FUTURE PROOF: PeatsHigh rents and falling consumer demand led the family who own Peats Electronics to decide to close, but the people of Ireland had other plans

‘IT WAS LIKE a death or something,” says Ben Peat of the decision in April this year to close his familys business. Like Clerys clock or the Moore Street traders, electronics shop Peats of Parnell Street has been a name synonymous with the Dublin retail scene for decades.

When a collapse in consumer spending and unsustainable rents brought Peats to its knees earlier this year, the family demonstrated old-fashioned business ethics and principles from which others could learn.

“We could see the writing on the wall up to a year ago,” says chairman Ben Peat, one of five sons and a daughter who, along with nieces and nephews, have worked at Peats since it was founded by Ben’s parents in 1934.

“Electronics was my father’s hobby and he decided to set up a business on Parnell Street charging wet-cell batteries and winding transformers. He loved electronics.”

By the year 2000, Peats World of Electronics had grown to 11 stores employing 75 people. While the business had always recorded growth, from 2002 turnover was increasing in double digits.

“We were being told by everybody – politicians, bankers, the Central Bank, economists – that this would continue and anyone that said anything negative about the economy was told they were mad,” says Peat.

But from 2003, rents doubled overnight. “You couldn’t get a lease without it being long-term or upward only. The landlords were in total control and if you didn’t agree with the terms, you wouldn’t expand or grow.”

He says while things would have been sustainable had sales continued to climb, that’s not what happened. Though the tills rang loud until Christmas 2006, from Christmas 2007 it was alarm bells that were ringing as consumer demand collapsed.

Peats moved to cut costs. While wages, directors’ salaries and pensions were trimmed, there was little leeway on rents.

“We spoke to landlords and they didn’t particularly want to know,” says Peat. While some gave reductions, most only offered abatements. “You still owe it and it’s still building up every month, so you get to the stage where it’s unsustainable.”

He feels landlords’ intransigence was driven by banks. “Every time we spoke to landlords they’d say ‘we have to go back to our bank and discuss it’. [The banks] were trying to keep the asset value on the books up – whether they were getting the rent or not, I think the priority was that everything looked all right on paper.”

Describing trading for Christmas 2011 as “flat and quite negative actually”, at the end of January this year, the family decided it was time to take action.

“We had cash in the bank and we could have traded on until September or October but we decided it would be better to take action before we ran out of money,” says Peat. “Our priority was to look after our staff and our suppliers and the family good name. We didn’t want to just exit and walk away from everything.”

The advice from accountants was liquidation. Peat describes it as an emotional time. “You’re talking not just pounds, shillings and pence but the family business and people working with you for 30 years. It was very difficult.”

On Monday April 2nd, Peat made the announcement at an all-staff meeting. He says while staff knew things were tough; it still came as a shock.

“Everybody was dumbstruck. They didn’t realise the whole company was closing down. Unfortunately, it was an all-in-one company. It was all or nothing, you can’t just walk away from leases.”

Going home to see his company’s closure on the news he says astonished him, as did the public’s response. “I just couldn’t believe the reaction . . . over the next couple of days, it was like a death or something.

“Then there was the reaction from our suppliers, they wanted to know when we were reopening again, they wanted to continue trading with us.”

Such reaction got the family thinking about other routes. On April 23rd, just one day before the companys final liquidation meeting, the High Court approved a survival plan, moving the company from liquidation to administration.

The original Peats of Parnell St and its Rathmines store would continue trading, with 27 jobs saved, saving the exchequer €163,000 in redundancy payments.

The Revenue was to get the majority of what it was owed and creditors, instead of getting nothing if the company had wound up, would now get something. Members of the Peat family also invested €140,000 in working capital and €15,000 in equity.

Describing it as an exciting but worrying time, he says the public’s support helped. “People would stop and talk to you. You just realise you are sort of an institution in Dublin, there’s a lot of goodwill out there. It gives you confidence to continue. Although it’s still very tough and it will be.”

With the business now slimmed down, Ben says Peats can get back to its core values – value for money and good advice.

“There are a lot of fantastic products being introduced and people need someone to explain how they work and how to get the best from the product.”

After a tumultuous year, he says he’s looking forward to a good Christmas.

“I’m quite confident the business will survive and hopefully we can hand it down to the next generation.”