NQR CEO explains what went wrong

Posted by Daniel Palmer on 7th September 2009

The new Chief Executive of Not Quite Right (NQR), a Victorian supermarket clearance outlet that entered voluntary administration in May, has outlined what went wrong for the company in a television interview on the weekend.

Graham Holman explained on ABC’s Inside Business program that the 22 year-old business suffered from a re-positioning that saw them attempt to take on the supermarkets. The move was made in the wake of a change of ownership three years ago.

“To see it built up over the number of years, the sale of the business, that’s a wrench in itself, but then to see it change direction and that direction not working, is quite disappointing,” he said.

The business has since been taken out of the hands of administrators by former owner Ken Nienaber, his wife and Roger Gillespie – the co-founder and Executive Chairman of Baker’s Delight. But, despite the new beginning, questions have lingered as to why a company that thrives on the price-driven consumer could fail during a time when consumers were looking to cut costs.

“The concept is to take job lots from manufacturers who have excess stock, packaging over-runs, end of season lines, that they need to clear and clear quickly. NQR was a strong small business, independent company, 100 per cent owned by Australians, and it was travelling well. It had good store staff, good suppliers and obviously a loyal customer base,” Mr Holman explained. “Year-on-year we were seeing seven, 10 per cent growth.”

This changed when the new owners looked to expand to fifty stores and altered the positioning of the company in the marketplace.

“I can see that they’ve tried to re-position the business as more of a supermarket, to compete against the major chains, and you can’t beat them, they’re the major force in the marketplace,” NQR’s current CEO advised. “NQR is not a supermarket, it is actually a grocery clearance store.””They did invest additional working capital a couple of times, but they still took it down the path of trying to develop the store network, put money into the capital expansion, but then didn’t follow through with the increase in the stocks, and it’s a stock driven business.”

Mr Holman said that the former leadership team had been monitoring the situation from afar and decided to buy back in because they thought steady profit growth could return.

“There’s a very loyal staff base there, some of them going back 15-odd years. You feel an obligation to these sort of people,” Mr Holman said. “Some stores in the country areas were closed. That’s disappointing to us, but importantly we have saved over 300 staff for ongoing, and that really is important.”

“I was the general manager of the company previously, so together we want to move it forward and stay with the nucleus of the 18-odd stores in the metropolitan Melbourne and re-establish as it was previously, as a pure grocery clearance store.”

The company still needs to rebuild consumer confidence in the chain, which will begin with a plan to quickly grow inventory levels by over 20 per cent.