BiG megastore closed suddenly two weeks ago

The Man who bought over Safe Superstore when it went bust finds himself in same boat!

The megastore closed suddenly two weeks ago. It is now dealing with its creditors as it goes into liquidation.

Last year, electronics and lifestyle megastore BiG at HarbourFront Centre recorded a healthy turnover of $48 million. But business plummeted in just six months, leading to its sudden closure two weeks ago.

So what happened?

The simple answer, according to managing director Robert Young: The working capital, or the money needed to keep the store going, had been miscalculated.

BiG owes some $21.2 million to creditors, including landlord Mapletree Investments, suppliers, and even contractors.

BiG's misfortunes did not begin with the usual suspects such as an out-of-the-way location, but its the mistake of changing its business strategy early this year.

BiG is the latest incarnation of Safe Superstore, first founded as SAF Enterprises in the 1970s, selling affordable household goods to army personnel. Although the store is no longer linked to the army, Mr Young adopted a 'low margin, high volume' strategy, offering low prices to customers.

But early this year, the store veered away from that and tried to earn bigger margins while bringing in fewer goods, although that meant paying suppliers a higher price. Turnover took a hit, plummeting to $12 million in the first six months of this year. Cash-flow issues became an even bigger problem.

The slew of competing megastores which have opened across the island and at nearby VivoCity gave it little breathing space.

The company fell behind on payments, including rent for the 80,000 sq ft outlet. At $3.60 per sq ft, rent set it back just under $300,000 a month. BiG's landlord, Mapletree Investments, tried to help out by organising instalment payments, but the downward spiral could not be stopped.

Then, Mr Young conceded, another wrong move was made - the company decided to sell off its Credit Instalment Scheme. This consumer finance part of the business - allowing customers to buy on credit, with their interest payments going towards the store's takings - is usually a cash cow.