Edcon CEO Grant Pattison reportedly broke down in tears this week on a conference call to suppliers. "We only have sufficient liquidity to pay salaries... which we deem a priority during these uncertain times."
There was much sympathy for Pattison when the story broke. "His courage and bravery should be recognised when so many other business people are ducking and diving to avoid having difficult conversations," one supplier was quoted as saying.
Fact of the matter is that Edcon should have been shut down a year ago. Instead, the irresponsible idiots secured a R2,7 billion boost in the form of loans, rent deals with landlords, and a cash injection from the PIC.
The starting point for this was the absurd proposition that Edcon was too big to fail.
The company and its subsidiaries employed some 30 000 people, and rents about 10% of the floor space in our biggest shopping malls. There are about 750 companies in the Edcon supply chain.
So we heard the usual platitudes. We cannot afford to put 30 000 people ut of work; we need to keep those suppliers afloat; Edcon is the backbone of the retail industry and needs to be kept afloat.
No one stopped to consider the hubris of the retail property sector who have insisted on ramping up on mall construction in spite of the global decline in such spaces.
No one stopped to consider the flawed business models of such spaces which bent over backwards to anchor tenants while plying on disproportionate costs to small businesses.
I'm sticking my neck out to say that Edcon will never recover from this. It is a business model from the last century. Forthcoming generations willl shop online rather than wade through malls with desultory attendants and surly cashiers.
As for CEO Pattison, the honourable thing to have done would have been to pay your suppliers rather than your staff. They have a future. Your business does not.