It's time to shine Indigenous design is hitting the runway for the first time ever at Mercedes-Benz Fashion Week Australia this year - Inside Retail
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Issue 2274 04 Mar 2020 RRP $14.95 insideretail.com.au It’s time to shine Indigenous design is hitting the runway for the first time ever at Mercedes-Benz Fashion Week Australia this year. In this issue News Opinion Feature A look into the year ahead Fact or fear? West side Story Australia Post outlines how e-commerce It might be time to dial down the panic Here’s why retail businesses are looking has and will continue to change. p2 surrounding coronavirus. p9 west for new opportunities. p12
NEWS Report: A peek into the future of e-commerce The latest data released by Australia Post gives us a glimpse into what the industry will look like in the years ahead. By Dean Blake W hile retailers have been noticing a shift in the holiday however, as staying on top of every other trend in the industry season over the last few years, data released by Australia requires capital to be spent. Post on Friday gives shape to what the Christmas period This can be seen in the myriad retailers, such as Ziera, that will look like in years to come. entered voluntary administration or liquidation after attempting Online sales over the 2019 calendar year grew 17.2 per cent on the massive structural changes. prior year, while Cyber Week was the busiest period “The sustainability of a business’s commercials is becoming just for online shopping – 82 per cent up on an average week in the as important [as environmental sustainability],” said Franzi. same year. Australia Post is not immune to these same pressures, with the And despite all the talk of Black Friday and Cyber Monday’s business’s letter delivery revenue falling 9 per cent to $1.1 billion, impact on Christmas, Australia Post’s head of e-commerce while its parcels and services division rose 13 per cent to $2.69 platforms and marketplace, Ben Franzi, told Inside Retail Weekly the billion in the half year to December 31. impact was equivalent to only around 1 to 2 per cent of total This result ultimately led to a 46 per cent fall in group profit for the Christmas sales. half to $83 million. IRW “It hasn’t radically eaten into the season, but it did move some shoppers. It delayed and softened the peak, but only ever so Online sales grew 17.2 per slightly. It wasn’t dramatic,” Franzi said. cent year on year in 2019, according to Australia Post. “The difference [last year] was that it had become an industry standard. Three years ago, it was hardly on the radar. Two years ago, there were early adopters and it was an event, but [2019] was like nothing we’ve seen.” Retailers, both physical and online, were getting in on the Black Friday and Cyber Monday action, while consumers were far more interested in the sales event than in previous years. This ultimately led to a 31.6 per cent growth for Black Friday year on year. Compared with the 18 per cent growth Boxing Day saw, down from 27.9 per cent the year prior, Black Friday’s growth is “unprecedented”. “Boxing Day will always have a place to play, and retailers will always want to grow sales post-Christmas Day. But I think Black Friday and Cyber Monday will continue to grow, cannibalise and impact Boxing Day moving forward,” Franzi said. Being prepared is key Based on what Australia Post saw in 2019, Franzi explained, the most important things retailers can do for the year ahead is to ensure they have a solid plan and don’t underestimate the popularity of sales events, and in control of their finances. “Retailers got caught out by how big Cyber Week was – as did we. It’s going to be really important that retailers don’t make mistakes like they did in 2019,” Franzi said. “Customers will be less forgiving this year with deliveries that are sometimes two weeks’ late.” The trends Franzi outlines include the ongoing growth of sales events, speed of delivery and service, making an offer more convenient, and a greater focus on the sustainability of a business’s supply chain and products. The financial sustainability of a business is equally important, 2 insideretail.com.au
NEWS MBFWA fetes indigenous design In an effort to showcase emerging indigenous talent, Mercedes-Benz Fashion Week Australia will be hosting a new runway event this year, specifically for talented designers in the community. By Jo-Anne Hui-Miller F or the first time ever, indigenous designers will be in the designers is wide and varied. For some, they may be a 10-hour drive spotlight during Mercedes-Benz Fashion Week Australia away from the nearest town over a bumpy road, so they may have (MBFWA) on May 15 in Sydney. trouble accessing training. Or they may need help with printing or “As we celebrate the 25th year of Mercedes-Benz Fashion Week when a machine breaks down. Other designers may show great Australia, it is incredibly exciting to welcome this intersection of promise, but they’re trying to work out the right business model for emerging and established designers who represent the vibrant them and access the right customer base, said Giles-Kaye. and diverse fabric of our country during this significant moment for “One of the big differences [with indigenous designers] is the need Australian fashion,” said Natalie Xenita, executive director of IMG’s to protect the culture that goes into the work. I think most, if not all, fashion events group, Asia-Pacific region. designers have a strong cultural influence on their designs and how The Australian Indigenous Fashion Showcase at MBFWA grew they protect that and how that’s valued is a really unique aspect to out of the success of the Country to Couture event organised by them. There is still a big divide in our country between indigenous the Darwin Aboriginal Art Fair Foundation (DAAFF) each year in and non-indigenous people; and the day-to-day challenges that all August. David Giles-Kaye, head of indigenous fashion projects at indigenous people in Australia face mean pretty much everything the DAAFF, believes the event will be a great opportunity for the they do is harder,” he explained. wider community to better understand the breadth of indigenous “I think so many of us are very aware of those social issues design and talent. In the coming weeks, the DAAFF will announce but have not had a connection [with the indigenous community]. the five designers who will be taking part in the MBFWA showcase, This is one of the great things about art and fashion – it can help unveiling 10 different looks each for the runway. connect indigenous and non-indigenous Australians and I’ve seen “I think people will be surprised about the incredible diversity. that in the last couple of years. This is where fashion shows are Indigenous art is not just one thing. I think one of the most amazing really important – where non-indigenous people can interact with things is their connection to stories. All fashion design should indigenous people and break down those barriers.” IRW connect people to stories from the designer, and we don’t see enough of that in the industry,” Giles-Kaye told Inside Retail Weekly. Consumers are also looking for more meaning in the products that they purchase and searching for a connection with brands and designers, something which Giles-Kaye said indigenous fashion has “in spades”. “Every single indigenous designer is telling the stories of their culture, communities and ancestors through their fashion. It’s an amazing connection that you have when you engage with indigenous designers – you’re connecting to an ancient culture.” Country to Couture is held every August in Darwin, where artists from remote communities work with a designer to create a collection for the show. Other events on the DAAFF calendar this year include the first National Indigenous Fashion Awards, which will follow the music and art award programs that also take place that week. Giles-Kaye was previously the CEO at the Australian Fashion Council, where he was also working towards putting indigenous artists in the spotlight and learning more about the community. “I’m very keen to see what I can do to help in my very humble ‘white person’ way. The key part has been in listening and seeing what people need,” said Giles-Kaye. “A really positive challenge of that is to then try to build pathways for everyone, from people in remote communities with little resources available to those who are doing amazing things in cities. Then there are indigenous The piece is a collaboration organisations that are growing to support designers, so we want to between Torres Strait Islander help them as well.” artist Lisa Waup and fashion designer Ingrid Verner. Like all business owners, the support required for indigenous 3
NEWS Retail Week shines a light on local industry From bushfires and floods to coronavirus, the local retail sector has been hit with a series of distressing events. What better time to pick ourselves up and get inspired for the future than Retail Week in Melbourne? By Jo-Anne Hui-Miller, photography by Hannah Caldwell D uring Inside Retail Live last week, audiences were rolling Shoes of Prey co-founder Michael with laughter when comedian Tessa Waters transformed Fox shared the highs and lows of into some of retail’s most amusing stereotypical customers, the business. from Lauren, the millennial who’s “adulting for the first time ever, lol” to Anne, the cheery widowed baby boomer who’s ready to splash her cash. The General Store’s chief strategy officer Matt Newell hosted a fireside chat with buddy and Shoes of Prey co-founder, Michael Fox, who opened up about where his business failed – and where he’s next taking his career with new plant-based meat startup Fable. We celebrated the local online sector with Internet Retailing’s annual Top 50 People in E-Commerce and on Thursday, keynote speaker Danny Lattouf asked, ‘What the actual fuck is going on in retail?’ then inspired attendees with the highlights of a recent trip to the US, including Starbucks, Nike and Dolby. ► QUT marketing professor Dr Gary Mortimer was a fantastic MC during Inside Retail Live. Marketing expert Amanda Stevens discussed the changing consumer at Live. 4 insideretail.com.au
NEWS Domino’s group chief The General Store’s digital and technology Danny Lattouf hit the officer Michael Gillespie at stage during his keynote. the Retailer Awards. Dan Murphy’s head of e-commerce Lynna Barrett at the CEO dinner on Monday night. Lush picked up the award for in-store customer initiative at the Retailer Awards. 5
NEWS Meanwhile in the afternoon streams, Domino’s group chief digital Adam Ioakim from Emarsys and technology officer Michael Gillespie, Anna Samkova from the at the CEO Dinner. PAS Group and Nathan Bush from agency 12High enjoyed such a fascinating panel discussion that it actually ran overtime – and no one in the audience actually left. Then Cameron Lawson and Rachel Tigel (or JLo and Shakira, as they called themselves) took the audience through the highs and lows of Forever New’s recent e-commerce transformation. And of course, after a two-day, jam-packed schedule, attendees really let their hair down at the Retailer Awards at the Timber Yard, where some of the industry’s best and brightest were recognised for their great work across 11 different categories. Thanks to everyone who came along with us to Retail Week in Melbourne. We had a ball. See you again next year. IRW PAS Group CEO Eric Morris was a keynote speaker at Live. Booktopia’s Wayne Baskin and Mark Teperson from The Accent Group celebrated being in the Top 50 People in E-Commerce list. 6 insideretail.com.au
NEWS Woolworths payroll error gets worse This week’s top 10 Our most read stories from the The problem of staff underpayment, which has past week at insideretail.com.au. brought retailers large and small under investigation, has once again hit Woolworths as its earlier estimates of liability have blown out significantly. The Sydney Morning Herald has reported that investors are calling for resignations of senior executives and board members due to the magnitude of the error. The grocery giant has increased its estimation of staff underpayments by $15 million, with the total figure now expected to be at least $315 million. The AFR report that when $80 million in interest payments and other costs are added, the total expense of the underpayment scandal will touch $400 million, with four years of payroll investigations 1 Taco Bell owner to expand after solid first half still to come. To date, Woolworths says it has paid back $69 million to staff. 2 How not to be a boring retailer The company made the announcement alongside its half-year results, saying that despite a strong 3 It’s not a store, it’s a place of worship. Meet the new brand experience performance, it was “disappointed” to have let staff down in relation to underpayments. “The calculations of the salary payment shortfall involve a substantial volume of data, a high degree 4 Q&A with Coles’ Steven Cain of complexity, interpretation, estimations, and are subject to further analysis of prior periods and the 5 Luxury Escapes opens experiential pop-up in Melbourne Fair Work Ombudsman’s ongoing investigation,” it said in a statement to the ASX. 6 Harvey Norman H1 profit hit by bushfires Harvey Norman braces for corona hit 7 Kathmandu embraces solar power to reach net zero target by 2025 Harvey Norman says it expects the coronavirus to deliver a hit to its bottom line, as consumers – already spooked by the bushfires and extreme weather – 8 Tax holiday for virus-hit traders in Queensland react to the new threat to stability. 9 The company refrained from solid guidance on P.E. Nation unveils 30-piece the matter, preferring to wait until the threat is collection for H&M better understood. 10 The furniture and electronics firm posted a Caltex rejects EG Group’s subdued Christmas period and the retailer’s first-half acquisition offer profit slipped by 4 per cent. Some stores in regional areas closed temporarily due to the bushfire crisis. Harvey Norman reported a net profit of $213.59 million for the six months to December 31, with its overseas ventures outperforming local operations. Revenue from local franchisees, which include the Comment of the week Domayne and Joyce Mayne stores, was down 4.2 per cent to $497.84 million. The group has 544 franchisees in Australia, and 194 franchised complexes. “Retailers haven’t evolved, kept stores However, company-operated sales revenue, which open that are unprofitable just so the includes 95 overseas stores was up 5.4 per cent to name is out there and no one else $1.24 billion, and five new stores were opened in can compete.” Malaysia during the first half. Sales rose in all regions, but the biggest Ram - How not to be a boring retailer. improvement came from the 15 stores in Ireland and Northern Ireland, where sales rose by 12 per cent to $249.08 million. IRW 8 insideretail.com.au
OPINION Let’s dial down the coronavirus scaremongering First it was bushfires, then it was floods, and now Australia is being impacted by coronavirus. But is the outbreak really worth all the panic and fear? By Jared Dickson T he coronavirus could not have struck at a worse time for Australian retailers still reeling from the impact of bushfires and floods, particularly in NSW and Victoria. The coronavirus has shuttered restaurants and other independent businesses in popular Asian shopping and hospitality precincts and The real danger of has reduced foot traffic in shopping centres. The panic around the outbreak is testing already fragile consumer coronavirus is not the confidence, but it also looks set to disrupt supply chains in a double whammy for retailers. disease itself but the panic It also hit at the worst time in China with millions of people in transit for the country’s New Year holidays. it has created. According to the Australian government’s Health Department website, global travel has carried the virus to 60 countries but the death rate from coronavirus is less than 4 per cent of those infected conventional media and inaccurate theories and rumours on social and most of those deaths have been attributable to poor or late media are all further denting consumer and business confidence access to medical attention. levels. It is worth comparing the fewer than 3000 coronavirus deaths A mooted further interest rate cut by the Reserve Bank will do reported so far by the World Health Organisation with the more than nothing to boost confidence and counter the negative impact of the 16,000 influenza deaths in the same period in the US alone, says the coronavirus scare, falling job numbers and higher prices for many US Centers for Disease Control and Prevention. retail products, including food. The US alone has had three times the number of influenza What is required to address falling consumer confidence is some infections compared with coronavirus in the same period. rational political and medical messaging and reassurance. The Department of Health site states that Australia has identified Restoring business and investor confidence is arguably a much fewer than 30 cases of coronavirus, at least 15 of which have tougher proposition, with the looming prospect of supply chain fully recovered. One person in Perth died earlier this week. disruption and higher costs for imported products, as well as lower In comparison, 50,000 Australians suffer a stroke each year, says demand for exports for as long as the coronavirus scare captures the Stroke Foundation. global headlines. The real danger of coronavirus is not the disease itself but the However, like government, retailers and other businesses need panic it has created, the rumours and speculation that are fanning to play a part in building consumer and investor confidence and fear and a disproportionate reaction notwithstanding the infection encouraging staff in stores to be positive and buoyant. rate would be expected to rise. The first half of the 2020 financial year was relatively weak Australia has certainly introduced stringent entry requirements on in terms of sales growth and earnings despite the fillip of the all international travellers, including quarantine periods for citizens November Black Friday and Cyber Monday sales events. returning from places that have reported coronavirus infections. For some retailers, including Bardot, Harris Scarfe, Colette, It also has the medical facilities to provide treatment for any Jeanswest, Curious Planet and Ishka, dismal first-half trading has people who have been infected and some pretty basic personal forced them into administration. hygiene measures significantly reduce the chance of infection. While most, if not all, of those retailers are expected to be Yet the hysteria around the outbreak has savaged the rescued, albeit scaled down, the recovery for them and an upturn sharemarket and the Australian dollar, which will increase the cost in the fortunes of other chains will require effective, confident and of goods sourced overseas. It has created yet another challenge for positive customer engagement strategies. retailers as tourism numbers plummet, international students are Most publicly listed retailers have warned investors that blocked from entry to Australia and some consumers curb the time profitability for the full financial year will be influenced by the they spend in public settings. bushfire, flood and coronavirus events. Government budgets are being eroded and economic forecasts The warnings are prudent; but rather than accept an inevitable trashed by the financial impacts of the bushfires and floods over jolt to sales and earnings, retailers need to provide consumers summer and the compounding shock of the coronavirus. with reassurance and relief from the doom and gloom and The global reaction to coronavirus, the crisis reporting of crisis mindset. IRW 9
NEWS Around the globe BB&B to cut 500 management jobs which enables a customer to buy from an online retailer and pay for their goods in four payments, is backed by the US home-furnishings company Bed Bath and Beyond is to cut Commonwealth Bank. about 500 jobs in response to a net sales drop of 9 per cent last This is the first year in which Klarna has posted a loss since it quarter and a further drop of 5.4 per cent in the first two months was set up in 2005, making it, according to Reuters, an outlier of the current quarter. among tech companies which often lose money for years. The company said it would focus on management positions Klarna’s 2019 operating loss was 1.1 billion Swedish kronor ($117 that were redundant or not essential rather than those which are million), against a 160 million kronor profit for 2018. The company customer-facing. said it was not worried by the results, which were due entirely to “We are announcing extensive changes today to right-size our investment and had been flagged earlier to investors. organisation as part of our efforts to reconstruct a modern, durable business model,” CEO Mark Tritton said in a statement. “We do not take this action lightly but, while difficult, these measured and Walmart eyes Asda sell-off Walmart is attempting to unload a stake in British grocery chain purposeful steps are necessary.’” Asda, which failed last year to merge with Sainsbury’s. Walmart USA Today reports that the company expects the cuts and other bought Asda in 1999 for £8.7 billion. efficiency measures will save several hundred million dollars. Asda, like most traditional food retailers, has been losing market The paper also reported that previously announced closures of up share to German discounters Aldi and Lidl, and its Christmas sales to 60 stores were still planned, but that 20 of the closures would be were down. delayed pending the results of other cost-cutting measures. Reuters reports that private equity firms were most likely to be Amazon cracks down on corona cons interested in taking a stake in Asda, and that analysts expected Walmart to retain a stake in the company. IRW As fears and rumours about the coronavirus spread, Amazon has been forced to withdraw more than a million products that made false claims to be cures or defences for the deadly disease. The giant online retailer has also responded to apparent gouging, as prices for such ordinary items as sanitising gels and facemasks soared, warning sellers that inflated prices would not be tolerated. Reuters reports that one merchant, for example, offered a 10-pack of N95 masks for $128, up from a recent average price of $41.24. The company said it has monitored for price spikes and false claims through a mix of automated and manual review of listings. Ikea cuts greenhouse gases Ikea has reached another milestone in its quest to become cleaner and greener, as carbon emissions across the chain fell for the first time last year, according to a sustainability report released last week. The world’s biggest furniture brand attributed the positive numbers to its investment in renewable energy plus significant increases in energy efficiency of the lighting and appliances range. Ikea maintained steady sales growth of 6.5 per cent while its footprint decreased by 4.3 per cent to 24.9 million tonnes, or FY16 levels, Ecotextile News reports. Late last year Ikea announced plans to invest €200 million ($370 million) to both increase renewable energy within its supply chain and to offset CO2 emissions via better forest management. Ikea is aiming for its chain to be climate positive – where it cuts more greenhouse gas emissions than it emits – by 2030. Klarna posts loss after expansion Swedish online buy now pay later service Klarna has reported its first annual loss after a year of vigorous expansion in the US, Europe and Australia. The company links up customers with retailers like H&M, ASOS, Boohoo and Ticketmaster through its online lending platform, and Private equity firms are says it now adds a new merchant every seven minutes. most likely to want a stake in Walmart’s Asda. Klarna launched in Australia at the end of January. The service, 10 insideretail.com.au
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FEATURE For retailers, it pays to look west While NSW and Victoria remain the jewels in the Aussie property market, out west, entrepreneurs are getting more bang for their buck. By Nick Hall F rom the golden beaches of Perth’s northern shore, where “There is a lot of economic activity currently happening across surf breaks rival those seen anywhere in the world, to the WA,” Ibrahimi continues. vast Outback expanses that dazzle tourists and natives “Perth CBD leads this progress with several major refurbishments alike, Western Australia is the state that offers a slice of everything and redevelopments by key landlords, including the redevelopment Australia has to offer. of Carillon City and Piccadilly Arcade and the completion of work And for the first time in a long time, buyers and renters are cashing in Enex 100, Raine Square and, more recently, Forrest Chase in the in on Australia’s not-so-hidden gem. heart of the city.” Lending restrictions have loosened, in line with a falling interest rate that has given way to an emerging middle-class economy. It’s New developments a trend that all major cities across Australia are experiencing, but In Sydney and Melbourne, the infrastructure race seems to in Western Australia, where commercial interest has traditionally be slowing, however, across the Perth CBD, construction and waned, things are heating up. development are underway. In fact, the city’s newest developments “The current market is ripe for investment opportunities,” says have an underlying value of just below $12 billion, making Perth one Ahmad Ibrahimi, head of retail leasing for the Perth arm of property of the fastest growing regions in Australia. firm Colliers International. Ibrahimi says residential interest has expanded the city scope, “Interest rates are at an all-time low, while spending per capita in giving birth to a number of as-yet-untapped areas. WA continues to outpace the national average. As retail footprints “Historically, Perth has had limited retail options between the CBD reach saturation and in some cases are cannibalising one another and a few established regional shopping centres. That has changed in other parts of Australia, in WA, landlords are still responding to significantly during the last decade as the housing market expanded growing demand from retailers looking to come west.” north towards Alkimos, south towards Mandurah and east along Take a look at the breadth of international chains that have made major growth corridors.” their way to the state over the past few years and it’s easy to see Southeast of the state’s capital, the population growth impact that interest is swelling out west. Big-name brands such as Uniqlo, is plain to see, as highlighted by the recent $350 million Westfield Zara and H&M now call WA home, with international giant Costco’s Carousel redevelopment. first of two confirmed stores set to open next year. Located just 12 kilometres from the Perth CBD, the retail “Retailers, especially those who are gearing up to enter the precinct has a total trade area population of 640,000, buoyed by its west, stand to benefit the most from this as landlords look to host proximity to both Curtin University’s Bentley Campus and Murdoch brands and concepts that help to differentiate them from others,” University’s South Street Campus. Ibrahimi suggests. The 2018 redevelopment saw an additional 70 specialty retailers So, with construction on the horizon and a wave of new brands, added to the mix, taking the total number of offerings to 350 across both international and domestic set to make WA the next big retail the fashion, food, lifestyle, dining and entertainment verticals. market, where can eagle-eyed franchisees look for a bargain The redevelopment – alongside the launch of fellow retail business opportunity? precincts Yagan Square and Raine Square – has helped to extend the Perth CBD outside its traditional town borders. Perth CBD “The combined investment of over $2 billion has resulted in world- Similar to its east coast counterparts, WA’s capital presents the class retail offering across the state that has injected billions of strongest opportunity for prospective small business owners. dollars into the local economy, creating jobs and helping to improve However, unlike Sydney and Melbourne, an oversaturation of the retail sector,” Ibrahimi says. offerings has yet to dwindle profitability for tenants. While the Westfield Carousel project has captured much of the “The CBD provides a great platform to target an ongoing rotation state’s attention, a number of other inner-city developments are also of visitors and white-collar workers, with footfalls throughout the presenting value-for-money opportunities. year remaining strong and conversion rates following closely,” Ibrahimi says. Yagan Square The resulting spark in retail interest has seen a number of Located in the heart of Perth’s CBD within the reach of the heritage- prominent landlords invest heavily in restructuring processes – with listed Horseshoe Bridge, Yagan Square is the flagship public space the aim of making their locations more appealing to prospective of the Perth Council’s new City Link. business tenants, particularly as new developments spring up The diverse, multi-use region celebrates Western Australia’s across Perth. cultural heritage and landscape through a series of art spaces, retail 12 insideretail.com.au
FEATURE “As construction and development progress over coming years, we will see retail, hospitality and hotel operations continue to boost the state’s economy.” Historically, Perth has But while Yagan Square remains the jewel in the Perth City Link crown, it isn’t the only major development generating interest in had limited retail options the city. between the CBD and a Elizabeth Quay Elizabeth Quay, the $2.6 billion landmark waterfront development few established regional designed to reconnect Perth city with the Swan River, is yet another shopping centres. initiative turning heads. The ambitious project was named best of the best by the Urban Development Institute of Australia, thanks to its transformative approach to retail innovation and growth. “Elizabeth Quay has restored a valuable physical and cultural offerings and digital implementations. Bearing a price tag of over connection between Perth’s city centre and the Swan River, a $73 million, the much anticipated area opened to the public in March connection that had previously been cut by roads and decades of last year, after more than 10 years of planning. development,” Metropolitan Redevelopment Authority CEO Sean Encased within the 1.1 hectare site is the booming William Street Henriques says. Mall, a lively pedestrian thoroughfare lined with shops and alfresco “People come out of the high-rise buildings to enjoy lunch by dining, linking the Perth CBD with Northbridge. the water. They are returning to the city on the weekend, or staying It was a significant development for the city, which had longer after work to attend shows and events with their families and traditionally offered little pre- and post-match entertainment for they are forging new connections and ways of engaging with the city its AFL-mad inhabitants. Yagan Square’s introduction provided an and its river.” additional nightlife boost, attracting a number of micro-breweries Bolstering the new region is the development of global business and millennial-themed offerings. Chevron’s Australian headquarters. The new 29-storey, mixed-use “Local, interstate and international visitors have Perth Arena and Chevron tower has added more than 54,000 sqm of office space, Yagan Square at their feet with the added bonus of direct train however the big boom for prospective tenants comes in the wealth services to key destinations,” Planning Minister Rita Saffioti reveals. of expected foot traffic. ► Yagan Square offers a series of art spaces, retail offerings and digital implementations. 13
FEATURE “Chevron’s new headquarters will contribute to delivering a largest state by area is largely rural, and while population numbers in vibrant, activated Elizabeth Quay, which is ultimately expected to be these towns pale in comparison to the Perth and Fremantle regions, home to 1400 people and 10,000 workers,” Saffioti says. they shouldn’t be ignored. The unique mix of commercial, dining, entertainment, retail and Significant government investment is slowly building infrastructure community uses have seen the region grow in stature, not only in and appeal in the state’s more rural town centres, with areas such Perth but across the state. as Geraldton, Bunbury and Albany emerging from the post-mining- “Elizabeth Quay will continue to be an exciting place to live, work boom slumber, repositioned as thriving regional tourist spots. and visit and will generate essential economic activity for many “With tourism investments picking up and more airline years to come,” Henriques says. connections to Perth, including the recent introduction of direct flights between Perth and Tokyo, we expect a surge of interest for Sub-regional opportunities places like Margaret River, Bunbury and Albany to the south and Since the collapse of the state’s mining industry, regional and sub- tourist hotspots in Geraldton, Exmouth and Broome to the north,” regional areas in Western Australia have struggled to stay relevant, Ibrahimi explains. with little to draw new entrants to the town centres. However, a “These regional centres already enjoy substantial interest from strong state government approach to infrastructure and education is intrastate travellers and will continue to receive more visitors from slowly helping to build back appeal. other parts of Australia and overseas tourists, leading to strong “While we obviously had an inflated figure during the mining demand for retail operators.” boom, which included interstate workers who settled in the regional Primarily driven by pad sites for Quick Service Restaurant options, areas, today, the steady and organic population growth is evident medical and childcare centres, pharmacies and most recently across the state, with key indicators recording a 0.93 per cent entertainment, interest is slowly rising. growth between 2017 and 2018,” Ibrihimi reveals. But a new industry discovery looks certain to accelerate that “And while the larger shopping destinations such as Westfield growth. As the dust settles on the state’s iron ore, gold and copper Carousel, Morley Galleria and Garden City offer very competitive mining sectors, exploration in lithium hydroxide is revitalising the retail opportunities, smaller neighbourhood centres continue to draw prospect of a secondary resource-driven boom. the most interest from retail operators due to their relevance to the Several regional sites across Western Australia have been residents in nearby communities.” bolstered to address the growing demand for the material, which will fuel the next generation of car and smartphone batteries. Regional opportunities Ibrahimi reveals that the state’s resource-driven economy is set to From a geographical perspective, however, Western Australia offers thrive as result, turning Western Australia into a major global player more than just CBD and sub-regional opportunities. The nation’s and immigration hotspot. Across the Perth CBD, construction and development are underway. 14 insideretail.com.au
FEATURE “The world’s largest lithium hydroxide processing plant outside be any truer than today. In addition to international challenges of China opened in Kwinana, just south of Perth earlier this year,” he with global trade wars and regional instabilities, consumer habits explains. continue to drift away from the conventional ‘customer’ that the “The $400 million facility looks set to be joined by a $1 billion plant industry was all too comfortable with,” he says. in Bunbury. In total, WA is expected to produce more than a third of “Throw in online shopping growth trends across the country the world’s demand for lithium. Its significance to the local economy, and we find ourselves in unconventional territory that demands job creation and state budgets cannot be stressed enough.” the best of our attention and effort. WA is not immune to any of As new developments take shape across rural Western Australia, these challenges, and retailers are expected to do everything they towns that have previously suffered in the fallout of the mining can to provide a level of ‘future-proofing’ as we move through this collapse look set to be revamped, with entrepreneurs ready to uncharted route.” capitalise. The retail leasing expert advocates strong due diligence on the Ibrahimi suggests a driving demand for workers is a sure-fire sign part of the prospective franchisee, offering two pieces of advice: of sector on the precipice of a great revival. know your customers and know your lease. “Job creation industries will continue to drive interest in the south “It is vital to know as much as possible about your customer of the state, especially in regions like Bunbury. We are confident base, their demographics, shopping habits and spending power. regional towns will continue to be a powerhouse for the state’s This will allow you to best judge a location and its suitability for your economy and will, in turn, continue to benefit the retail sector.” business,” he explains. “After this stage, get to know your lease. This is not just a review Future-proofing of the document but more importantly understanding its human As population growth continues across Western Australia, new retail components. Know your landlord, the leasing agent, your future precincts are certain to present value-for-money opportunities, property manager, your adjacent neighbours. If you are part of a particularly for those operators willing to commit early. retail precinct or shopping centre, get to the nitty-gritty details of the Despite the upside, however, Ibrahimi suggests the state is not marketing budget and plan. Today, it is more about interacting with without its challenges. the customer in all aspects of their lives, and data and research is “Retail has always been an evolving industry and that couldn’t key to this.” IRW Xxx Elizabeth Quay, the $2.6 billion landmark waterfront development reconnecting Perth city with the Swan River. 15
FIGURES 28% $50 billion Australians that shop The amount the ASX fell on online once a week. Monday due to coronavirus fears. Source: Klarna Source: AAP $32 million $3.9 billion Mosaic Brands 1H 2020 EG Group’s rejected bid for EBITDA up by 36 per cent. Caltex Australia’s business. Source: Mosaic Source: Caltex 7 92,000 kWh Taco Bell stores to open in The amount to be generated at Kathmandu’s Australia this year. first solar-powered store in Victoria. Source: Restaurant Brands Source: Kathmandu Retales For those of us who love greenery in our homes but haven’t got the green thumbs to make it happen, Bunnings has a wonderful policy. It seems that if a plant you bought from a Bunnings Warehouse dies, you can bring it back to them (preferably in the same pot) and get a new healthy one or your money back. They call it the “perfect plant promise”. And all plants – though not seedlings – are covered by it for a 12-month period. The policy has actually been around for a while now, but it was flying under the radar until a grateful customer posted about it on Facebook. All you need is your receipt, although like most refunds, the plant needs to be examined by a Bunnings employee and refunds will be at his or her discretion. It seems simple, but as news.com.au reports, the shame factor keeps many brown-thumbed customers quietly burying their mistakes. 16 insideretail.com.au
PROPERTY Retailers must invest in the future, says CBRE Changing consumer habits are impacting all bricks-and-mortar The company anticipates the transformation of some redundant retailers, and those that fail to innovate and respond to these retail space into other uses, such as childcare centres, education changing patterns will be left behind, CBRE reports in its 2020 real and entertainment centres, medical centres and residential estate market outlook. developments. CBRE estimates that online sales will reach 11 per cent of total CBRE forecasts that retail yields will remain relatively flat, with sales in 2020 in Australia, compared with 3.3 per cent of total sales super-prime CBD location and regional shopping centre returns in 2011. Technological advances are expected to transform the hovering at or below 5 per cent for the next two years. Prime large- entire retail sector, but these will require significant investment. format returns are expected to remain at around 6.7 per cent until at Mid-range clothing retailers have been hurt the most by least 2022. e-commerce – CBRE says that 41 per cent of all insolvencies in Large format retailers are tipped to show growth in rentals due the past five years have been in this sector. The food and beverage to recovery in the residential sector, CBRE says, although it places trade, however, continues to expand. pressure on mid-range clothing retailers and department stores will A number of global retailers are entering or expanding in Australia put downward pressure on rents. in 2020. Retailers as varied as Alexander McQueen, Tory Burch and Los Angeles-based CBRE is the largest commercial real estate Yves Saint Laurent – even Taco Bell – are expected to transform the services company in the world. local shopping experience. Woolworths plans Brisbane DC Woolworths has taken another step in its ongoing technological facility will be key to supporting future growth in Queensland. revamp, as it gets ready to open a $184 million state-of the-art “We’re pleased to be investing in our Queensland supply chain distribution centre in the Brisbane suburb of Heathwood. network for the benefit of our customers,” Graham said. Subject to approval from Brisbane City Council, the 42,000sqm “This development will help us deliver fresher food to customers, temperature-controlled facility will house frozen and long-life chilled take trucks off Brisbane’s roads, and create new career opportunities products for distribution to around 260 stores. for hundreds of Queenslanders.” At full capacity, more than two million cartons will move through the Woolworths’ meat supplier Hilton Meats will also have a production centre each week from more than 400 suppliers. facility on the site, which will help reduce truck movements. Woolworths’ chief supply chain officer, Paul Graham, said the Woolworths will sign an initial 15-year lease on the site. IRW The Heathwood DC will house frozen and long-life chilled products for distribution to around 260 stores. 17
PEOPLE Appointments Contact us EDITOR Jo-Anne Hui-Miller jo-anne.h@octomedia.com.au T2 boss to lead Unilever Australasia Unilever has appointed T2 CEO Nicole Sparshott (pictured) ONLINE EDITOR to head up the consumer goods giant’s Australia and New Heather McIlvaine Zealand business following Clive Stiff’s retirement. heather.m@octomedia.com.au Sparshott, who has 24 years’ experience leading within global corporations, will take up the role in April, reporting to JOURNALIST Unilever’s global COO Nitin Paranjpe; she will also keep her Dean Blake CEO position with T2. dean.blake@octomedia.com.au Sparshott joined Unilever ANZ in 2006 as marketing director for foods, ice cream and beverages, before moving CONTRIBUTORS to Singapore to take up leadership positions in the Asia Joyce Abaño, Jared Dickson, business. She was appointed CEO of T2 when Unilever Norrelle Goldring acquired the tea business in 2016 and has previously had roles at Procter and Gamble and Coca-Cola. SUB-EDITOR Margaret MacNabb She holds a Masters in International Business from University of Technology Sydney, and is a board director of GRAPHIC DESIGN the World Wildlife Fund. Pablo Colombi Stiff is retiring from the business after eight years in the role and 34 years in FMCG; he will stay with the business ADVERTISING until March 31 to help with the transition. Jeff Purser ads@octomedia.com.au 0408 401 076 Current team steps up for Caltex Caltex Australia has been unable to appoint a replacement Suite 3, Ground Floor. for retiring CEO Julian Segal so its CFO, Matthew Halliday 131 Clarence Street (pictured), will fill the position on an interim basis. Sydney NSW 2000 “Given our recent announcements regarding the receipt of revised and new proposals to acquire Caltex, it is not PO Box R217 possible for us to complete this search at this time,” Royal Exchange NSW 1225 chairman Steven Greg said. Telephone: (02) 9901 1800 Segal announced his retirement plans in August and was to have left the role on March 2. SUBSCRIPTIONS Louise Warner, the executive general manager of fuels and subs@octomedia.com.au infrastructure, has been appointed as interim COO, while current deputy CFO, Jeff Etherington, has been appointed ISSN 1448-1642 interim CFO. A.B.N. 98 090 664 305 “The interim appointments we announce today will ensure we can continue to engage with interested parties on a potential transaction, while continuing to execute our FOLLOW US @INSIDERETAIL strategy,” Greg added. Lawson exits Forever New Cameron Lawson (pictured), the head of digital marketing, Copyright notice: retail marketing and loyalty for Forever New, has announced Readers are reminded that the content of this his departure from the company on LinkedIn, saying that he publication is subject to copyright, vested in is “moving on to the world of dogs and cats”. Octomedia Pty Ltd. Readers and subscribers are Forever New, a fashion clothing and accessories brand expressly forbidden from copying and re-posting the contents of this publication or republishing all founded in Melbourne, is one of the fastest growing or any part of it without the express permission Australian brands. It emerged in late 2006 as a startup of the publisher or group editor. Octomedia Pty Ltd reserves all of its rights against any pirating or retailer and now trades over 250 stores across seven unauthorised use of such materials and publication countries. without its prior written permission. It took home the Best Omnichannel Retailer of the year as well as Best Online Store at last week’s Retailer Awards. IRW 18 insideretail.com.au
OPENING MAY 2020 T ER S E GI W R NO Artist Impression LEASING NOW M-Ci t y, lo c ate d at t he ma j o r i nters e c ti o n of P ri nces Hi ghw ay and Bl ack burn Ro ad in Clay ton, V ic to ri a, i s set to b e co m e the m o dern retai l hu b of th e s ou t h-e as t . D on’ t mi s s thi s exci ti ng o pp o r tuni t y to b e a p ar t of s u c h a dynam i c pre ci nc t. C a l l i n g for busine sse s of — • o pto m etr y • la ser s ki n therapy • fas hi o n and fo ot w e ar • ho m ew ares • fl o ri s tr y • j ew el l er y • c o nveni ence sto res SECURE YOUR BUSINESS! PLE A SE C ALL SHARRYN P OT TENGER 04 47 520 022 A development by 19
TIME OF YOUR LIFE BES UP STORE WELCOME TO LD HAVE THE TIME OF Y ONLINE POP UP STORE DER WORLIFE BEST ONL PRESENTED BY UP STORE WELCOME TO LD HAVE THE TIME OF Y WE HAVE OUR WINNERS! Nine phenomenal retailers were just recognised as best-in-class at the coveted customer experience of the year awards! Best Pop Up Loyalty Program/Campaign Instore Customer Service Online Customer Service 2020 of the year initiative initiative Best Customer Service Omnichannel Retailer Retail Supplier Online Store team of the year of the year of the year Store Design/Concept Customer Experience Customer Experience of the year of the year - Small of the year - Large Read more about the event on insideretail.com.au Presented by Sponsors Partner 20 insideretail.com.au
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