Why did MFI, Woolworths have gone bankrupt?
Ok, there is global credit crunch, there's very little money to lend by the banks. But what I cant understand is that, how these giants are tumbling down? Is this because there are not enough people with money to buy their goods? Or is it because there were running a tight ship and the inability to borrow has tipped the balance?
- Anonymous1 decade agoFavorite Answer
MFI - their own explanation was a lack of people buying "big ticket" items. The credit crunch has made it harder for people to obtain credit to buy big items and also the economic slowdown means that people have either got less money to spend or the fear of what might happen and job insecurity puts people off making big purchases - we can all make our sofa last a bit longer and re can all wait until things look better before refitting the kitchen.
Woolworths - has been a lame duck for ages and had a flawed business model. Shops specialise these days and there is no room for a shop that sells a bit of everything (if you want a cd go to a record shop, toys go to a toy shop etc) - they became outdated and the shops also became scruffy and disorganised. They built up debts and eventually suppliers wanted them to pay up front as they were considered a credit risk. Having to pay for the xmas 2008 stock up front maxed out the debts and the main creditors pulled the plug.
Hope this helps! Its a big shame in both cases.
- Anonymous1 decade ago
MFI has been crap for years, they've struggled in the boom days and it was inevitable they would fold in bad times.
Woolworths have 30,000 staff to pay and sales dived. Everyone gets excited about big stores and supermarkets, but all they do is bring junk in from China, undercut stable 1 man businesses and then go pop when sales and funds dry up because management and shareholders bleed the companies dry.
- kapnLv 71 decade ago
Walmart......Cosco.........Sam's.........need more..........people will go for the best price and screw Mom & Pop stores...........