW, mainly in Sydney’s outer suburbs and in large regional centres including Bathurst, Albury and Dubbo. It runs 19 outlets in Queensland.