The price of fame

All Black Daniel Carter (above) and fellow celebrities Sally Ridge and Adam Parore hit the wall with clothing firms put into receivership. Photo / Glenn Jeffrey

Experts have two main tips for celebrities getting into business - put in the hard yards and get some good advice.

You don't have to be famous to fail in this harsh retail climate but the more public recognition, the harder the fall. As one commentator says, just because you can kick goals on the footy field doesn't mean you'll meet them in business.

All Black Daniel Carter joined other famous faces suffering business failure after a clothing chain he has a 50 per cent share in went into liquidation last August. The four-store Gas chain collapsed owing $1.16 million just two months after Sally Ridge and Adam Parore's James & August women's leisure wear company went into liquidation, owing $1.04 million.

A furniture chain in which All Black Ali Williams had a stake was put into liquidation by an American wholesaler.

A report on SuperFurn shows the company, which had stores around Auckland, owed nearly $929,000, only about a tenth of that available for distribution to creditors.

And those cashing in on their name to endorse rather than invest have also come a cropper in finance company collapses. Boards of the failed companies have been sprinkled with a few famous faces, mainly former politicians.

A review of securities law is seeking feedback on the practice of celebrity endorsement, asking whether those who appear in adverts promoting an offer should be liable for the statements they make.

Paul Keane of retail consultants RCG said celebrities should be fully involved in the business.

"If you look around there aren't too many retailers who've fallen over because they haven't had hands-on experience - if they have hands on they've got a better chance," he said.

"There's also an experience factor. But to be fair, these are difficult times in a difficult market."

Auckland University's head of marketing, Professor Rod Brodie, said in Carter's case lack of experience and bad timing were telling.

"I'm not sure with Carter how much experience he had. It was also bad luck, we're going through a recession, retail's hurting, especially the luxury end."

Celebrity business failures were always more visible.

"They create a certain expectation and sometimes that can't be met and that's the problem. It's two-sided - being a celebrity there's draw in that, but he can't hang out in his stores all that often."

For Carter, there could have been some some confusion between the Jockey brand he promotes and his clothes shops, which were more of a boutique operation, Brodie said.

The retail scene has been described as the toughest in almost two decades in sectors where statistics are already against longevity.

Statistics NZ's industry profiler shows clothing, footwear and personal accessory retailing has a success rate of just over 60 per cent after two years. Just on 40 per cent of businesses are still going after five years.

Success rates for furniture, electrical and hardware retailers are a little better with 70 per cent surviving the first two years and just over 40 per cent still going after five years in business.

Newmarket Business Association chief executive Cameron Brewer Fame guarantees nothing in business, especially in hard times said celebrities appeared to do better in the good economic times - when they tended to go into business.

"What we've noticed in the last 18 months is that the age of celebrity has moved on, really - there's not the glitzy champagne parties, well-known people from the arts or sports putting their name to anything that moves," he said.

"Part of their value proposition is the 'ra ra'. When they lose that, it's harder to sell."

Shoppers were looking for value, not who was behind the venture.

Those starting up tended to underestimate the ongoing operational expenses of running a business. For a single shop they could be paying $100,000 a year in rent.

"It appears to be a good idea but retail's a tough game and for celebrities to come in without a strong business case or experience, I think they're unpleasantly surprised."

And Brewer said those without universal appeal could struggle.

"Politicians tend not to open shops - 50 per cent of the market would refuse to come in."

Julian Smith, general manager of business software firm Myob, said it's how celebrities get out of their business that counts.

"If it's going really well they have a great exit strategy, but they also have to have an exit strategy if they encounter hurdles along the way."

Support was key.

"They know their personal brand is tied to that business and to be really successful they surround themselves with folks who can support them."

Celebrities more typically plug products but it doesn't always go well, as seen in the collapse of finance companies that rugby great Sir Colin Meads and newsreader Richard Long promoted.

As RCG's Keane says: 'It doesn't always mean you're going to be able to convert from a goal on the paddock to a goal in the business world."