Country Road goes green - Inside Retail
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Issue 2250
21 Aug 2019
RRP $14.95
insideretail.com.au
Country Road
goes green
From recycled yoghurt cartons to
fishing nets used as fixtures, here’s
an inside look at the retailer’s newest
environmentally-friendly store.
In this issue
News News Analysis
Spendless sale to strengthen business Overseas fashion label lands Divided we fall
The shoe retailer’s future is now set under Chinese designer brand JNBY opens Who is representing the industry’s
Novo’s new leadership. p3 first store in Melbourne. p4 voice in government? p6
NEWS
Country Road leads the way in
green – and beautiful – design
Country Road has just earned a coveted five-star “Green Star”
rating for its new Chadstone store – and more of these fitouts
are on the way. By Heather McIlvaine. Photography by Guy Lavoipierre
W
alking into Country Road’s newest flagship store, which fixtures were repurposed in other stores throughout the network.
opened in Chadstone Shopping Centre last Thursday, “So many things need to come together to get the [five-star]
customers are drawn to a luxe-looking table, where the rating,” Buffington said. “It means that you’re actually looking at
fashion brand’s latest accessories are artfully displayed. everything in the store; it’s a really holistic approach.”
At first glance, the white surface looks like it is made from The Chadstone flagship is just the first in the network to get the
terrazzo, an on-trend stone material that would not be out of place green treatment. According to Buffington, the brand is hoping to
in a Country Road store known for its “affordable luxury” aesthetic. receive a Green Star rating for its new store opening in Westfield
In fact, the table is made from recycled yoghurt containers. The Newmarket in Auckland, New Zealand. The shopping centre
intricate herringbone parquetry? Recovered from old buildings has been undergoing redevelopment and is due to open later
around Sydney. Even the hooks in the fitting rooms are fashioned this month.
out of used fishing nets. “We’ve put a lot of work into the [green store design], so it’s
These are just some of the dozens of environmentally-friendly something we want to roll out more broadly,” she said.
design decisions that Country Road and London-based agency As stores throughout the Country Road portfolio come up for
HMKM made in the construction of the new store, which has earned refurbishment, they will be refit to be more environmentally-friendly.
a five-star “Green Star” rating from the Green Building Council of This is in keeping with the brand’s broader sustainability targets,
Australia (GBCA). which include ensuring that every product has a sustainable
Country Road is the first fashion retailer to receive a five-star attribute by 2020.
rating from the GBCA, which ranks buildings across nine impact So far, the brand has launched traceable merino, jeans made
areas, including their indoor environment quality, such as air quality from recycled denim and swimwear made from recycled nylon. On
and acoustic comfort, energy, water, emissions, materials and Friday last week it also launched a new page on its website called
other categories. “Our World”, where it has posted a list of its suppliers and factories,
Most of the store’s environmentally-friendly features are not its commitment to ethical trade, information about its materials and
visible to the naked eye, such as its use of low-VOC paint and other aspects of its supply chain.
FSC-certified timber, or the education of staff about proper waste “Country Road is a big brand and a well-known brand,”
management – and that is by design. Buffington said. “That comes with a responsibility to do the
“We wanted to show the industry that you can create right thing.” IRW
environmentally-friendly stores that still look beautiful and don’t
cost any more [than traditionally-built stores],” Alicia Buffington, Country Road discovered that the
cost of an eco-friendly fitout is
store design and development manager at Country Road Group, roughly the same as a traditional one.
told Inside Retail Weekly.
According to Buffington, the per square metre cost of the
Chadstone flagship was roughly on par with other flagship fitouts,
thanks to the cost of environmentally-friendly materials, such as
paint and lighting, coming down over the past five to 10 years.
Even the sourcing of special pieces to put in the new store, such
as the white tables made from recycled yoghurt containers, was not
as difficult as Buffington thought it would be – though the team had
to look further afield than she would have liked.
“Once we started looking, we were amazed at how many people
around the world are producing these beautiful things. Finding them
wasn’t a problem. But finding them in Australia was one of the most
challenging parts,” she said.
Ultimately, Country Road and HMKM settled on a mixture of items
Xxx
sourced from both Australia and overseas. The store’s old fitout
was responsibly disposed of by a demolition waste recycler, while
2 insideretail.com.au
NEWS
Chinese fashion brand
This week’s top 10
Our most read stories from the
lands in Melbourne
past week at insideretail.com.au.
China-based designer label JNBY, or ‘Just
Naturally Be Yourself’, plans to target local
consumers with Chinese ancestry. By Dean Blake
C
hina-based designer-fashion brand attracting Chinese consumers has become 1 Wesfarmers to reposition Target,
cuts head office roles
JNBY launched its first Australian big business – both the over one million
2
store in Melbourne Central last Australians with Chinese ancestry and the Country Road opens green store
month, with the potential of more stores to 1.4 million Chinese tourists each year. in Chadstone
come. After opening stores across China and Data from Tourism Australia found that
the US, it was a natural progression for the Chinese tourists spent $11.5 billion in 2018
brand to enter the Australian market, said – or roughly a quarter of all inbound tourism 3 Novo Shoes Group snaps
up Spendless
JNBY spokesperson Lijie Fu. expenditure. As a result, many local brands
“With more than 1500 stores around the are adapting their offerings to appeal to this
world, it made sense to be in Australia. There growing market. IRW 4 Don’t innovate, adapt: What retailers
can learn from Ikea
is a strong fan-base of Chinese nationals
living in Australia who already know, love JNBY has stores across
and are loyal to the brand,” Fu told Inside China and the US; Australia
is a natural next step.
5 Super Retail Group sees growth
across the board
Retail Weekly.
“We feel that JNBY will resonate well
with fashion-led Australians, in particular 6 ‘Challenging’ retail slump hits Vicinity
Melbournians.”
While the brand’s seasonal styles will 7 Retailer weighs in on new code of
conduct for shopping centres in NSW
reflect what is being sold in its home
market, JNBY is curating a collection that is
specifically selected for Australia. According 8 Caltex CEO to resign, search for
replacement begins
to Fu, the brand enjoys evolving with and
for its customers, and as such, curated
collections are something it reviews and 9 Strong interest in Asia, but little
adapts on an ongoing basis. action: report
While the initial offering is limited to JNBY’s
womenswear range, the brand is open to
expand more of its range to the Australian
10 Baby Bunting’s online focus pays off
market as demand necessitates.
“We think the things that make JNBY
special will equally be appreciated by
Australian customers,” Fu said.
Comment of the week
The Melbourne Central store is the brand’s
first in Australia, though there is potential for
more across Australia and New Zealand in
the future. “The best approach for SMEs is a step-
“We’re very excited to bring and make by-step one, starting at Singapore or
JNBY available to existing and loyal fans another S.E. Asia country.”
already based in Melbourne, and we’re
thrilled with the uptake of new fans after our
Warren - Strong interest in Asia, but little
grand opening launch event,” Fu said.
action: report
“It’s a collection and brand that local
stylists and fashion lovers are already
connecting with.”
In a struggling Australian retail market,
3
NEWS
Novo Shoes purchase
gives lift to Spendless
The new owners say nothing will change at Spendless Shoes
but its future just got a lot more secure. By Dean Blake
A
fter more than 30 years at the helm of Australian discount Rider brands across Australia and New Zealand, the purchase adds
footwear chain Spendless Shoes, founder John Charlton a further 214 Spendless locations to its roster.
has sold the business to competitors Novo Shoes Group.
According to Charlton, the deal was reflective of the renaissance of Keeping the team in place
good retail taking place. Novo Shoes chairman Ian Unwin told Inside Retail Weekly that the
“As the largest family footwear retailer in the country, this group has been watching Spendless for some time, and was invited
purchase will make Spendless more competitive in the future, by Charlton to “look under the hood” of the business around six
where no customer will be offended by price,” Charlton told months ago.
Inside Retail Weekly. “When we met John six months ago, he indicated that he was
“The increased scale and purchasing power [will ensure] a strong looking to sell out of the business… We were very impressed with
future for Spendless Shoes.” what they’ve done, and the team they’ve built and the business
Charlton founded Spendless in 1988, after starting his career in model,” Unwin said.
David Jones’ shoe department. “It’s well run; it’s a profitable business, and we thought it could
While Novo Shoes already operates more than 100 retail strengthen the business we have in Australia – so that’s why we’re
locations, between its Novo, Naturalizer, Ipanema, Grendha and buying it.”
Novo was so impressed with the way Spendless has been run
that it is making as few changes as possible to the operating model
moving forward. Spendless will not be integrated into Novo Shoes –
the two businesses will continue to run separately in the Australian
market.
According to Unwin, the brands speak to different customers,
operate under different models, offer different price points, and it
doesn’t make sense to combine the two.
“We intend to retain the [business model],” Unwin said. “We’re
keeping the team, and we’re keeping the profile the business has. It
will be the same.”
With Charlton stepping away from the business, Spendless
general manager David Evans has stepped up to lead the business
as chief executive, while general manager of finance Tina Taddeo
now serves as chief financial officer.
Go where the customers are
Charlton spoke to Inside Retail Weekly earlier in the year, indicating
the business was investing into a stronger online presence, with
more consumers being incentivised to purchase online rather than
entering shopping centres.
“[One] thing I find amazing right now is that landlords are
increasing paid parking at their centres,” Charlton said. “Why would
someone drive around a carpark, get frustrated and pay for it, when
they could just have something delivered to their home? Why are we
making it difficult for them?
“A customer will happily pay $40 for something online and
rave about getting free shipping, and another one will pay $30
for something and complain about $9 of shipping. It’s the same
psychology with paid parking. Customers don’t like it.”
The two shoe businesses appeal to different According to Charlton, Spendless doesn’t care how you want to
markets and different price points.
shop, it just wants to sell you shoes. IRW
4 insideretail.com.au
NEWS
Around the globe
Trade war hits Macy’s earnings said the company was now turning its attention to lower-tier
Macy’s has cut its full-year forecast as second-quarter earnings Mainland China cities for growth, hoping to broaden its customer
of US28¢ a share badly missed Wall Street analyst estimates of base. That strategy has been working for JD’s archrival Alibaba.
US45¢. The retailer has been heavily discounting merchandise and
has closed more than 100 stores since 2015. Chinese lean on brand ambassadors
The largest US department store operator, whose flagship Chinese brand ambassadors of fashion labels from Coach to
building in Manhattan is a major tourist attraction, blamed a bigger- Givenchy have severed ties with the companies over products
than-expected decline in tourist spending for the shortfall, along which they say have violated China’s sovereignty by identifying
with weak demand for its own-brand women’s sportswear and for Hong Kong and Taiwan as countries.
warm weather apparel. The brands are the latest to get into hot water over political
Total tourist numbers have fallen sharply partly because of the issues in China, which has been more assertive in its territorial
higher US dollar. And the trade war with China has caused a 2.8 per claims and how it expects foreign companies doing businesses in
cent drop in the number of Chinese citizens visiting the US in the China to describe them.
first six months of the year, Reuters reports. Italian luxury label Versace and its artistic director, Donatella
The trade war is expected to hurt Macy’s – along with most Versace, apologised last Sunday after one of its T-shirts, depicting
retailers – as it will be hard to resist price rises as costs start the territories of Hong Kong and Macau as countries, was criticised
to climb. on Chinese social media.
Yahoo Finance sees Macy’s current numbers – shares down 60 Jewellery retailer Swarovski has also apologised for implying
per cent so far this year – as “terrifying” as the once-impregnable Hong Kong is not part of China following the resignation of its
fortress has revealed itself to be “just another retailer”. Chinese brand ambassador, Jiang Shuying.
Coach’s China ambassador, supermodel Liu Wen, said on Weibo
Discounting costs Luckin Coffee that she had severed her endorsement deal with the New York-
Chinese startup Luckin Coffee has turned in a bigger-than- based label over a similar T-shirt, which also listed Taiwan as a
expected loss as costs ballooned on store openings and heavy country even though Beijing says the self-ruled island is a
discounts aimed at competing with Starbucks took their toll. renegade province.
Luckin opened its doors early last year and listed its shares in “I apologise to everyone for the damage that I have caused as a
May. It opened 593 new stores in the June quarter, bringing it to result of my less-careful choice of brand!” she said in a Weibo post
a total of 2963, about 1000 fewer than Starbucks. By end of the that was “liked” hundreds of thousands of times.
year, Luckin aims to have 4500 stores.
Despite the loss, the company is satisfied with its progress as Steinhoff aims to slim down
it aims to become the largest coffee network in China. It says that Scandal-hit Steinhoff says its only hope for survival is to sell off
revenue grew 700 per cent during the quarter. assets to become a retail-focused holding company, as it fights
“We are pleased with the performance of our business as we to recover from 2017’s $10 billion accounting fraud and share
continue to execute against our long-term growth plan,” chief price crash.
executive Jenny Zhiya Qian told Global Coffee Report magazine. At the South African company’s first public investor presentation
since the scandal broke, Steinhoff said it had already sold a number
of assets that did not align with its recovery plan.
It had also refinanced some €9 billion ($14.7 billion) of debt in its
overseas operations, which include brands such as Poundland in
Britain and France’s Conforama, after pushing the deadline date
back repeatedly.
Reuters reports that the company is now up to date with its
financial reporting and expects to publish an unaudited quarterly
update for the three months ended June 30 on August 29.
JD sales rise 23 per cent
Chinese e-commerce giant JD exceeded revenue expectations in H&M backs social enterprises
the June quarter, as net sales rose 23 per cent to 50.28 billion yuan As pressure mounts to end throwaway consumerism, H&M, the
($10.6 billion). world’s second-biggest fashion retailer, says it will sell homewares
The company has cited forays into the convenience store sector made by two social enterprises – businesses that aim to do good
and supermarkets, as well as the harnessing of artificial intelligence as well as make a profit – in H&M Home and Arket stores in five
in its advertising and logistics operations for the improved result, as European countries from late August.
it tries to be less reliant on its core online retail platform for growth. Products will include lampshades made with banana leaves and
Net income reached 618.8 million yuan ($129.8 million), a significant artisan-crafted trays and baskets, with a view to job creation and
turnaround from the 212.4 million yuan ($44.6 million) net loss of the providing help for people and communities that are struggling.
same period last year. Critics, however, say that for a fast fashion retailer like H&M,
The company’s logistics business broke even during the quarter. whose growth depends on selling more and more stuff, to embrace
Discussing the results during an analyst briefing, a senior executive environmental campaigns is just greenwashing. IRW
5
ANALYSIS
Divided we fall: why retailers
must speak with one voice
The retail sector is facing a plethora of threats, so it must unite
to lobby government effectively and persistently. By Jared Dickson
T
hrough some of the most challenging years for the sector, are pleading for higher wages to kickstart the flagging economy –
the retail industry has had way too little bark or bite. precisely the same argument that the Shop Distributive and Allied
Australia’s largest private sector employer – and a key Employees Association (SDA) will pursue in the FWC.
economic driver – has had but a whisper in public debate and little Wage theft legislation is on the government’s agenda too, along
shout or clout in government affairs. with franchising law changes, recycling and waste, and a global
That is not to say the industry associations haven’t tried to make trade war that could dramatically impact on the purchasing power
some noise, but they are under-resourced and struggle for of the Australian dollar and the cost of imported products.
authority because none of them can claim to really represent Who is actually representing the industry in Canberra? What
the entire industry. firepower – indeed, what credibility does the industry have in the
The biggest single achievement of recent years for the industry debates, inquiries and decisions that both directly and indirectly
associations has been to convince the Fair Work Commission impact on retailers, their employees, suppliers and customers?
(FWC) to pare back penalty rates. And the industry would probably Arguably the two most potent industry spokespersons are Gerry
have lost that gain had Labor won the May federal election. Harvey and Solomon Lew, both of whom are prepared to weigh
Labor’s failed campaign was a great escape for the retail industry in to political debates. Yet their potency is blunted by the fact that
on many industrial relations issues, but there are still challenges they are perceived as big and successful retailers who are
looming as the union movement attempts to effect changes in simply whinging.
wages and conditions. In one of the most detrimental decisions for the industry,
Woolworths and Coles quit the Australian Retailers Association
The quest for higher wages (ARA) to form the Australian National Retailers Association (later
The Reserve Bank governor, the prime minister and his treasurer known as Retail Council).
Target to move upmarket
In a move to differentiate itself from sister brand Kmart,
department store Target will see an accelerated transformation
to offer higher-quality apparel, soft homewares and toys.
This shift will reposition it to compete against more specialty
and middle-market offerings, and could keep Kmart and Target
from potentially cannibalising each another’s sales.
As a result, however, approximately 80 head office roles have
been restructured. A Target spokesperson confirmed to Inside
Retail it is aiming to redeploy some of these staff into other
parts of its business or into the wider Wesfarmers group.
According to the Herald Sun, Kmart Group managing
director Ian Bailey said he believed it was the right time to
recast Target against higher-quality competitors such as
Cotton On, Myer or Country Road, though at a more
affordable price.
Bailey said Target needed to stand apart from Kmart, and
believes the switch will improve the quality of its overall offer.
Xxx
6 insideretail.com.au
ANALYSIS
Australia’s two largest retailers believed they were not getting the ARA. The association has not completely ruled out a merger or
enough backing from the ARA’s broad membership base and a collaborative working relationship but has concerns at this time
decided they would have more success with their issues in Canberra about a diminished voice for small retailers and higher costs for
with an entity composed of the country’s largest retailers. staffing a national body.
The Retail Council is essentially defunct in large measure because The NRA, which has attempted to develop membership outside
it lacked the authority of representing the entire industry – and, Queensland, has been relatively effective, particularly in training and
when it comes to politicians, small business matters. industrial relations, and is apparently in a sound financial position.
It was nice to hear the monthly commentary on retail sales, The retail industry needs a strong and effective voice and all
but where was the relentless, informed, constructive input to players matter, large and small mum-and-dad retailers, as well as
government on issues, technology changes and other challenges franchise and corporate retailers. IRW
confronting the industry?
Eyes on Woolworths
The breakaway was a disaster for the entire industry but especially
for the ARA, the only industry body with national coverage, because
its budget was savaged to the extent that it had to sell off assets to
continue operating.
It is interesting now to see that Woolworths is considering
rejoining the ARA because the company recognises the retail
industry needs a stronger voice. It seems the other retail members
of Australian National Retailers Association, including Bunnings,
Kmart, Target, Super Retail Group and JB Hi-Fi, are also mulling
over a return to the fold.
The potential membership and resources boost to the ARA is a
positive, if not imperative, move for a retail industry that has been
largely sidelined on important debates and decisions because of its
fragmented representation.
The rejuvenation of the ARA as an effective national body is a
crucial move and those major retailers thinking of rejoining need to
recognise the value of the smaller retailers and diverse membership
as much as their own might and power.
Retailers face a concerted
Limits of a national body campaign against low wages – and
It is disappointing that the Queensland-based National Retail wage theft – across the sector.
Association (NRA) has decided against a proposed merger with
SRG profit rises 8.6% Tarocash owner expanding
Super Retail Group has posted an 8.6 per cent growth in net Retail Apparel Group-owner The Foschini Group says it is gearing
profit over the 2019 financial year to $139.3 million, up from up for further expansion throughout Australia and New Zealand.
$128.3 million the year prior. The South African retail group, which owns local brands such
Total group sales, which include BCF, Macpac, Rebel Sport as yd, Connor, Tarocash, Johnny Bigg and Rockwear, said topline
and Supercheap Auto, grew 5.4 per cent to $2.71 billion. Like- growth in Australia is in the double-digits, and it’s planning to
for-like group sales grew 2.9 per cent, while overall online sales introduce more of its brands to the region, such as jewellery brand
increased by 25 per cent year on year. American Swiss.
Supercheap Auto sales rose 3.4 per cent to $1.04 billion, TFG chief executive Anthony Thunström told a media roundtable
and like-for-like sales 2.3 per cent, driven by higher average that the company sees significant opportunity in the Australian and
transaction value. New Zealand markets, reports Moneyweb.za.
Auto maintenance and auto accessories were the strongest “Australia has not been in a recession since 1990 – it is almost
performing segments across the brand, representing the polar opposite to SA with unemployment also at record lows,”
approximately three-quarters of divisional revenue. Thunström said.
Looking forward, the brand is focused on expanding the value- “Retail is not by any means easy there with the high costs around
added services it provides customers to encourage purchasing rentals and other operational costs, so there is little margin for error
products in-store. Online now represents 6 per cent of total sales to get it right or wrong.”
with click-and-collect accounting for two-thirds of them.
7
8 insideretail.com.au
AROUND THE GLOBE
When glitter isn’t enough,
it’s time to get creative
In a changing category, branded jewellery retailers are
beginning to join the experiential party. By Norrelle Goldring
W
hile jewellery retail trends often mirror those of apparel it exhibited some late 20th century jewellery pieces along with
and luxury goods, typically the category has lagged drawings of their original designs.
a few years behind. But this is beginning to change as Then at the end of 2017, Tiffany opened the Blue Box cafe in its
experiential innovations catch on. flagship New York store. The next year, it opened the Style Studio
According to Daedal Research, the global jewellery market grew in London’s Covent Garden. The duck-egg blue, Instagram-worthy
5 per cent from US$333 billion in 2017 to US $350 billion in 2018. store sells the brand’s Everyday Objects collection – homewares
In Australia, according to Ibisworld’s 2019 report, the jewellery and accessories such as bone china paper cups, a mini folding
industry grew 1.8 per cent annually between 2014 and 2019, chair, a glass fish bowl or even a sterling silver greenhouse (which
partially due to an increase in tourist spending on luxury goods. will set you back $483,500).
But the growth is patchy, varying across jewellery types, channels The Studio is intended to be more creative than formal,
and countries. encouraging shoppers to create unique jewellery looks with
unexpected combinations. A #MakeItTiffany personalisation bar
When the market dries up enables customers to draw designs on a tablet, which can either be
In the US, about half of 2000 consumers surveyed by Mintel in copied onto their new Tiffany piece, or simply engraved.
December 2018 had made no jewellery purchases at all in the Meanwhile, an in-store vending machine stocks Tiffany perfume
preceding 12 months. In 2018, nearly one in 20 of the country’s (these have have since rolled out to other Tiffany locations) and
highly fragmented, mostly small independent 19,000 jewellery there curated range of the most desired collections is on display,
businesses closed, according to the Jewelers Board of Trade. including Tiffany T and Tiffany City HardWear. An ongoing program
Signet group, owner of brands Kay, Zales and Jared, has seen its of immersive experiences and events is planned, ranging from
shares lose 75 per cent of their value in the past three years due to styling sessions to performances, art installations and animations.
declining footfall in the nation’s aging shopping malls, and is closing
150 stores as a result. Retail meets nightclub
E-commerce has taken longer to increase in jewellery than other Meanwhile, Cartier has been experimenting with pop-ups in
categories, historically due to consumer reluctance to buy high- Japan. A pop-up gallery named Tank 100 was installed within its
value items online. But shoppers are increasingly “showrooming” Tokyo Roppongi Hills store in 2017 to celebrate the Tank collection
– trying on in-store and buying online. centenary.
As of this May, according to GartnerL2, the online share of sales Designed as both library and nightclub, the main room – dubbed
has doubled in the past five years and now accounts for 10 per “Tanktheque” – featured both artwork and technology. A large, red
cent of the US and Western European jewellery markets. Fashion installation shaped like a castle and topped with lit candles was
jewellery sales online are expected to continue growing faster than surrounded by displays enumerating the history of the Tank brand,
those of fine or precious jewellery. while digital signboards played futuristic video works by Parisian
The growth of mono-brand stores in apparel and luxury goods artists. Tablets with online shopping options were available for
– such as the expansion from half to a two-thirds share of total shoppers to buy Tank collection pieces in situ, as well as any other
sales by LVMH’s own-branded stores in the 10 years to 2017 – is Cartier item. Future pop-ups are planned.
increasingly reflected in jewellery. Branded jewellers are beginning to leverage the emotional
According to McKinsey, branded jewellery share doubled from aspects of in-store experience which can’t be replicated online,
2003 to 20 per cent in 2014, driven by Cartier and Tiffany and newer and bring the digital and online in-store. It remains to be seen if the
entrants such as Pandora. Further growth was expected from independents will follow suit. IRW
luxury goods players in adjacent categories introducing jewellery
collections. It’s the branded companies that are playing with
experiential retail.
Norrelle Goldring has 20 years’ experience in retail, category,
More than just trying on for size channel and customer strategy, marketing and research and has
Bulgari could be considered to have kicked things off in 2016 with worked with global retailers, manufacturers and consulting houses.
a form of art installation in its Bond Street store in London, when Contact: 0411735190 or norrellegoldring@hotmail.com
9
Q&A
From the source:
Sand and Sky
After Sarah and Emily Hamilton
sold their beauty subscription
business Bellabox in 2014,
the sisters launched skincare
brand Sand and Sky. In two
years, the pair has developed
an Instagram-worthy brand
and sold 800,000 face masks
globally. We chat with Sarah
about direct-to-consumer brands,
the beauty landscape and how
terrifying social media can be.
Interview by Jo-Anne Hui-Miller
Inside Retail Weekly: Sand and Sky has just experienced 105 heard of Australian pink clay, so despite the competitiveness, we
per cent growth in its second year. That’s impressive. What found that gap. We just came on the back of that trend and also
have you got planned for the next financial year? Korean beauty which we love, but it is quite extensive and we really
Sarah Hamilton: It’s been nuts. It’s all about expansion for us. We wanted to simplify things.
haven’t launched a new product in over a year, [but now we have So despite all the noise, rightly or wrongly, we found an area we
two new SKUs]. One’s a mask, the other is an exfoliating treatment. could concentrate on, and the push of the brand from now on is to
I think we’ve sold over 800,000 masks worldwide. The last year keep refining those niches.
has been about product development, how we can create more You have to win your race. If you worry too much about what the
ranges around Australian ingredients and how we expand our global competitors are doing, you won’t be true to your brand, so with all
footprint – we’re looking at Indonesia and India at the moment. our new products, that’s what it’s about.
It’s about continuing to grow but engaging with the customers
about what they want and almost refining the brand a bit. ‘Brand IRW: There’s so much out there now. So much brand discovery
Australia’ and its colours are a big push for us. We’re excited for the is through social media and now if you’re in beauty, you’re
next chapter all the products will bring, because you’ll see a lot more competing with Rihanna and Kylie Jenner.
of the brand come through. The behind-the-scenes work will come SH: When we saw Kylie Skin coming out, we went, ‘Oh my God!’ It
to fruition in the next few months. does seem like she’s very involved in product development and so
is Rihanna. So yes, we’re competing against a celebrity, but again,
IRW: I feel like new indie beauty brands are popping up all the you have to rely on your product being good. Despite all of that
time. How do you feel about the competitive landscape and how and especially because our first product went well – we know our
do you cut through it all? customers loved it – so we just stood back. We didn’t need to be
SH: It’s so funny. Beauty is really competitive. When we created Kylie, we just needed a product that worked and resonated on social
Sand and Sky, we thought, ‘Where is there a gap in the market?’ We media. But we were laughing the other day when we were part of
knew what we wanted – beautiful, fun products that work straight Amazon Prime Day and our mask was the 11th bestseller. And if you
away. We looked at the black mask treatments everyone was doing look at clay masks there, ours is four times the cost of everybody
at the time and their horrible stripping of the skin. Nobody had really else’s! We didn’t expect or plan it – it’s amazing how it works.
10 insideretail.com.auQ&A
IRW: Was it your first Amazon Prime Day? of percentage, we like the retailers we work with. We’re working in
SH: Second. China cross-border through a distributor, so it might change a little
bit. We still want D2C to be the majority of what we do so we know
IRW: What did you learn from the first one? what the customer wants, but in terms of how it all changes,
SH: Oh my God, we ran out of stock. This year was all about planning we’ll see.
for Prime Day, so we had stock in three weeks prior. We focused on
the US and UK and we have account managers, so we were working IRW: What’s it been like creating a product that’s gone into so
with them to work out deals. It was a much more coordinated attack. many different markets so quickly? Have you needed to tweak
Right now, we have two staff members who work on Amazon – as the product when it goes into different markets?
of yesterday, we had our second. We had no idea last year, but this SH: There’s a lot of work around compliance but because we
year, we were 120 per cent up on last year. launched wanting to sell in the EU, UK, Australia and the US, the
I love Amazon. Our point of view is we love people buying directly compliance work you do in Europe helps you with everything else.
from us, so then we have a known relationship with the customer, but We’re working with Indonesia Sephora, so they’re helping us through
we can’t forget that people buy on Amazon or their preferred retail the regulation process. The list of documents they want are the same
partner. It’s convenient and we can’t deliver in one hour like Amazon. as the ones we’ve given to someone else.
And we have lots of resellers, so if we’re on Amazon, we can protect There are some language issues. In the EU we need 12 different
our trademark and we can kick off unauthorised resellers. Ten per translations; in Quebec, certain things need to be in French.
cent of sales are done on Amazon. We’re trying to create a universal packaging footprint, but it’s
hard. We’re just trying to make it easier for ourselves, but there are
IRW: Sand and Sky started off as D2C and there are heaps of different requirements everywhere.
new D2C brands popping up. Why did you go down that route?
SH: Again, we really want to own the relationship with the customer IRW: Tell me about A Beauty and the rising consumer interest in
and to control the channel. That engagement is so important for us, Australian brands.
but retail is about us getting credibility on beauty brands, which is SH: When Emily and I both lived overseas, as soon as we’d speak,
why we entered into it. Seventy per cent of our sales are D2C and people would ask, ‘Are you Australian?!’ They really love Australians
that’s our goal. overseas – I just found it so hilarious. So as we got into beauty, we
changed packaging and now it has Australian landscapes on it. So
IRW: Are you looking to grow that percentage? many people want to travel to Australia but they can’t, so we wanted
SH: We’re going to keep growing revenue in that arm, but in terms to bring them a bit of Australia. ►
The brand evokes Australia’s natural
beauty, its golden sand and blue skies,
and its culture of enjoying the beach.
11Q&A
To us, A Beauty is about that easy lifestyle – not the 11-step Customers are more knowledgeable than before. They know what
Korean routine, which is amazing but a lot of work. We want our they want, they want to get it and they want to see those results, so
products to work quickly. It’s about simple, natural, effective beauty you can’t overpromise, or you get a bad review.
products, sunshine, the beach....That’s how we started talking about
it and we called it Oz Beauty to start, but then editors just took it up IRW: What lessons did you learn from Bellabox that you’ve
as A Beauty. implemented at Sand and Sky?
It’s kind of fun. We’re in among some amazing Australian brands SH: Probably that same lesson about customer service we were
which are getting some cut-through at the moment, so it feels like talking about is what we saw through Bellabox. Even though they
something that’s happening. Then there are Australian brands like paid $15 a month to get five products, they tried every single one;
Jurlique and Aesop, which have been around for years. People think they gave feedback and if anything disappointed them – like if the
of Australia when they think of those brands. People can tell they’re cap wasn’t on – you’d know about it.
effective and beautiful products. How many open homes do you go So social media is a great beast, but it can be terrifying. What’s
into that have a beautiful Aesop hand wash? the experience like? Does it work straight away? And I think that
minimalist design is gone – people want personality out of their
brands. If it’s just too vanilla, people won’t buy into it. At Bellabox,
people wanted all that information and if there was no brand story,
people said, ‘What’s this about?’ and they’d be even less forgiving.
Customer service is so big with Bellabox that it adds to straight
If you worry too much away, go onto Instagram and Facebook and if you ignore it, you’ll
suffer for it. A lot of brands have had a go at customers and we
about what the competitors felt like it at some times at Bellabox, but we learned how powerful
customer service is. People want to chat and be able to call you.
are doing, you won’t be
true to your brand. Pink clay is a niche focus
for Sand and Sky.
IRW: How would you describe the beauty landscape at
the moment?
SH: It’s almost like there’s a divide – the big L’Oréals of the world
versus these D2C indie beauty brands that are coming through.
It’s almost like the department stores versus Mecca or Adore
Beauty. The assortment of products has just changed and it’s not
a celebrity face that sells a brand anymore. Even when we ran
Bellabox, [something] we wanted to break through was you’d go
to a department store and buy $500 worth of product that you’d
never use because you’re at a counter manned by that brand’s
ambassador. Now it’s about beauty that suits you, and I think indie
beauty has done that. It’s accessible, and it doesn’t need to be in
Sephora for you to buy.
The bathroom ‘shelfie’ phenomenon [where customers take
photos of the products on their shelves for Instagram] is full of
different brands. Everyone wants cool brands, but they all need to
be products that work.
IRW: How would you describe the modern beauty customer?
SH: They’re really discerning and they do research. When we first
launched, we were really big on launching our reviews at the same
time. You can’t have bad reviews – people just won’t buy your
products. Do you follow Estée Laundry on Instagram?
IRW: No, but I follow Diet Prada [a popular Instagram account
that aims to expose copycat designers].
SH: Well, welcome to the beauty version of that. You never want to
be on Estée Laundry! It’s the same as Diet Prada. People want to
know what’s in your products. There is so much more scrutiny over
what you put in products. And if they don’t work, then they’re upset.
And they’re unforgiving.
12 insideretail.com.auQ&A
So when we started a new brand, we made sure customer service works for them and share our plans with them.
was all covered and we were what people want. Now, we’ve had IRW: Do those insights impact the way you look at product
over two million samples sent out worldwide with Sand and Sky. development in the future?
We love it – it’s so powerful. And now we have to make sure they’re Completely. I find it so interesting. We have a self-tanner coming
happy with product. out in February and obviously we won’t push it in India. I was about
to tell Sephora in India and said, “We have a new product coming
IRW: Tell me about Sand and Sky’s social media strategy? out...which will have no relevance for you!’ When we did the mask in
SH: We’re very analytical. We won’t post content our followers China, I realised it was actually quite active, whereas in the US and
don’t like. We look at Instagram the same way we look at any part UK, the customers are all, ‘More, more, more!’ Those idiosyncrasies
of the business – what works, what doesn’t, what people like – and are interesting and completely affect product development.
we test various things all the time. It’s not just an expression of our We have more products coming out and we’ll make them available
brand. It’s also about ensuring the customer wants that content and to all regions, but we’ll push some things here, step back over there.
how we engage with them. We’ll test colours, lifestyle and beauty It’s something we’ve always got at the back of our minds.
content – we’re always testing and learning.
IRW: What plans do you have for next year?
IRW: When you started being stocked in major retailers, what SH: Apart from launching new products, we’re moving our site onto
lessons did you learn immediately after moving from D2C? Shopify and trying to make it a better experience. We’re always
Not to be exclusive to any one retailer – we’ve screwed that up a trying to enhance it.
couple of times! – and to have an equal partnership. Our job is to And we want to push more into the US market. We haven’t really
build a brand and we’ve got a decent-sized brand, but we want the focused on it, even though it’s our biggest market. Emily and I are
retailer to support us as well, so our products are not just sitting on going to LA, so the next year will be about building that team in LA.
a shelf or a site. That’s not how we want to work. Any partnership We’ve got a new PR in the US, because we’ve realised we have to
needs to be two-way, so we need to manage our expectations with do more in that market. It’s all happened naturally in the US without
the retailer – have a good relationship with them, understand what us ever focusing on it. It’s really exciting. IRW
‘We wanted beautiful, fun products that
worked straight away,’ says Hamilton.
13PROPERTY
Losses mount across sector
Three of Australia’s largest property groups have reported falling “The retail environment is expected to remain challenging in
profits in June as problems in both the retail and residential sectors FY20, although economic stimulus including lower interest rates and
played havoc with their bottom lines. income tax cuts may benefit retail spending,” the company said in
GPT, reporting for the half-year, saw its profit tumble 51.6 per cent a statement.
to $352.6 million, compared with the $728.5 million earned in the The retail property trust sold 12 shopping centres – including
prior corresponding period, while the value of its retail portfolio fell Belmont Village in Victoria and Flinders Square in Western Australia
0.6 per cent. – for a total of $670 million during the financial year.
Profit was hit by more modest valuation gains compared with Vicinity Centres, which owns 62 shopping centres, said it was
prior periods, as well as losses across its hedge book due to the putting on hold a plan to sell more of its properties, including part of
significant reduction of interest rates. Like-for-like income growth for the Vicinity Keppel Australia Retail Fund (VKF).
the retail portfolio increased 1.4 per cent. “The recent softening in investor demand for retail property
GPT’s head of retail, Chris Barnett, said the results reflected funds globally, compounded by a crowded divestment market, is
a reduction in turnover rent, particularly from the cinemas impacting retail property pricing in Australia,” chief executive Grant
category, which has had one of the slowest starts to the year Kelley said
seen in a decade. .
“The team remains focused on remixing our centres towards Office portfolio lifts results
higher-performing retailers to drive growth in specialty sales Mirvac has reported a 6 per cent fall in full-year profit to $1 billion
productivity, which has now increased to $11,512 per sqm across as the property group says trust in its brand is helping sustain it as
our portfolio,” he said. the residential building industry goes through a rough patch.
GPT has seen specialty categories booming – particularly food, Revenue for the 12 months to June 30 was down 1 per cent
technology, leisure, beauty and lifestyle, Barnett said. on the previous year to $2.78 billion and Mirvac will pay an
Retailers Harris Farm Markets, Breadtop, Craig Cook Butchers, unfranked final distribution of 6.3¢, up from 5.5¢ in the previous
Apple and JB Hi-Fi were named as some of the most successful in corresponding period.
GPT’s portfolio. Challenges to the residential property market included an insecure
outlook for jobs which is creating a fear of taking on financial
Shopping malls a weak spot obligations; the difficulty of getting finance; and nervousness about
Retail landlord Vicinity Centres posted a 72 per cent slump in full- building quality, especially in NSW, after a series of mishaps.
year profit to $346.1 million as the shopping mall owner warned that The group’s office portfolio, however, showed strong profits and
the outlook for retailers appeared weak. upward revaluations of nearly $400 million, the Australian Financial
The company said total revenue for the 12 months to June 30 Review reports.
dipped 3.6 per cent to $1.28 billion and it lowered its final payout Mirvac is now Australia’s second-largest office manager with $15
from 8.2¢ to 7.95¢, unfranked. billion in assets under management. IRW
GPT’s Highpoint Shopping
Centre, Victoria
14 insideretail.com.auFIGURES
10 years 80
The amount of time Caltex Australia chief The amount of head office roles
executive Julian Segal led the business before at Target cut as the business
his retirement announcement this week. seeks to reposition itself.
Source: Caltex Australia Source: Target
$56 billion US$16.7 billion
The amount lost on the Australian trading The revenue generated
market on Thursday, as the ASX saw the by Alibaba in the second
worst fall since February 2018. quarter of FY19.
Source: The Australian Source: Alibaba
55% 28%
The amount of businesses surveyed by Asialink The amount of US and UK
Business which generate less than 5 per cent of businesses expecting higher
their annual revenue from Asia markets. revenue this holiday season.
Source: Asialink Business Source: Yieldify
Retales
Have we reached peak “experiential retail” yet? US retail startup Showfields has unveiled its latest
project, House of Showfields, where immersive theatre meets shopping within a giant four-storey
store in SoHo, New York.
As customers walk through the door of House of Showfields, slide down a slippery dip and enter
a forest surrounded by neon lights, they’re transported into a whole new world, where actors begin
to perform the stories behind Showfield’s brands. The house is filled with whimsical showrooms, art
installations – and product for customers to touch, taste and feel.
At the end of the 30-minute performance, customers reach the physical store, the Showfields Lab,
where customers can purchase the products they saw throughout the house.
While the concept seems rather extravagant, going through this experience doubles the number of
people willing to try the products on display, says Snowfields, which could lead to a purchase.
Pretty impressive, but worth the US$6000 to US$12,000 a month fee to be featured?
15FEATURE
TikTok: What you need to know
If you think the world’s most downloaded app is just for memes
and teens, your business might be missing out on opportunities
to connect with customers. By Adam Freedman
T
welve months ago, if you were to hear the phrase “Tik Tok”, “things”, TikTok is very much about the people. So much so that
you’d either think someone was counting down until you had there are now many in the TikTok community – or ‘TikTokers’ as the
to do something – or if you’re a music fan, you may have cool kids would refer to them – who are giving up their day jobs to
thought about the hit single by the singer Ke$ha. Today, TikTok often make a living solely through the platform.
triggers an entirely different response among millennials – a new This is where brand marketing comes in. As any platform grows
social media platform that is taking the world by storm. And it was in popularity, the interest in brands unsurprisingly rises fairly
created only three years ago. dramatically. With the platform having a large teenage audience
TikTok became the world’s most downloaded app in 2018 after base – a notoriously difficult audience to break through – the appeal
surging in popularity in Asia, capturing more than one billion for marketers to reach them is huge. The key consideration, however,
downloads. Now it has become one of the first Asian digital is to ensure they are reached in a way that doesn’t detract from
properties to break into the Western market and it is starting to what got the teens on the platform in the first place and, if anything,
gather traction across Australia – all of this without a sustained mass complements their experience.
fanfare compared with other platforms. Much of this was driven by The attraction to TikTok and its distinction from the rest of the
its music-based heritage, which fuelled memes, lip-syncing and crowd stems from its penchant for “real people” and “real content”.
comedy routines that captured attention. There is no polish or filters on this platform. It’s raw, real-time and
The premise of the site is simple: create short-form video content led by trends rather than perceptions.
that lasts up to 60 seconds. Many videos last between 15 and A number of brands have begun dabbling in the world of TikTok
30 seconds. and are beginning to see results. Superdry is one that has openly
It is this simplicity that has seen the platform generate a huge revealed it is working with TikTok to target Asian-Australian
groundswell among a young audience: no gimmicks, and a central consumers and build relevance on a platform where they are highly
theme around fun and popular culture. A platform for people to engaged. Its primary use to date has been around store openings,
entertain and be entertained. While some platforms focus on leveraging so-called TikTok celebrities who would share content on
16 insideretail.com.auFEATURE
the platform to encourage others to visit while also creating their
own channel – one of the first brands to do so – to showcase more
content in and around their stores.
At this point, TikTok does not have a specific commercial platform
for advertisers, unlike other channels. However, that is expected to
There is no polish or filters
launch in the near future. Instead, many brands are signed up as
individuals vs official advertisers, which can be advantageous at
on this platform. It’s raw,
this early stage in terms of “blending into the community”. Chipotle
is one such brand to succeed with this in the US with a “lid-flip”
real-time and led by trends.
challenge led by a TikTok “influencer” who simply asked his fans
to flip a container and land it perfectly. For a relatively low cost and
easy call-to-action, this generated over 100,000 entries and more
than 200 million views.
Another key action to highlight is the way consumers interact. For those looking to dabble, attention should be paid to consumer
User-generated content has long been an activity and behaviour behaviour. It is worth taking the time to become a real TikToker and
that marketers have struggled with, attempting to find the careful embrace how the community interacts to find inspiration for content
balance between authenticity and feeling forced. TikTok is seeking generation from a brand perspective. The key is to ensure your
to break through that barrier, with encouraging early signs around brand is talking to the audience based on real insights rather than at
the prevalence of “video responses” on the platform – a more active them and presenting information in a passive, non-engaging way.
response than a “like” or text comment as seen elsewhere. A question to pose to your internal team: how and what would you
talk about to represent your business in 15 seconds? Based on your
Here is where to start initial exploration and if you are brave enough, it may even be worth
While its early success and rapid proliferation certainly represents taking this experiment into a store and have staff ask customers for
an exciting opportunity for marketers, it is still very early days and feedback. Getting your audience involved early will help to optimise
brands should consider approaching it as an experimental channel your content in the longer term and ensure you remain on-trend and
as it continues to find its feet and grow its community. not be seen as a brand trying too hard.
For those brands and businesses targeting teens, where Doing you homework properly in the short term could set you up
cultural trends among this audience move faster than Usain Bolt nicely in the long term. IRW
at full speed, it’s worth considering entering into the TikTok world
sooner rather than later to earn you valued “street cred” and the
opportunity to be a trailblazer. But it’s important to continue to retain Adam Freedman is head of consumer at Red Havas and has
presence on other digital channels so your TikTok presence remains consulted numerous brands and retailers across Australia and the
complementary to expand your reach further. UK on their marketing and communications strategies.
Superdry is working with TikTok to
target Asian-Australian consumers.
17PEOPLE
Appointments Contact us
EDITOR
Jo-Anne Hui-Miller
Caltex chief to retire
jo-anne.h@octomedia.com.au
Caltex Australia’s managing director and chief executive, Julian Segal (pictured) has
announced his retirement. Segal started at the petrol and convenience business in 2009, ONLINE EDITOR
and will stay on board until a suitable replacement is found. Heather McIlvaine
Caltex chairman Steven Gregg said Segal oversaw major milestones in the petrol heather.m@octomedia.com.au
business, such as the closure of the Kurnell
refinery, the establishment of Ampol Singapore, JOURNALIST
and the company’s expansion into New Zealand Dean Blake
and the Philippines. dean.blake@octomedia.com.au
He was a key player in developing Caltex’s
international fuel sourcing and supply chain, as CONTRIBUTORS
well as driving an improved convenience offer in Joyce Abano, Jared Dickson,
Australia, Gregg said.. Norrelle Goldring
Caltex will deliver its half-year results later this
month. It expects group earnings before interest SUB-EDITOR
and tax to be just $120 million to $140 million, Margaret MacNabb
compared with the $443 million it reported in the
2018 half, due to difficult conditions rising from a GRAPHIC DESIGN
Pablo Colombi
slowing Australian economy.
ADVERTISING
Adairs appoints CFO Amir Engler
Home furnishings retailer Adairs has announced (02) 8224 8361
the appointment of Ashley Gardner as chief amir@octomedia.com.au
financial officer, effective immediately. He will be
responsible for Adairs’ finance function, supply Fontini Yourelis
chain and merchandise planning. (02) 8224 8367
Gardner (pictured) has previously served as fontini@octomedia.com.au
CFO of David Jones and Country Road, and was
regional CFO of their parent company, South Level 10, 51-57 Pitt St.
Africa’s Woolworths Holdings. Prior to this, he Sydney NSW 2000
was CFO of Just Group for nine years. PO Box R217
Gardner is a chartered accountant and holds a Royal Exchange NSW 1225
bachelor of commerce degree (honours) from the
Telephone: (02) 9901 1800
University of Melbourne.
SUBSCRIPTIONS
Vinomofo brings new CMO aboard subs@octomedia.com.au
Online wine retailer Vinomofo has hired former Village Roadshow marketer Clare Smith
(pictured) as its new chief marketing officer. ISSN 1448-1642
The appointment was made as Vinomofo reports it is ramping up marketing and A.B.N. 98 090 664 305
growth strategies across Australia, New Zealand and Singapore.
Smith has spent the past four years as director FOLLOW US
@INSIDERETAIL
of digital marketing and customer at Village
Roadshow. She was formerly at Medibank,
Sensis and a number of agencies, and is
dedicated to expanding and changing the way
brands approach their digital, media and customer Copyright notice:
marketing strategies.
Smith told CMO website that she was keen to Readers are reminded that the content of this
work at Vinomofo. “Not only as one of the most publication is subject to copyright, vested in
Octomedia Pty Ltd. Readers and subscribers are
disruptive brands in the wine industry expressly forbidden from copying and re-posting
but also for its brand personality and irreverence. the contents of this publication or republishing all
or any part of it without the express permission
I’m really excited to be joining the business of the publisher or group editor. Octomedia Pty Ltd
and look forward to delivering amazing reserves all of its rights against any pirating or
unauthorised use of such materials and publication
brand experience through all our customer without its prior written permission.
touchpoints.” IRW
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