EXCLUSIVE: Bidders For 2nds World Exposed 15 New Stores Coming
When billionaire retailer Gerry Harvey scooped up 2nds World last week after the liquidators were bought in, he bought to a halt the ambitions of several competitors who were looking to pick up the NSW retailer on the cheap.
Now Gerry Harvey is set to open 15 2nds World branded stores, with major brands approached to supply stock.
Several of these stores are currently branded Harvey Norman stores five of them are in NSW.
Even before the liquidators were called in, some of the biggest retailers in the consumer electronics and appliance market tried to get hold of the 2nds World business that was initially established selling rejected, returned or seconds stock.
Several potential bidders have said that under Gerry Harvey management, the retail chain will strip business away from Greys Online, Catch Of The Day and E Bay where both distributors and brands are “getting rid of run out stock”.
They claim that the Harvey Norman acquisition was a “very smart move”.
ChannelNews has discovered that the sale of the business was not without its own drama’s when all of the organisations who had approached the liquidator were later exposed to each other.
This happened when the liquidators, NSW chartered accountants De Vries Tayeh, failed to blind email the organisations who had approached them with an expression of interest when they syndicated the official expressions of interest document.
ChannelNews has since been shown a list of the people and organisations on the list.
Administrators, chartered accountants De Vries Tayeh, led by Riad Tayeh, Antony Resnick and Mark Robinson, were appointed administrators of the 2nds World group on April 15.
Prior to their appointment several people approached Peter Hammerman the CEO of 2nds World who was desperate to secure an investment or sell the business. At the time the business was collapsing due to a lack of credit and poor cashflow.
At one stage former Panasonic Marketing Manager Marcel Mellick was accused of trying to tap investor’s for money to finance a takeover deal prior to 2nds World being placed into Liquidation.
According to people who Mellick approached he told them that he was working with Brian Fox a former senior executive at The Good Guys who “could turn the business around”.
Fox has since told ChannelNews that Mellick “had no authority” to represent him in the market.
Fox said “We were talking to 2nds World management prior to the liquidators being called in and afterwards. This was a business that had potential. It was suffering from cashflow problems, had the wrong brands and creditors had stopped extending credit to 2nds World”.
Within hours of ChannelNews breaking the story that the liquidators had been called in to the struggling retailer, the administrators started getting expressions of interest for the business.
Within 48 hours some of the biggest retailers in the Country had expressed interest in the business.
According to Mellick he did not officially spruik financial interest in the business. “It was more a case of me expressing to people I know that there was a good business opportunity with 2nds World”. He said.
A former executive at Sony and Panasonic Mellick said that he was no longer in the consumer electronics or appliance business. “I am not involved in any Companies involved in this market”. He said.
He also said that he was not working for any distributors as a consultant including Ayonz or Laser Corporation who he has worked for in the past as a consultant.
2nds World had a long-running history, selling discounted appliances to retail customers and commercial clients.
Built around the marketing notion of cheap or seconds products the business had moved away from selling distress or refurbished stock with more than 70% of the products being offered being new.
A member of the NARTA buying group, the Company in the end had no option but to call in the liquidators after NARTA stopped supply with one source telling ChannelNews that the Company was “Constantly maxing out their credit limits within the first few days of the month”.
According to NARTA executives the business represented less than 1% of their total purchases.
Gerry Harvey said that the Harvey Norman was interested in 2nds World because it wanted to grow its seconds business in Sydney.
2nds World stores were located in the Sydney suburbs of Castle Hill, Caringbah, Cremorne, Auburn and Penrith, and the retailer also has an online store, selling discounted appliances to both retail customers and commercial clients.
Mr Harvey said as part of the deal he would take over the leases of the five bricks-and-mortar stores. He would not disclose the agreed acquisition price. ChannelNews has been told that the Cremorne store will nor re-open.
At present all stores are closed along with online ordering “until further notice”.
ChannelNews understands that Harvey Norman is set to kick start the online operation soon, taking on the likes of Greys Online and Catch Of the Day with discounted stock.