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AUSTRALIANRETAIl
OUTLOOK 2017
®
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www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 1
Rethink
your strategy
and business
model
Speak with one of our
retail consulting experts today and
stay ahead of the game
Enhance. Transform. Grow.
www.azurium.com.au | 03 9604 5600
AUSTRALIAN
RETAIL
OUTLOOK
2017 CONTENTS
4| Welcome EXPERT FORECASTS
5| Retail predictions: It’s 52 | Azurium: Delivering the
time to buckle up for ‘magic’
2017.
53 | Azurium: Looking into
11 | 2017 Retailer Survey: the future
Results from Inside
Retail’s latest reader 56 | Azurium: Nothing
survey. changes if nothing
changes
EXECUTIVE
57 | Michael Page: Always a
11 PERSPECTIVES challenge
22 | Terry White Group:
58 | Retail Doctor Group:
Just what the customer
Don’t be left behind
ordered...
59 | NORA: Back to basics
24 | Super Retail Group:
Changing dynamics
60 | Deloitte: Disruption the
new norm
28 | Asian Restaurant
Concepts: Boxing on
62 | GFK: It’s all about the
experience
30 | Lush: Change more than
cosmetic
64 | IbisWorld: Tough times
ahead
32 | Oxfam Australia
22 Trading: No exemption
66 | Savills: Elephants and
from turbulence
poachers
34 | Disrupt Sports: Doing it 68 | Mima Design: Keeping
their way
up appearances
AZURIUM 72 | CBRE: Thinking small
38 | 2016 Scorecard: 73 | Neto: Keeping it all in
Winners and losers the family
42 | Trending in 2017: Food
retail and the last mile
50 | Economic update: No
38 improvement in sight
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 3
FROM THE EDITOR
AUSTRALIAN Welcome to the 2017 Australian Retail Outlook, a joint effort between
RETAIL Octomedia, publisher of Inside Retail and Azurium.
Last year wasn’t easy for retail with several major brands bowing out of the
OUTLOOK industry, including Payless Shoes, Dick Smith, Masters and Pumpkin Patch.
Another wave of global retailers arrived again and we said hello to Debenhams,
2017 John Lewis and Decathlon, while the Chinese market continues to ramp up.
In terms of online retail, Australians are increasingly shopping using their
The Australian Retail Outlook is printed mobile devices and in response, retailers are picking up their game in the
by Octomedia delivery space with the rise of click-and-collect. Perhaps in response, traditional
bricks-and-mortar retailers are seeking creative ways to lure customers into their
stores, through special events, in-store experiences and even one-off pop-up
stores.
HEAD OFFICE Meanwhile, Amazon is hot on the heels of Australian retailers - it will be
Level 3, 51-57 Pitt St interesting to see how our local stores respond to the online giant’s interest in
Sydney, NSW 2000 our shores.
PO Box R217 I hope you enjoy reading the latest Australian Retail Outlook and it offers you
Royal Exchange NSW 1225 some food for thought for your business for the year.
Tel : +61 2 9901 1800
Fax : +61 2 9901 1800 Jo-Anne Hui-Miller
Editor, Inside Retail
EDITOR
Jo-Anne Hui-Miller
jo-anne.h@octomedia.com.au
JOURNALIST
Zilla Efrat
zilla@octomedia.com.au
ADVERTISING
Amir Engler FOREWORD
amir@octomedia.com.au 2016 certainly was a year that will stand out in recent history. Political upheavals,
Chris Samios the passing of notable popular culture icons and a series of tragic world events
chris@octomedia.com.au left many grateful for its end. And whilst some retailers might also share
this sentiment (as outlined in our ‘Winners and Losers’ scorecard), for many
GRAPHIC DESIGN operating in the Australian market there are potentially tougher times ahead.
Nguyen Pham The last 12 months were marked by the unfortunate demise of some iconic
nguyen@octomedia.com.au brands such as Dick Smith, Laura Ashley and Payless Shoes. It wasn’t all bad
news though. The likes of Dominos, Kogan and JB Hi-Fi were shining examples
of home grown retail successes.
CEO
2016 could also be considered the year of the bricks-and-mortar revival. Whilst
Oliver Ranck online retail is certainly providing a stronger growth trajectory for retail sales,
oliver@octomedia.com.au local brands understand that brick-and-mortar stores still play an integral part
in being able to deliver to the consumer a unique, exciting and seamless retail
FOR MEDIA RELEASES experience. Whilst the shopping centre of the future may look remarkably
irnews@octomedia.com.au different, physical retail is still well and truly alive.
The benchmark for Australian retail has now been set by big name international
brands who have taken to the local market. This is set to continue with the
anticipated arrival of Amazon this year. Rather than a threat, local retailers
Octomedia Pty Ltd accepts no liability for any errors,
should consider this an opportunity to reassess their own business and strive
ommissions, or consequences, including any loss or damage,
to deliver a service and offering which matches the expectations of the now
arising from reliance on information in this publication. The
globally-minded Australian consumer.
views expressed in this publication reflect opinions of the We wish all Australian retailers the very best for 2017.
writers and are not necessarily endorsed by Octomedia Pty
Ltd. We recommend obtaining professional advice from an James Stewart
accredited advisor before relying on the information in this Partner, Azurium
publication. Octomedia Pty Ltd reserves all copyright over the
content included in this publication. No part of this publication
may be reproduced, stored in a retrieval system, or transmitted
in any form, as per the Australian Copyright Act 1968.
4 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.au
RETAIL PREDICTIONS
IT’S TIME TO
BUCKLE UP
FOR 2017
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 5
RETAIL PREDICTIONS THE STATE OF PLAY Buckle up for 2017. With choppy trading conditions ahead and the possible entry of Amazon and other internationals into the market, Australian retailers will need to lift their eCommerce game and find their points of differentiation. 6 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.au
RETAIL PREDICTIONS
2016
was a choppy which lets people design their own support Oxfam’s fair and ethical retail
year for sports equipment. It smashed its tar- business.
Australia’s gets and grew its own retail presence On the food side, Asian Restaurant
retailers as different categories faced (see p34). DisruptSports.com has lots Concepts hit its growth targets and
different trading conditions. of new projects planned for this year, now has 107 Noodle Box and Wok in
Despite a slowdown in growth including opening in Los Angeles and a Box restaurants in Australia and
early in the year, Australian Bureau of New York City. Elphick also expects four Noodle Box restaurants in Saudi
Statistics (ABS) figures show that retail to make waves with a game-changing Arabia (see p28). Acting GM Michael
turnover had a 3.5 per cent seasonally B2B integration platform and some Standley says the group is targeting
adjusted year-on-year rise in October. “really awesome” virtual reality custo- growth of 15 per cent this year and
According to Azurium’s James misation tools. hopes to launch a third brand, still in
Stewart, 2016 had its share of retail Mark Lincoln, a director of Lush the Asian space, with two restaurants
winners and losers. Local brands who Cosmetics Australia and New Zea- by the end of the year.
embraced digital (e.g. Dominos and JB land, says 2016 was an exceptionally
Hi-Fi) saw healthy sales growth whilst good year for his business too, with
some retailers who have failed to adapt three stores launched in the region
THE INTERNATIONAL
their business models (e.g. Myer) have and other outlets undergoing refur- INVASION
struggled. Geographically, retail spend- bishments (see p30). And despite ex-
ing in the eastern states was buoyed pecting a challenging retail environ- The continued arrival last year of in-
by the housing boom, while WA and ment this year, he believes his group ternational retailers in Australia was
Queensland faltered amid the slow and is well placed for strong growth. “The noted in Inside Retail’s 2017 Retailer
steady mining bust. beauty category has always been an Survey (see p12). An overwhelming
This patchiness is reflected in the intensely competitive market. The 43.5 per cent of the participants listed
mixed responses to Inside Retail’s 2017 challenge is to ensure we stay fo- international entrants as one of the
Retailer Survey (see p12). For example, cussed on delivering quality products biggest challenges facing the retail
23.4 per cent of respondents to the an- and the best customer service experi- industry this year. A further 41.3 per
nual poll described trading conditions ence in the industry,” says Lincoln. cent said they were worried about
over the past 12 months as solid, 20.7 Meanwhile, Terry White Group these newcomers compared to 28.5
per cent as ordinary and 25 per cent as CEO Anthony White admits the retail per cent last year, and those who
challenging. Likewise, 37 per cent felt pharmacy market is tough, with phar- were not worried slumped from 71.5
that the market was better than last macists further hampered by severe per cent last year to 58.7 per cent.
year, 20.1 per cent said it was worse cuts to the Pharmaceutical Benefits However, many respondents wel-
and a similar amount (20.7 per cent) Scheme over the past year (see p22). comed the heightened competition,
said it was about the same. But he says there are still opportuni- some noting it will improve the retail
Looking ahead, respondents were ties “if retailers can evolve and offer mix and enhance the retail experi-
not overly bullish about the prospects value to their customers – and that’s ence for Aussie shoppers.
for this year, with 35.9 per cent expect- not only on price, but on service and “International retailers force local
ing trading conditions to remain the knowledge as well”. White’s key focus retailers to improve their game,” said
same and 45.7 per cent expecting them this year, however, will be bedding one, while others noted that more
to improve a little. Only 4.3 per cent down his group’s merger with Chem- competition was needed in some of
believed conditions would improve a mart, which has created a mega-chain the retail categories that are dominat-
lot, while 14.1 per cent said they would of 500 pharmacies with $2 billion in ed by two large businesses.
become a little worse. annual turnover. In his commentary, Super Retail
This sluggishness, however, is not Julia Sumner, GM of Oxfam Austra- Group’s Birtles observed: “We have
reflected by all the retailers participat- lia Trading, also describes last year’s highlighted for many years the
ing in the Australian Retail Outlook retail environment as challenging (see impact that international retailers
2017’s executive perspectives, with p32). “With lower confidence in both will have on the Australian retail
most participants looking back on last the property market and household market, whether through rolling out
year positively and embracing this finances as well as low wage growth, a network of stores or through an
year with optimism and enthusiasm. we have seen a big impact on discre- online presence. We are now seeing
Peter Birtles, group MD/CEO of tionary spend throughout the year.” international retailers come into our
Super Retail Group, is pleased with She says it has been quite a tough segments, and we welcome the chal-
his group’s strong sales growth last year for retail in general, with some lenge that brings.
year (see p24) and says its key focusses retailers going into liquidation in the “We know we need to continue to
this year will be on understanding its lead-up to Christmas. “That said, our lift the standard of our businesses,
customer, building its omni-channel organisation has had quite an exciting which has to be good for the cus-
capabilities, developing its supply year with the opening of two shops in tomer. The strategies we have been
chain and engaging its staff. “Looking Sydney, the launch of a new website implementing over the past few years
ahead, we all know the dynamics of and a successful year in our whole- have been developed with interna-
the retail industry are changing – cus- sale channel off the back of increased tional competition in mind, so we
tomers have even more information distribution through independent don’t see any need to change our
at their fingertips as to who will best supermarkets across Australia.” strategic focus at this time. We have
meet their needs, and they have more Off the back of unstable economic the opportunity to turn our deeper
choices than ever before,” he says. indicators throughout the past 12 understanding of the Australian
Similarly, Gary Elphick, CEO and months, Sumner says she cannot marketplace, Australian conditions
founder of DisruptSports.com, says make predictions for this year, but is and the Australian customer to our
2016 was a great year for his company, confident consumers will continue to advantage.”
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 7
RETAIL PREDICTIONS
tial for major market disruptions is
huge. We are already seeing retailers
setting up task forces to assess the
potential impact of an Amazon mar-
ket entry, but it’s not yet clear what
exactly the company has planned for
Australia.
“What we do know is that where
Amazon has entered new markets,
the impact on local retailers has been
seismic and has impacted almost all
categories and channels. So retailers
can’t afford to wait and see what Am-
azon does – they need to be develop-
ing strategies and taking action now.”
In his commentary, Azurium’s
Stewart says Amazon is likely to be
a game-changer in the Australian
market and accelerate the pace of
online growth. It could perhaps
also be the catalyst that brings the
Australian eCommerce economy up
to international benchmarks. “We
doesn’t believe he has seen anything expect retailers in all sectors to invest
revolutionary from any of the inter- heavily in securing their marketing
"Retailers can’t national players. “Whatever we learn
from the overseas brands’ influence
channels in an attempt to fend off
the American heavyweight, which is
afford to wait and on the local retail scene, one rule that
never changes is that if you simply
expected to undercut prices through
cost efficiencies.”
see what Amazon stand still and watch, you are going
backwards,” he warns. POINT OF
does – they need In response to the trends created
by the overseas arrivals, he expects DIFFERENCE
to be developing smaller, bespoke and more person-
alised fashion brands to pop up, keen
To withstand the many threats com-
strategies and to offer something different that will
not be found in the malls.
ing their way, retailers will need to
work on standing out from the pack.
taking action now." Zelman Ainsworth, head of retail
brokerage leasing at CBRE Mel-
As Anthony White notes, one of the
biggest challenges for retailers – and
also one of the biggest opportunities
bourne, says that if 2016 was the year
– in the coming year will be to have
of the international retailer, 2017 will
Deloitte’s David White expects a clear point of difference and to be
be the year when domestic players
the influx of international retailers to highly responsive to the ever-chang-
rise to the challenge, with the emer-
continue this year and beyond (see ing needs of customers.
gence of micro-stores helping to even
p60) on the back of Australia’s strong Similarly, Birtles says: “Our job
the playing field between local and
economic conditions, high consumer is to ensure we stand out from the
offshore brands (see p72).
demand for international brands and crowd with an offer that inspires and
“This trend is good news for
relative proximity to Asia. engages at a broader level than prod-
everyone,” he says. “Not only do
“One of the key differentiators uct and price. As long as we continue
micro-stores promote a more rich and
international retailers have brought to to provide the solutions and expe-
diverse retail sector, characterised by
Australia is in their store design and riences that help our customers to
boutique and independent stores, this
customer-experience model, lever- make the most of their leisure time,
concept also offers fiscal perks. These
aging their experience from larger we are confident we can continue to
include lower capital outlay costs,
markets. However, we are seeing achieve growth.”
lower overheads and the opportunity
Australian retailers slowly starting This theme is echoed by Brian
to have multiple tenancies in different
to fight back, with investments rising Walker, founder and CEO of the Re-
locations – opposed to just one large
in store design, and concept and tail Doctor Group, who predicts that
store.”
flagship stores. So these new entrants successful retailers this year will be
will find Australian retailers better heavily focussed on the uniqueness
prepared and skilled to take on this ELEPHANT IN THE of their offerings and will increasing-
new challenge compared to five years ly turn to fields such as neuroscience
ago.”
ROOM to understand consumers with far
Mark McConnell, design director Deloitte’s David White says that more alacrity and accuracy (see p58).
at Mima Design, acknowledges that if Amazon is not on the agenda To create a buzz with customers
the internationals are bringing new at board meetings for Australian this year, Paul Greenberg, executive
store experiences for us to engage retailers, then it should be. “With the director of Nora.org.au, expects to
with (see p68). “Think what Apple rumoured arrival of the US giant to see more retailers using new apps,
did and now Tesla,” he says. But he Australia’s shores this year, the poten- trials, promotions and technolo-
8 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.au
RETAIL PREDICTIONS
gy, “given that many shoppers are tor of retail services at Savills, forecasts retail sales are still only marginal
itching for innovation and change” that local malls will increasingly em- compared to those of traditional
(see p59). brace things that cannot be replicated bricks-and-mortar sales. Analysis
“Myer and eBay’s virtual reality online or delivered by drone. by Citibank suggests Australia’s 10
store last year was a fine example “What we will we see be things largest retailers derive not quite 6 per
of this. Did it change the world? that are experiential, personal, or cent of all sales from online channels.
No, but it was a lot of fun for the of a service nature. The space will That number is almost double in the
teams of both businesses to develop, respond uniquely to the trade area US at 11 per cent.
customers had a fantastic play, and demographic instead of the ‘one Stewart from Azurium notes that
the media went into meltdown with size fits all’ current model of shop- the strong growth shown by the eCom-
excitement. No losers here, and my ping-centre leasing and develop- merce sector and the enormous shift in
prediction is that this could quite ment,” he says. consumer behaviour in the US toward
well develop to be a significant nee- mobile eCommerce is a warning
dle mover.” bell for Australian brick-and-mortar
Similarly, in her forecast, Norrelle
ONLINE GROWTH retailers.
Goldring, APAC region shopper lead In his commentary (see p38), Azuri- Roy Morgan reveals that 16.5 mil-
at GFK, advises retailers to focus on um’s Stewart discusses the exponen- lion Australians (85 per cent) shopped
creating experiences, not just selling tial growth of Australian retailers at one or more shopping centres in
stuff. “Tell a story, provide a theme – through online channels over the an average four-week period in the
for example, by apportioning a part past five years, noting that this has financial year to June 2015. So while
of your store to themes and seasonal been largely spurred on by the in- some people proclaim physical retail
items. Ensure your experiential mar- creased consumption of online media is dead, Stewart says these figures
keting activities are shareable, and (music, movies, e-books and so on). show that bricks-and-mortar are still
that sharing is encouraged,” she says This growth was also picked up truly alive and well.
(see p62). in the 2017 Retailer Survey (see p12). However, Ryan Murtagh, CEO of
Our experts say that shopping Here, 31.5 per cent said their sales Neto, says retailers need to stop fo-
centres also need to work on their from eCommerce grew over the cussing on sales channels as separate
points of difference. Azurium’s James past year as a percentage of overall businesses with separate strategies
Stewart and Denis Carruthers warn revenue while 17.9 per cent expe- (see p73). Instead, they should recog-
that while model innovation will be rienced no change. Interestingly, nise the value of all customer contact
key for centre operators in the future, most retailers polled only earned − in-store, online or mobile − as part
success will also rely on a trait that up to a quarter of their total revenue of a continuous shopping flow. But
has never changed (see p53). “Every from eCommerce. Only 10.3 per cent he says that a key part of an effective
shopping centre needs to stand for earned more than that with 3.8 per omnichannel strategy is to rethink
something – it’s unique selling prop- cent earning more than 50 per cent. the bricks-and-mortar outlet.
osition needs to be clearly under- According to Azurium’s Stew- “It’s not just a point of sale any
stood by customers in its main and art, Australian retailers lag behind more – it’s anything you want it
secondary trade areas.” the rest of the world in adapting to be. It’s a service base. It’s a user
Likewise, Leighton Hunziker, direc- to omni-channel sales, and online experience lounge. It’s a fulfilment
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 9
RETAIL PREDICTIONS
centre. It’s a pop-up shop that spends in the short term with the longer-term Australian retailers remain relatively
a month in each city around the coun- outlook being uncertain. positive while many are expecting
try. It’s a boutique mart. There’s no “While interest rates are at re- to be able to grow and expand their
script to follow – it doesn’t even need cord lows, consumers continue to be businesses. However, competition
to be in a shopping mall,” he says. impacted by some of the lowest levels will be fiercer than ever and, even if
of wages growth in recent times, even Amazon doesn’t enter the market this
though unemployment continues to year, Australian retailers need to be
RENTAL ease. Adding to wages pressure has planning for change - disruption is
Again, rental overheads emerged as been the continued domestic and glob- now the norm, not the exception.”
the major issue keeping retail execu- al economic uncertainty, particularly However, White says the wealth
tives up at night. In this year’s Retailer in the past 12 months.” factor created by rising house prices
Survey, 44.6 per cent respondents cited Most of the retailers in Inside Retail’s in New South Wales will slow down
it as among the biggest challenges fac- 2017 Retailer Survey expect trading as house price growth is expected
ing the retail industry – slightly down conditions to either stay the same this to moderate. “Therefore, retail sales
from 50.3 per cent last year. year (35.9 per cent) or improve a little growth in 2017 in New South Wales
In a similar vein, Leighton Hun- (45.7 per cent). A far smaller group (14.1 will more likely match rather than
ziker, director of retail services at per cent) expected things to become exceed the national average.”
Savills, reckons it is not sustainable a little worse. Yet in its 2016 Retailers He says potential over-building
for landlords to keep driving specialty Christmas Survey (see p60), Deloitte of apartments and the closure of car
store rents at CPI + 2 per cent increases found that 64 per cent of respondents manufacturers could slow down
a year in an environment where sales expected their earnings to increase by 5 growth in Victoria this year. Western
growth has not kept pace (see p66). per cent or more this year, with levels of Australia continues to feel pressure
“Investors’ desire for never-ending optimism at their highest since it started from the downturn in the mining
rental growth has meant that special- this survey five years ago. sector, and trading conditions are
ty rental growth has outpaced sales “We can expect a steady improve- expected to be challenging there this
growth, leading to a combination of ment in retail sales through this year, year. Queensland has a more positive
retailer margin erosion, higher prod- which is likely to coincide with a mod- outlook, with its retailers expected
uct prices and now, courtesy of access est improvement in wage growth over to benefit from a rise in tourists and
to information and macro-economic time,” says Deloitte’s David White. students across the state, thanks to a
forces, customers reaching a point-of- “As we head into 2017, prospects for lower Australian dollar.
purchase resistance.”
The result? “Retailers are stressed
because they are being squeezed by
unsustainable cost escalations on one
end and tapering sales growth at the "As the Australian economy
other end,” says Hunziker.
remains sluggish, the
THE ECONOMY
Looking ahead, the outlook for Aus-
expectation is that the retail
tralian retailers does not appear too
rosy in the near term, but could im-
sector will stay tough in the
prove later in the year. In its economic
update (see p50), Azurium’s Stewart
short term with the longer-term
observes: “As the Australian economy
remains sluggish, the expectation is
outlook being uncertain."
that the retail sector will stay tough
1 0 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.auRETAILER SURVEY 2017 www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 1 1
Australian Retail Chain D I R E C T O R Y “The ‘Who’s who’ of Australian Retail” UPDATED PRINT COPY OUT NOW ONLINE + PRINT ONLY $395 2016-2017 EDITION Published by www.arcd.com.au
RETAILER SURVEY 2017
NOT SO TOUGH
Trading conditions are less tough now than last year, according to our
annual retailer survey. However, higher rents and inflexible landlords are
listed as the main grievances.
T
here is good news in Inside Retail’s 2017 retailer survey - trading condi-
tions are reportedly not as tough as they were last year.
Here is an overview of the results from the 15-question survey.
Q.1
WORST I HAVE EXPERIENCED
BEST I HAVE EXPERIENCED HOW WOULD YOU
DESCRIBE TRADING
CONDITIONS IN THE
PAST 12 MONTHS?
CHALLENGING
Fewer respondents to the survey
describe trading conditions as
ORDINARY
“challenging” than they did last
year – 30.9 per cent compared to 31.8
SOLID
POOR
per cent. Yet only 28.9 per cent saw
the market as solid, compared with
25.8 per cent in last year’s survey.
That said, there has been a rise in the
number who say the market is the
2 8. 9%
2 5.5 %
3 0.9 %
3. 4%
3.4%
8 .1%
worst they have experienced – 8.1 per
cent versus 3.97 per cent last year.
Respondents to this question only includes retailers
Q.2
47.5 %
BETTER
THAN
20 15
HOW DID YOUR FULL YEAR
COMPARE TO 2015?
25.9 %
WORSE
47.5 per cent of respondents believe they will have done THAN
better last year than in 2015. Last year, 47.6 per cent 20 15
believed they had turned in a better performance than
in 2014. However, only 25.9 per cent of retailers expect to
26.6 %
have fared worse last year, down from the 27.15 per cent ABOUT
who predicted a drop in earnings in last year’s survey. THE
SAME
Respondents to this question only includes retailers
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 1 3R E T A I L E R S U R V E Y 201 7
Q.3 45.7 %
IMPROVE
A LITTLE
35.9 %
IN THE YEAR AHEAD, REMAIN
THE SAME
HOW DO YOU
EXPECT TRADING
CONDITIONS TO
CHANGE?
14.1 %
On a brighter note, most of the GET A
retailers polled expected trad- LITTLE
ing conditions to either stay the
same this year (35.9 per cent) or 4.3 % WORSE
improve a little (45.7 per cent). IMPROVE
Only 14.1 per cent expected things A LOT
to become a little worse.
Respondents to this question only includes retailers
44
.6%
RENTAL OVERHEADS
43
. 5%
INTERNATIONAL ENTRANTS
41 .
8%
41 . OFFSHORE ONLINE RETAILERS
8%
ENDEMIC DISCOUNTING
41 .
3%
LOW CONSUMER CONFIDENCE
41 .
3%
HIGH LABOUR COSTS
28
. 3%
GLOBAL ECONOMIC TROUBLE
2 7.
7%
VALUE OF THE AUSTRALIAN DOLLAR
16.
8%
TAXES AND OVERHEADS
14.
7%
THE RISE OF PRIVATE LABELS Just like last year, rental overheads emerged as the major is-
10. sue keeping retail executives up at night. In notable swings
3%
this year, concern among retailers about international en-
GOV. RESTRICTIONS
8.7 trants, offshore online retailers and global economic trouble
% was higher than last year, but anxiety about the value of the
OTHER
1.6 Australian dollar and high labour costs eased.
% Some of the other worries retailers listed were a drop
NO CONCERNS
in Chinese tourism dollars, political incompetence at both
state and federal levels, and higher energy costs.
Q.4
One retailer bemoaned the trend for landlords to in-
crease the food/retail tenancy mix, therefore diluting that
sector and decreasing turnover on a store-by-store basis.
Another worried about the upsurge of selling on a pleth-
ora of Facebook sites by individuals rather than businesses,
while yet another fretted about the growing number of
WHAT ARE THE BIGGEST Australian online sales, such as Black Friday, where suppli-
ers were undercutting retailers.
CHALLENGES FACING THE Grocery deflation and the duopoly of the supermarkets
RETAIL INDUSTRY THIS YEAR? driving down pricing were also seen as causes for concern.
1 4 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.auR E T A I L E R S U R V E Y 20 1 7
Like last year, the top priority of respon- 30.5 %
dents by a long shot was increasing sales, INCREASING SALES
followed by improving margins and
raising stock turnover.
The percentages of those wanting to
prioritise new markets, expand their store
Q.5
networks, build an eCommerce presence
or implement an omni-channel structure
all dropped from last year’s survey.
No respondents expected to focus on
rebranding, compared to nearly 6 per cent
last year. Only 1.9 per cent saw closing
WHAT WILL BE stores as an important activity this year,
THE TOP PRIORITY down from 9.93 per cent last year.
Other priorities listed included inter-
12.4 %
INCREASING MARGIN
OF YOUR RETAIL national expansion, improving the supply
chain, finding new distribution channels,
BUSINESS THIS running a more efficient business and
YEAR? reducing store locations and size.
10.5 %
INCREASING STOCK
TURNOVER
Q.6
DO YOU PLAN TO CHANGE
YOUR NUMBER OF STORES
THIS YEAR? 9.5 %
BUILDING AN
ECOMMERCE PRESENCE
As with last year, most retailers polled intended to maintain store numbers at
last year’s levels. More planned to add stores (42.5 per cent compared to last
year’s 17.2 per cent) and far fewer expected to reduce store numbers (9.2 per
cent compared to a whopping 11.26 per cent the year before). 9.5 %
IMPLEMENTING AN
47.1 % – Maintain store numbers OMNI-CHANNEL STRUCTURE
1.1% – Pure-play retailer
8.6 %
EXPANDING THE STORE
NETWORK
5.7 %
NEW MARKETS
2.9 %
EXPANDING
PRODUCT RANGE
42.5% – Add more stores 1.9 %
CLOSING STORES
1.0%
REDUCING PRODUCT
RANGE
9.2% – Reduce store numbers 0.0 %
7.6 % REBRANDING
OTHERS
Respondents to this question only includes retailers Respondents to this question only includes retailers
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 1 5R E T A I L E R S U R V E Y 201 7
Q.7
DOES THE INFLUX OF
INTERNATIONAL RETAILERS
TO AUSTRALIAN SHORES
WORRY YOU?
With international retailers increas- to be better - the best retailers (local
ingly eyeing the lucrative Austra- or international) will continue to
lian market, there has been a prosper"
surge in concern about their • "The competition provided by
presence. This year, 41.3 per international retailers with a global
cent said they were wor- perspective, who are constantly
41.3 % ried compared to 28.48
per cent last year. And
evolving the use of technology to
improve their business and engage-
SAID THEY
WERE the number who were ment with consumers, will push
WORRIED not worried slumped those Australian retailers who have
from 71.52 per cent last not felt the need to improve their
year to 58.7 per cent. businesses as rapidly."
However, many • "International retailers give shop-
58.7 % respondents welcomed pers diversity and put pressure on
SAID THEY the heightened competi- Australian retailers to deliver the
WERE NOT tion. Some said it would experience shoppers expect and
WORRIED improve competition and that shoppers in other markets
enhance the retail expe- already enjoy"
rience and mix for Aussie • "As a shopfitter, I welcome it."
shoppers.
NEGATIVE COMMENTS
POSITIVE COMMENTS INCLUDED:
INCLUDED: • "They take shoppers away from
• "More variety and competition can other areas"
expose new customers to other • "The influx creates a skills shortage
offerings" with big-box retailers paying more
• "The market needs competition. for the talent pool. The recruitment
Some categories are owned by two of good people is difficult"
large businesses" • "It leads to margin pressure"
• "This cuts both ways. There is no • "Customers flock to what"s new,
reason why Australian retailers abandoning retailers who, in our
should not compete internationally" case, have indented stock six to
• "International retailers force local nine months prior"
retailers to improve their game" • "It has a potential impact on local
• "Locals who can"t compete should retailers and the Australian econo-
not be operating to begin with" my – locals pay adequate taxes."
• "This will challenge local retailers
Q.8
Like last year, opinion was closely Australia’s competitiveness.
split on how the Australian retail
market is placed compared to other TOP COMMENTS
international markets – 26.1 per cent
saw it as better placed, 26.6 per cent INCLUDED:
said it was the same, and 25 per • It’s very expensive to buy pretty
much anything when compared
HOW DO cent said it was worse placed. With
to London, where I lived previ-
opinions being so closely divided, it’s
YOU BELIEVE THE probably not surprising that 22.3 per ously. Retailers rely on higher
margins at the expense of volume.
AUSTRALIAN RETAIL cent were not sure.
Offshore and online retailers will
Some respondents noted that
MARKET IS PLACED Australia’s small population was a change that dynamic with Aus-
tralian retailers having to rely on
COMPARED TO OTHER limiting factor. “Most of our suppliers
higher volume at lower margins
say we are negligible, maybe 2 per
INTERNATIONAL cent of the global market,” said one. to compete.
Others noted that higher rents, la- • Australia is the second most
MARKETS? bour and other costs of business limit retailed market after the US.
1 6 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.auA U ST R A LIA N R E T A IL OU T LOOK 20 17
Q.9
25.3% 68.1%
YES, LANDLORDS NO, LANDLORDS DID
WERE MORE NOT OFFER MORE
HELPFUL FLEXIBILITY OR HELP
DID YOU FIND THAT YOU
RECEIVED MORE FLEXIBILITY
AND HELP FROM LANDLORDS
LAST YEAR?
Like last year, most retailers (68.1 per cent of
respondents) said their landlords did not offer more
flexibility or help over the past year. Only 25.3 per
cent found that their landlords were more helpful. A
few noted that they owned their premises.
TOP COMMENTS INCLUDED:
• "Our landlord is totally inflexible, refusing to
6.6% acknowledge the difficulties we face at this time."
• "Most landlords are not cognisant of industry or
I AM AN ONLINE
RETAILER government pressure."
Respondents to this question only includes retailers
There is too much floor space.
As eCommerce increases and
retailers invest in technology and 25% 26.6% 26.1%
THE SAME
in in-store experience, we will
see a shrinking of retail stores
22.3% WORSE BETTER
UNSURE
in favour of a better outcome for
shoppers and retailers. This is not
a particularly good situation for
landlords, who need to catch up
by remixing and improving their
customer proposition for both
retailers and shoppers. Australia
is effectively two to three years
behind other major markets such
as the UK, US, Singapore, France,
the UAE and South Korea.
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 17R E T A I L E R S U R V E Y 201 7
Q.10
HOW DO YOU 9.6%
GET BETTER
EXPECT LEASING
TERMS TO CHANGE
THIS YEAR?
Moving into 2017, only 9.6 per cent
25.0%
of retailers expect leasing terms to GET WORSE
change for the better – down from
12.58 per cent last year. While 25
per cent say leasing terms will
become more challenging, that is 65.4%
lower than the 21.85 per cent who STAY THE SAME
said so last year. “We try to re-
main positive, but don’t have our
fingers crossed,” one respondent Respondents to this question only includes retailers
observed.
"If a retailer is seeing decking online
sales at this point, it's because there
is a problem with its eCommerce
infrastructure and marketing."
1 8 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.auA U ST R A LIA N R E T A IL OU T LOOK 20 17
Q.11
HOW WILL THE VALUE
OF THE AUSTRALIAN DOLLAR
IMPACT YOUR BUSINESS 13%
THIS YEAR? POSITIVELY
Almost half of the retailers surveyed, our margins"
47.8 per cent, believe fluctuations in • "A mixed bag. Retailers who import
the value of the Australian dollar will will have to pay more to buy stock.
have no discernible impact on their Locally made stock will be cheaper"
business this year. In contrast, 39.2 • "A declining Australian dollar
per cent expected to be hurt by the tends to see our eCommerce in-
value of the Australian dollar. That crease, which we interpret to mean 39.2%
NEGATIVELY
is a big improvement from last year it’s more expensive to source from
when 58.28 per cent said the impact our overseas competitors"
would be negative. • "Current conditions favour Austra-
lian-made"
• "It depends on which way it goes.
TOP COMMENTS For retailers who mainly import
• "I expect the Australian dollar to
their finished product from China,
fall further, which will help tour-
a rise in the dollar will be good
ism in particular"
and a decline will be bad"
• "I buy in US dollars from overseas
suppliers, so a lower Australian
• "As our products are from overseas 47.8%
this changes the costings per prod- NO DISCERN-
dollar hurts my margin big time" IBLE IMPACT
uct, which depend on the Aussie
• "We are an importer, so any drop
dollar being competitive."
in the Australian dollar will affect
Q.12
Respondents’ sales from eCommerce grew 31.5 per cent
over the past year, as a percentage of overall revenue.
Only 2.7 per cent of retailers experienced a drop, which
is a better outcome than last year when 6.62 per cent saw
sales from eCommerce fall.
“There is a clear trend in consumer behaviour with a pro-
HOW HAS YOUR REVENUE FROM pensity to buy online for convenience,” said one survey
ECOMMERCE CHANGED IN THE participant. “If a retailer is seeing decking online sales at
this point, it’s because there is a problem with its eCom-
PAST 12 MONTHS? merce infrastructure and marketing.”
31.5% 42.9%
SALES FROM I DO NOT SELL
ECOMMERCE ONLINE
ARE UP AS A
PERCENTAGE
OF OVERALL
REVENUE
17.9%
NO
CHANGE
2.7%
4.9% SALES FROM
ECOMMERCE
I AM A PURE- ARE DOWN AS
PLAY RETAILER A PERCENTAGE
OF OVERALL
REVENUE
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 1 9R E T A I L E R S U R V E Y 201 7 3.8%
MORE
5 0 P E RT H A N
CE NT
89.7%
0 -2 5
PE R CE N
T
6.5%
Q.13 25 -5 0
PE R CE N
T
WHAT PERCENTAGE Australian retailers continue to lag behind the rest of the world in adopting
eCommerce, with online retail sales remaining only marginal compared to
OF YOUR TOTAL those of traditional bricks-and-mortar sales. Almost nine out of 10 retailers
REVENUE COMES FROM polled earned a quarter or less of their total revenue from eCommerce. Only
10.3 per cent earned more than that, with 3.8 per cent earning more than 50
YOUR ECOMMERCE per cent. The expected arrival of Amazon, however, is likely to shake things
CHANNEL? up and accelerate the growth in eCommerce.
Australia’s top brands:
Q.14
BUNNINGS WHAT IS THE BEST AUSTRALIAN
ALDI RETAIL BRAND FOR 2016?
COLES/KMART
Wesfarmers has emerged as the owner of three of
Australia’s four top brands: Bunnings, Coles and
Kmart. But Target, a strong
COTTON ON/JB HI-FI/MYER
performer last year, didn’t get a
look in this year.
Bunnings rose from third
WOOLWORTHS place last year to scoop our
top slot as Australia’s best brand. Aldi was voted the
DAVID JONES/PRICELINE second most popular, while Coles slipped from last
year’s top spot to equal Kmart in third place and, like
last year, outstrip Woolworths.
AESOP/CHEMIST WAREHOUSE/CUE/ Myer, which did not feature strongly last year, made
DAN MURPHY’S/SMIGGLE a huge leap to overtake David Jones this year.
Q.15 70.1% — FACEBOOK
43.5% — INSTAGRAM
WHICH ARE THE MOST EFFECTIVE
19% — LINKEDIN
SOCIAL MEDIA CHANNELS YOUR
RETAIL BUSINESS USES? 11.4% — TWITTER
Yet again, Facebook emerged as the most effective social-media 11.4% — ONLINE BLOG
channel, used by 70.1 per cent of retailers. Instagram was a poor
second, used by 43.5 per cent, followed by LinkedIn with 19 per
1.6% — PINTEREST
cent. Twitter tied with online blogs in effectiveness. Only 1.6 per
cent of retailers used Pinterest, compared to 13.25 per cent in last
15.2% — DON’T USE
year’s survey. And surprisingly, given how vital and cost-effective
SOCIAL MEDIA
social media is in retail marketing, 15.2 per cent didn’t use it at all.
2 0 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.auEXECUTIVE PERSPECTIVE www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 2 1
EXECUTIVE PERSPECTIVE: TERRY WHITE GROUP
Anthony White
Chief Executive Officer
Terry White Group
JUST WHAT THE
CUSTOMER ORDERED...
After more than doubling in size through its merger with Chemmart and
enduring severe cuts to the PBS, community pharmacy group TerryWhite
has had a big year. Now it hopes its extensive marketing plans and ambitious
growth strategy will further cement it as a household name in Australia.
WAS 2016 A GOOD ing a highly sophisticated retail model ers, and significant scale advantages.
YEAR FOR YOUR RETAIL to provide our pharmacy owners with We were also focussed on ensuring
BUSINESS? a solid, diversified revenue stream to we had a highly competitive retail
help offset the impact of the ongoing pharmacy business model through
It was a great year for our company, reforms. As a result, we reported an systems that increased in-pharmacy
both operationally and financially. above-market increase in like-for-like efficiencies, freeing up our phar-
It was the most significant in our retail sales across the pharmacies macists to spend more time with
almost 60-year history, and through within our network last year. customers. This enabled the group to
our merger with Chemmart, we have achieve strong financial performance,
more than doubled in size and now DID YOU GROW OR above-market sales growth and a
work as 500-strong group of commu- CONSOLIDATE YOUR RETAIL strengthened market position.
nity pharmacies. We also announced
PRESENCE?
our new brand, TerryWhite Chem- HAVE YOU NOTICED ANY
mart, which has already started roll- We completed our merger with Chem- INTERESTING SHIFTS IN
ing out across our national network. mart during the year, which provided
CONSUMER BEHAVIOUR
us with a truly comprehensive national
OVER THE PAST YEAR?
WHAT WERE YOUR BIGGEST footprint and significant scale. This fur-
CHALLENGES? ther increased the competitiveness of Much has been said about the growth
all of our pharmacies within the retail of online shopping, but what I have
Over the next decade, the pharmacy marketplace. We are now Australia’s found interesting is the move by
and pharmaceutical sectors are set largest pharmacy network. online stores to start opening up
to deliver more than $20 billion in bricks-and-mortar shopfronts, be
savings via reforms to the Pharma- WHAT STRATEGIES DID YOU it a pop-up or a permanent shop.
ceutical Benefits Scheme (PBS). Last This shows that consumers are
USE TO GROW OR MAINTAIN
year our industry was impacted by the still looking for a traditional retail
most severe round of funding cuts to YOUR BUSINESS?
experience, but in a 21st-century
the PBS ever. This placed significant Over the past 12 months we contin- environment. This has never been
pressure on our pharmacy owners. ued to execute our growth strategy more true than now for pharmacies,
As an organisation though, we to achieve a more competitive market as customers increasingly look to
have invested significantly in develop- proposition for our pharmacy own-
2 2 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.auEXECUTIVE PERSPECTIVE: TERRY WHITE GROUP
pharmacists to provide trusted health marketing and let us be much more to consumers. That’s how we manage
advice and patient-centred healthcare competitive. to consistently stay ahead.
services in a highly accessible way. Our new brand, TerryWhite Chem-
mart, stands for value and health, and WHAT IS YOUR TOP
HOW DO YOU BELIEVE we will be pushing hard into further OVERALL PRIORITY AS
THE RETAIL MARKET WILL expanding the important role our A RETAIL BUSINESS THIS
PERFORM THIS YEAR pharmacists play in the delivery of
YEAR?
frontline health services to consumers,
COMPARED TO LAST?
to deliver a really strong and differ- We will continue to focus on integrat-
There's no hiding the fact that the re- entiated value proposition within our ing the two businesses following our
tail market is tough, but there are still industry. We will roll out our new merger with Chemmart, and rolling
opportunities if retailers can evolve brand and concept stores this year. out our new brand across about 500
and offer value to their customers – pharmacies to ensure we have strong
and that's not only on price, but on ARE YOU FACING ANY brand recognition, supported by a
service and knowledge as well. In THREATS FROM NEW significant investment in above-the-
the pharmacy space, that has never MARKET ENTRANTS, AND IF line marketing. We will continue to
been more accurate. People are living pursue consolidation with like-mind-
SO, HOW DO YOU PLAN TO
longer and looking to lead healthier ed pharmacy groups as we work to-
lives, and these factors, combined FIGHT BACK? ward continuing to grow our national
with the expansion of chronic health Community pharmacy is highly footprint.
conditions and an ageing population, competitive and fragmented. We
are contributing to the strength of the have competing banner groups and WHERE DO YOU HOPE YOUR
sector and offer prospects for future competition from both supermarkets BUSINESS TO BE THIS TIME
growth and industry expansion. and new market entrants. Given the NEXT YEAR?
already high levels of competition
WHAT DO YOU EXPECT within our industry, any new en- Twelve months from now, we’d like
TO BE THE BIGGEST trants will need to have an incredibly to see TerryWhite Chemmart as a
strong offer to be able to compete household name with high levels of
CHALLENGES FOR
with the established groups. We are brand recognition and a national net-
RETAILERS OVER THE NEXT work of pharmacies that has contin-
focussed on supporting our members
12 TO 18 MONTHS? ued to grow.
to achieve success by having a highly
As retailers, we need to have a clear competitive and differentiated offer
point of difference and be highly re-
sponsive to the ever-changing needs
of our customers. Consumers are very
savvy – they want more from their
shopping experience. In my view, one
of the biggest challenges for retailers,
and one of the biggest opportunities,
will be tapping into that sentiment
and providing that experience.
We have designed our pharmacies
to ensure the pharmacist is front and
centre, and highly accessible. Also,
in response to increased customer
demand for the delivery of frontline
health services, by far most of the
pharmacies within our network have
a clinic room, which has been a great
success in supporting the delivery of
preventative health services, includ-
ing heart health, asthma, weight
management and flu vaccinations.
HOW DO YOU EXPECT TO
CHANGE YOUR BUSINESS "We were focussed on ensuring
STRATEGY TO STAY AHEAD
THIS YEAR?
we had a highly competitive retail
Knowing where we want to go, and pharmacy business model through
why, is what inspires us every day
and drives us as a company. We have
a really ambitious growth strategy
systems that increased
and want to continue to aggressively
increase our network size and market
in-pharmacy efficiencies, freeing
share. The scale we achieved last year
will allow us to significantly increase
up our pharmacists to spend
our investment in above-the-line more time with customers. "
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 2 3EXECUTIVE PERSPECTIVE: SUPER RETAIL GROUP
Peter Birtles
Group MD/CEO
Super Retail Group
CHANGING DYNAMICS
After strong sales growth last year, Super Retail Group will this year focus
on understanding its customer, building its omni-channel capabilities, devel-
oping its supply chain and engaging is staff.
WAS 2016 A GOOD new Rays brand and store format, at PRESENCE, AND WHAT
YEAR FOR YOUR RETAIL the same time as converting some FACTORS PLAYED A ROLE IN
BUSINESS? Ray’s Outdoors stores to BCF Boating THIS?
Camping Fishing Stores.
We have been pleased with our per- At the same time, BCF has been We are always looking for ways to
formance through the year. We have working to broaden its customer base optimise our store portfolio and
generated strong like-for-like sales from passionate fishermen to a much strengthen the group’s overall foot-
growth across all our retail business- wider cross-section of participants print. This year we grew the network
es and have made good progress with in outdoor leisure activities. So far so of stores in our Amart Sports, BCF
our key strategic initiatives: building good with the new-format Rays stores Boating Camping Fishing, Rebel and
our omni-channel offer, developing attracting tremendous feedback from Supercheap Auto businesses. Notably,
our supply chain, reinvigorating our customers, and both businesses gen- that included extending our brands
leisure business, which includes the erating good underlying like-for-like into new geographies, such as launch-
BCF Boating Camping Fishing and growth and improved profitability. ing BCF Boating Camping Fishing
Rays brands, and seeing real progress Looking ahead, we all know the in Tasmania and Amart Sports in
in building customer-centricity and dynamics of the retail industry are Western Australia. At the same time,
safety awareness across our team. changing – customers have even we achieved strong growth in online
more information at their fingertips sales across all brands.
WHAT WERE YOUR BIGGEST as to who will best meet their needs We continue to see opportunity to
CHALLENGES OVER THE and they have more choices than ever open stores across all our brands, as
YEAR? before. Our job is to ensure we stand there are many areas in the country
out from the crowd with an offer that in which not all of our brands are
We started the year recognising that inspires and engages at a broader present. There are many oppor-
we needed to reinvigorate the perfor- level than product and price. As long tunities for retail space growth in
mance of the two businesses in our as we continue to provide the solu- large-format retail locations that suit
leisure division: BCF Boating Camp- tions and experiences that help our many of our businesses.
ing Fishing and Ray’s Outdoors. We customers to make the most of their
accelerated the major transformation leisure time, we are confident we can DID ANYTHING SURPRISE
underway for the division, which continue to achieve growth both this YOU ABOUT YOUR BUSINESS
included a significant repositioning year and beyond. OR THE RETAIL LANDSCAPE
and refurbishment program for the
old Ray’s Outdoors business. This LAST YEAR?
DID YOU GROW OR
meant accelerating the roll-out of the Across the retail landscape there
CONSOLIDATE YOUR RETAIL
24 | AUSTRALIAN RETAIL OUTLOOK 2017 www.insideretail.com.auEXECUTIVE PERSPECTIVE: SUPER RETAIL GROUP
was nothing necessarily surprising. really embraced our focus in two which is based around understand-
However, you have to be impressed areas: safety and customer-centricity. ing the customer, building a great
with the way retail businesses are We have seen a significant reduction omni-channel experience, developing
adopting advances in technology to in our lost-time injury frequency a highly effective supply chain and
provide a better customer experience. rate, but, as importantly, the team building strong operating founda-
It is a challenge for all of us to de- has recognised the importance of tions.
termine how, where and when – but being safety aware and we have Each of our brands has a clear
more particularly why – we will use seen an exponential increase in our pathway to growth ahead – our
technology. It is important to never be reporting of near misses. We have strategic focus continues to be in
complacent about the market or cus- also seen our net promoter score realising the potential for profitable
tomer expectations. The only constant for all our brands improve through growth across the group. Our brands
in retail is constant change, and the the year, and we were particularly have a range of growth levers at their
key to success in retail is being able pleased that every brand recorded a disposal, including our continued ex-
to identify and respond to market score of more than 50 toward the end pansion into “Do It For Me” services,
changes and new developments as of the year. optimising our online channels, and
they occur. expanding our private labels, exclu-
Within our group, I have been WHAT STRATEGIES DID YOU sive partnerships and so on.
very surprised at the strong growth USE TO GROW OR MAINTAIN In Australia, the sectors we work
we have generated in the sales of car YOUR BUSINESS LAST YEAR, in are still highly fragmented in
audio products, despite the declin- many cases. We see significant po-
AND WHAT WERE YOUR KEY
ing market. This just shows what tential to bring to bear our scale and
can be done when you have a great
AREAS OF FOCUS? maturity, and the advantages that of-
merchandise team that really un- The core focus across each of our fers in terms of supply chain, capital
derstands the customers and builds businesses is to move from being resources and marketing, to continue
strong relationships with tremendous a product provider to a solution to grow our business.
trade partners. provider. This means engaging and
inspiring our customers around their HAVE YOU NOTICED ANY
WHAT DID YOUR BUSINESS passions, whether that be tuning the INTERESTING SHIFTS IN
DO REALLY WELL LAST performance or maintaining the look CONSUMER BEHAVIOUR
YEAR? of their Monaro, catching the biggest OVER THE PAST YEAR?
“barra” of their life or beating their
I always take the biggest pride in lifetime best for the half-marathon. As I go around the stores, I sense that
our team, and in the past year it has This underpins our strategic focus, customers are becoming ever more
www.insideretail.com.au AUSTRALIAN RETAIL OUTLOOK 2017 | 2 5EXECUTIVE PERSPECTIVE: SUPER RETAIL GROUP
“mission focussed”. They have al- We have a clear vision set out for the leisure time, we are confident we can
ready made their mind up about what business and we are not anticipating continue to achieve growth across
they want to buy, they know what any significant changes to our strate- our business.
they are prepared to pay for it and gy this year. Our focus will continue
have generally chosen where they are to be on understanding our customer, ARE YOU FACING ANY
going to buy it. I think the amount of building our omni-channel capabil- THREATS FROM NEW
time spent browsing is going to keep ities, developing our supply chain, MARKET ENTRANTS, AND IF
reducing, and retailers are going to and engaging our team to be able to
SO HOW DO YOU PLAN TO
see even less footfall – but a contin- deliver inspiring and engaging solu-
ued increase in average customer tions for our customers.
FIGHT BACK?
spend per visit. Our challenge as As we head into a period of low We have highlighted for many years
retailers is to engage the customer inflation, it will be our ability to the impact international retailers
when they are deciding what to buy embrace the changing dynamics of will have on the Australian retail
and where to buy it – before they the retail industry that will enable us market, whether through rolling out
come to our stores. to outpace the markets in which we a network of stores or online. We are
work. The macro trend toward solu- now seeing international retailers
HOW DO YOU BELIEVE tions and services leaves our business coming into our segments, and we
THE RETAIL MARKET WILL well-placed to capture the revenue, welcome the challenge that brings.
PERFORM THIS YEAR? customer and margin growth offered We know we need to continue to
by the shift from products toward lift the standard of our businesses,
Consumer sentiment appears to be the solutions-centric offering that is which has to be good for the cus-
generally positive across Australia, already well underway across the tomer.
but what we’re focussed on as a group. The strategies we have been imple-
business is continuing to work hard menting over the past few years have
to better inspire and engage our cus- ARE THERE ANY EXTERNAL been developed with international
tomers. At the end of the day, it’s our FACTORS STRAINING YOUR competition in mind, so we don’t
relationships and connection with see any need to change our strategic
BUSINESS, SUCH AS STAFF
our customers that will drive our focus at this time. We have the op-
success as a retail business. COSTS, THE AUSTRALIAN
portunity to capitalise on our deeper
DOLLAR, TAX, RENT,
understanding of the Australian
WHAT DO YOU EXPECT AVAILABILITY OF SUITABLE
TO BE THE BIGGEST LOCATIONS?
CHALLENGES FOR As a major importer, we have seen
RETAILERS OVER THE NEXT the cost of our products increase as
12 TO 18 MONTHS? the Australian dollar has weakened
against the US dollar. However,
I see the biggest challenge being the through a combination of our hedg-
need to evolve the traditional retail ing programs and fine-tuning our
business model to accommodate the pricing and promotions strategies,
full impact of digital across all areas we have been able to manage the
of the organisation, and to evolve the impact on our business. We are not
traditional retail culture from being seeing other factors have a signifi-
predominantly product-centric to be cant impact on our business – it’s all
truly customer-centric. about connecting with customers and
meeting or exceeding their expecta-
HOW DO YOU EXPECT TO tions. As long as we are continuing to
CHANGE YOUR BUSINESS provide the solutions and experiences
STRATEGY TO STAY AHEAD? that help them make the most of their
"We as retailers
must earn the right to be invited
by our customer to fulfil one of
their needs how, when and where
it best suits them, and unless we
can do this well, our customers
have plenty of other choices."
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