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Issue 2272
19 Feb 2020
RRP $14.95
insideretail.com.au
Strandbags always
by your side
With its latest refresh, the 100-year-old
retailer wants to create the most loved
destination for the perfect bag.
In this issue
News Analysis Feature
NRA calls for retail recovery plan JB Hi-Fi makes the right moves ASOS bounces back
Tax breaks, wage freeze and government The high-flying electronics retailer has seen There are lessons for every retailer in the
funding part of plan to help retailers. p2 off – or purchased – most of its competitors. p5 online fashion brand’s quick turnaround. p14
NEWS
NRA lays out retail recovery plan
Industry association wants to postpone wage increases and give
retailers a break from payroll tax to help them get back on
their feet. By Heather McIlvaine
T
he National Retail Association (NRA) believes state and spending growth despite the government’s gift of bigger tax refunds
federal governments need to do more to support Australian for many Australians and the Reserve Bank’s repeated interest rate
retailers that have been left reeling from the one-two punch cuts. And, as Lamb pointed out, there are consequences when
of bushfires and COVID-19 (also known as coronavirus) after more retailers fail.
than a year of stalled spending growth. “Because of the sheer number of businesses that operate in this
On Friday, the industry association released a five-point plan space, because of how large an industry we are and how many
for retail recovery, including a 12-month ‘holiday’ from payroll people we employ, it will have other impacts,” she said.
tax, an exemption from the annual wage review for bushfire- and Lamb said the NRA is at various stages of conversation with state
coronavirus-affected communities, funding for financial assistance and federal governments about each of its proposals. For instance,
education for small and medium businesses, the permanent it has been talking to the federal government about its Safe Retail
adoption of the instant asset write-off and the expansion of the Safe Precincts program, an initiative to reduce crime, such as theft, in
Retail Precincts program to regional areas. metropolitan areas.
The NRA released the plan preemptively, ahead of expected Now, it wants to extend the program to regional areas because,
changes to the minimum wage following the annual wage review by according to Lamb, communities that experience a natural disaster
the Fair Work Commission and the next federal budget. often see a spike in crime, such as fraud or looting, in the aftermath.
Such a public and proactive approach is a new strategy for the Other proposals, such as a 12-month ‘holiday’ on payroll tax
organisation, which in the past has tended to lobby the government seem more far-fetched. But Lamb believes it’s important to be on
behind closed doors. But it reflects the seriousness of the current the front foot.
situation, according to chief executive Dominique Lamb. “This blueprint came out because this is what our members are
“The bushfires and coronavirus have created a perfect storm of telling us they need right now. In the end it’s about getting the job
added pressure that means we need the government to act,” Lamb done,” she said. IRW
told Inside Retail Weekly.
“Whilst in the past we may have been more subtle about our Restrictions on Chinese
messaging, I don’t think we can do that now. Now is not the time to tourists and students
entering Australia will cost
be subtle.” the economy $2.3 billion,
according to research by
Billion-dollar disasters PricewaterhouseCoopers.
Hard figures are hard to come by, but Terry Rawnsley, national
leader for economic and social analysis at SGS Economics and
Planning, has estimated the total economic cost of the bushfires
to be $1.5 billion to $2.5 billion. ANZ Research has predicted the
disaster will reduce GDP by between 0.1 to 0.2 percentage points in
the final quarter of 2019 and the first quarter of 2020, largely due to
its effect on consumer sentiment.
Of course, the cost of the bushfires is not evenly distributed
across the sector, with rural and regional retailers bearing the brunt
of it. Likewise, some businesses have been harder hit than others
by the fallout from the coronavirus. Luxury brands popular with
Chinese tourists and retailers that cater to international students
have seen a sharp drop in foot traffic since the travel restrictions
took effect earlier this month.
“We know some centres are down by up to 60 per cent,” Lamb
said, “and we know that some classes at QUT business school
have 70 per cent of students not attending. Those are the kids who
have come here, set up house and they’re spending money in our
communities. Without that influx of people, it causes a lag.”
It’s a lag that many retailers are ill-equipped to handle, coming
off a year of gloomy consumer sentiment and minimal year-on-year
2 insideretail.com.au
NEWS
Rewriting the book on loyalty
After securing a wider product offering and private funding to
expand the business, Booktopia has launched a book club to
reward its customers for doing what they love – reading. By Dean Blake
T
he last few weeks have been busy for Booktopia. Additionally about 62 per cent of Australians take advantage
In January, the online bookstore made a substantial of most rewards and benefits of the programs they are in, while a
addition to its product range through the purchase of the further 28 per cent have admitted to spending more in order to earn
Co-Op’s website, software and customer data, with textbooks points or maintain a membership – meaning loyalty members are
expected to make up one-third of the business’s sales moving more likely to interact with and transact with a brand.
forward. “The incremental purchases that a well-structured loyalty program
A week later, Booktopia announced it had raised $20 million in can stimulate is where businesses who invest in loyalty programs
private funding to help propel the business forward, with plans to really succeed,” Posner said. IRW
double its inbound and outbound capacity to around 60,000 books
per day.
And last week, Booktopia launched a new customer loyalty
program that rewards customers with discounts on exclusive titles –
customers just need to shop.
Though free to join, the Booktopia Book Club requires customers
to have spent at least $30 on a single purchase in the last 90 days,
making the offer less about setting and forgetting and more about
using and abusing.
As an introductory offer, club members will be able to purchase an
exclusive paperback copy of Particia Cornwell’s Quantum.
According to Booktopia’s head of publishing Franscois McHardy,
this model was selected to benefit the wide range of tastes
Booktopia customers have shown.
“There are a number of niche book subscription offers that have
been launched globally that pick a particular book and package it
up with other products, sometimes printing a collectors’ edition,”
McHardy told Inside Retail Weekly.
“But books are so subjective and the range of titles to choose
from is infinite, so it’s hard to pick one title that will appeal to
everyone. One of Booktopia’s great strengths is that you can find
pretty much anything you like.”
This way, customers spending money on textbooks can still utilise
the Book Club just like an avid fiction reader, and as a customer’s
needs change, they can use different purchases to activate the
membership.
And while it’s still early days with the program, Booktopia has
already committed to adding several new features in the coming
months.
According to the 7th annual For Love or Money report, published
by The Point of Loyalty in 2019, 89 per cent of Australians over the
age of 18 were enrolled in at least one loyalty program while the
average number of memberships was 4.3 across each Australian.
However, over half of report respondents were concerned about
the privacy of their details after numerous high profile data breaches
and fraud reported worldwide.
To minimise this fear, chief executive of The Point of Loyalty
Adam Posner said businesses should prioritise a proactive and Booktopia has launched a new loyalty program
with special rewards for customers who spend at
transparent approach to highlight to members how their data is
least $30 every three months.
being used and protected.
3
NEWS
Costco moves into e-commerce This week’s top 10
Our most read stories from the
Costco Australia has finally launched its e-commerce past week at insideretail.com.au.
site nearly two-and-a-half years after it first revealed
plans to do so.
The service – available only to Costco members
– includes a wide range of products, including
electronics, kitchen and laundry appliances, home
and furniture, BBQs and outdoor living, home
improvement, sports and fitness equipment,
jewellery and watches, wine and spirits, clothing,
luggage and handbags. There are plans to add new
categories going forward.
Many of the items offered will be exclusive to
online shoppers.
Patrick Noone, country manager for Costco
1 Costco launches long-awaited
e-commerce site with free shipping
Australia, said the company would introduce grocery,
food and fresh products at a later date.
Although shopping online will be more convenient,
2 Website debacle overshadows solid
first half for Baby Bunting
Channel 7 has reported that it’ll also be pricier
3
than shopping in one of the wholesaler’s big-box Bunnings merger with Adelaide Tools
warehouses. Shipping costs will be included in online could impact competition: ACCC
prices, which will be slightly higher than in-store.
Costco does not currently offer national delivery
for every product it sells online. Medium and large 4 Deliveroo breaks UberEats’
monopoly on McDonald’s
items, such as large TVs, only ship to metropolitan
areas on the east coast. Small items can be shipped
anywhere in the country. 5 Klarna nabs Appliances Online as
first Australian retail partner
The company, which is based in the US, has 785
warehouses around the globe to date, including 11
in Australia. 6 Toll still working to restore services
after cyber attack
7 Ritchies IGA creates ‘foodie
Caltex considers ATDs final offer paradise’ in $5m store revamp
The board of Caltex has indicated it will be advancing
talks with Canadian convenience store operator
8 Sephora suspends makeup services
as precautionary measure
Alimentation Couche-Tard (ATD) after the suitor made
its third and final offer last week.
On Thursday ATD submitted an offer of $8.8 billion
9 Cease-fire: Taco Bell and Taco
Bill reach settlement
to acquire all Caltex shares by way of a scheme of
arrangement – a bump on the $8.6 billion Caltex
balked at earlier in 2019.
10 Inter Ikea names new leader as
long-term CEO steps down
The new offer works out to $35.25 cash per share;
previous offers of $34.50 and $32 per share were
rejected by the board.
Comment of the week
“The Caltex Board considers that it is in the interest
of Caltex shareholders to engage further with ATD,”
the Board said in a statement to the ASX.
“Accordingly, Caltex has decided to provide ATD
with the opportunity to conduct additional due “With AASB-16 moving onto bal-
diligence on a non-exclusive-basis.” ance sheets, retailers should expect
ATD’s offer is subject to a number of conditions, to see more stormy weather as loan
unanimous recommendation by the Caltex board and covenants get greater security and
approval of the ATD board. A potential deal would the compound effect of legacy lease
also be subject to Foreign Investment Review Board escalations start to bite hard.”
approval.
Last week, Bloomberg reported that British retailer
Stephen - Online competition didn’t kill
EG Group is in talks to team up with Macquarie
Jeanswest. Boring retail killed Jeasnwest.
Group Ltd in a bid to acquire Caltex. IRW
4 insideretail.com.au
ANALYSIS
The rise and rise of JB Hi-Fi
It isn’t luck that brought JB Hi-Fi success – it’s that the retailer
made the right moves every step of the way. By Jared Dickson
A
mid the gloom and doom of retailing, there are no doubt and computer games categories for which it was market leader
long, envious looks from other retailers at JB Hi-Fi, eroded by new consumer options such as Netflix, Stan, Apple
which continues to defy the headwinds battering other iTunes and Spotify.
businesses. Having wanted products in technology, entertainment and
JB Hi-Fi and Bunnings Warehouse are arguably the two most household appliances obviously helps, but JB Hi-Fi’s success
successful Australian retailers of the past two decades on revenue, is really due to its strong brand, effective marketing, competitive
earnings and market share metrics as well as network growth. pricing and consumer engagement.
It would be easy to argue that JB Hi-Fi has simply been fortunate Management stability is another important ingredient to success,
to be in the right place at the right time in respect of the products and it is worth noting that if you are a retail worker interested in
that consumers want. working in the product categories sold by JB Hi-Fi, the chain is the
retailer of preference.
Outlasting the competition CEO Richard Murray points to the passion and knowledge of
That assumption would overlook the fact that JB Hi-Fi has seen in-store staff as a critical factor for success, given that the chain is
off significant competitors such as Retravision, Billy Guyatts, essentially selling a product in “the same box as somebody else”.
Dick Smith, Virgin Entertainment and acquired Clive Anthony and JB Hi-Fi maintains a sharp focus on its metrics keeping a tight
The Good Guys. rein on the costs of doing business, including the key areas of
JB Hi-Fi has also outpointed Myer, David Jones, Harvey Norman technology, supply chain management and the productivity of retail
and the discount department store chains, and has achieved floorspace.
consistent growth despite competition from local and global online For the first half of the 2020 financial year, JB Hi-Fi has passed
vendors across relevant product categories. $4 billion in revenues with comparable sales growth across its store
JB Hi-Fi has grown from a single store in Melbourne’s northern network of 4.4 per cent.
suburbs to become the seventh-biggest retailer in Australia, with
annual revenues exceeding $7 billion.
The retailer is arguably the most successful graduate from
private-equity ownership between 2000 and 2003, when it listed on
the Australian Securities Exchange.
The private-equity ownership, Macquarie Bank, developed the
Macquarie Bank developed
corporate infrastructure the chain needed for expansion nationally the corporate infrastructure
the chain needed for
and into New Zealand but it didn’t tamper with JB Hi-Fi’s culture.
JB Hi-Fi’s early growth was on high-street locations, which
expansion but it didn’t
ensured it didn’t become a sanitised shopping mall format store,
and allowed the chain to build strong brand recognition.
tamper with JB Hi-Fi’s
A distinctive advertising signature smashing the retailer’s logo
boosted brand recognition and underscored its pricing strategy,
while its staff were product-savvy rather than immaculately
uniformed and stores were no-nonsense with dense product culture.
ranges.
When JB Hi-Fi moved into shopping malls it was in a strong
negotiating position as a retail brand that could generate
customer traffic. The retailer posted a profit of $170.6 million for the six months
The chain cut good deals on rents and ensured it had the to December 31, up from $160.1 million despite the challenges of
flexibility in terms of permitted uses in its leases so that it would not bushfires and drought and a consumer spending lethargy that has
be prevented from expanding into new product categories. sent a number of retailers into the hands of administrators.
JB Hi-Fi’s online sales in Australia increased by 18.3 per cent to
Expanding the brand $170.8 million in the half, representing around 6.3 per cent of total
JB Hi-Fi has successfully expanded into new categories, leveraging revenues.
the recognition of and trust in its brand and exploiting technology Investors who were not convinced of the wisdom of JB Hi-Fi
to boost its engagement with customers and build one successful acquiring The Good Guys in 2016 are smiling now, with the retailer’s
online platform. share price doubling in the past 12 months to $41.55, just shy of the
Flexibility and adaptability have been crucial to the continuing price for Woolworths scrip and eight times higher than
solid results and growth of JB Hi-Fi which has seen the CDs, videos Harvey Norman. IRW
5
AROUND THE GLOBE NEWS
Around the globe
Victoria’s Secret tipped to be sold Britain was able to import and export goods seamlessly during its
membership of the EU’s customs union and single market. But the
Following weeks of intense speculation, it seems that L Brands is
government says border controls will be needed to ensure the right
about to unload its Victoria’s Secret lingerie business after several
customs and excise duties are collected and borders are
quarters of falling sales, a raft of bad publicity and consumer
kept secure.
resistance to its sexy “fantasy” image.
Private-equity company Sycamore Partners is believed to be the
bidder, and a deal is expected within days.
Bed Bath and Beyond shares plunge
Troubled US homewares retailer Bed Bath and Beyond has
Rumours of a potential sale emerged in early January when it was
announced a 5.4 per cent drop in same-store sales for the first two
widely reported that the controversial and outspoken founder, Les
months of its fourth quarter, largely due to increased promotions,
Wexner, was planning to step down as CEO.
inventory management issues and falling store traffic.
One analyst, the Motley Fool, has described the brand as “losing
The company said it was “having trouble stabilising the business”
relevance” as customers opt more for comfort, and prefer a
and that holiday sales had fallen far short of expectations.
company with a more inclusive image and diverse styles. Last year
The result disappointed analysts, who were expecting a more
the company discontinued its high-profile televised fashion show
rapid turnaround following the appointment of Mark Tritton as CEO
and is said to be looking at closing its giant flagship stores as sales
in November. Since then Tritton has made some structural changes
decline.
and overhauled the executive team, and more changes are tipped in
The move would leave L Brands with just one retail business – the
the next few months.
fast-growing Bath & Body Works – but analysts question whether L
Following the announcement, shares fell 25 per cent.
Brands can survive without Victoria’s Secret, which accounts for the
vast majority of its US$13 billion annual turnover.
Yahoo HK succumbs to competition
JD Sports may have to sell Footasylum Yahoo Hong Kong is to close its commerce operations, including
Yahoo Auctions, Yahoo Store and Yahoo Group Buy, a move it
Britain’s competition watchdog may force JD Sports to sell its
said reflected a “strategic directional change” following “fierce
Footasylum brand if it does not act to address the regulator’s
competition”.
concerns that consumers could be disadvantaged.
The platform will suspend buying and selling features on March
JD Sports acquired its smaller rival last April for £86 million ($167
24 and close on May 31. Until then, transaction history, past
million) but the deal has been under review from the Competition
communications and other relevant data can be downloaded
and Markets Authority (CMA) ever since.
for users.
The CMA said it was concerned that the loss of high street
The peer-to-peer marketplace Yahoo Auction has been running for
competition could mean fewer discounts, clearance sales and
more than 20 years and was considered a pioneer of Hong Kong’s
promotions, a lower quality of customer service and less choice in
e-commerce scene.
stores and online.
Throughout the decades, several Yahoo Auctions marketplaces
JD Sports has strongly denied that there is a problem with
have been terminated around the world, but the concept found
the acquisition hurting competition in footwear or athleticwear,
success in Hong Kong, Japan and Taiwan. Only the latter two will
calling the findings “fundamentally flawed”. It said that in any case
continue to operate for now.
Footasylum would account for less than 2 per cent of its earnings
The company promised that it would introduce “new
this year.
shopping experiences”. IRW
The company has until February 25 to come up with a proposal to
avoid a sale.
UK braces for post-Brexit border checks
Goods coming to Britain from the EU will face import controls from
January 1 next year after the post-Brexit transition period ends,
senior cabinet minister Michael Gove has announced, potentially
disrupting trade worth more than half a trillion dollars.
In response, the British Retail Consortium (BRC) warned the
government would have to move fast to get infrastructure in place
for the start of 2021. It said that without adequate preparations the
availability of goods on shelves would be disrupted, with fresh fruit
and vegetables especially vulnerable.
Andrew Opie, BRC director of food and sustainability, told the
New European website that ministers needed to set out detailed
plans on how the controls would be implemented if the flow of goods
to consumers was to be maintained. After several quarters of falling
“Staff will need to be hired and trained to carry out these checks sales and bad publicity, Victoria’s
Secret is tipped to be sold.
on the thousands of lorries that enter the UK every day,” he said.
6 insideretail.com.au
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7
OPINION
Buy now, pay later
beefs up the bottom line
Rather than delay important purchases until they can afford
them, customers can put them on BNPL – which is good news
for retailers. By Libby Minogue
I
t’s no secret that retailers are always looking for ways to
improve their cash flow. Whether it’s chasing unpaid invoices,
selling off old stock at a discount or simply improving overall
sales, there are a whole bunch of ways to keep a business’s cash BNPL service providers are
the only ones at risk should
reserves healthy.
One increasingly common way for retailers to improve things is
the customer not settle
through offering buy now, pay later (BNPL) services. These allow
consumers to spread the cost of a purchase over time – without
their subsequent payments.
having to pay interest.
The BNPL service fills the gap between the sale and the
customer’s eventual payment, helping cash to flow smoothly into the
retailer’s pockets. This is great news for the customer, since BNPL
allows them to maintain a more comfortable cash flow – a benefit customer not settle their subsequent payments. This means that
which is then passed on to the retailer through increased sales. a retailer’s cash flow isn’t affected, and the sale is paid for like any
Research shows that more than half of consumers choose to other.
delay certain important purchases because they can’t afford them. Finally, there’s no denying that BNPL services cost the retailer
One report found 51 per cent of respondents delayed necessary more than the average debit card transaction. However, when you
dental work because they couldn’t afford it, and 35 per cent factor in how many more sales you can achieve as a result, the new
delayed purchasing children’s clothing, while 29 per cent delayed sales far outweigh the costs.
undergoing a medical procedure. As budget-savvy customers
grow increasingly cautious about spending on big-ticket items or Bridging the online/offline divide
unexpected expenses, BNPL can help in that all-important decision One major factor that can affect a retailer’s cash flow is the
phase. unpredictable nature of customers’ shift from online to offline. They
By breaking down the payments into more manageable chunks, might spend weeks, months or even years flitting between stores,
the customer is able to see how the payment will more easily fit into trying different versions of the same product, or even purchasing
their budget. This flexibility works in the retailer’s favour, because it items and then returning them.
is able to make sales that might otherwise have been abandoned. Thankfully, most modern BNPL services have designed their
systems with this exact style of customer journey top of mind.
Responsibility is key Bricks-and-mortar stores can be kitted out with web-based BNPL
Before buying into BNPL, retailers should always read up on the offerings, as customers open up their chosen provider’s app and
checks and balances that various BNPL services require of their scan an automatically generated barcode. Online, it’s even easier:
customers before signing on the dotted line. Customer eligibility only a few clicks stand between the consumer and their product,
checks are an essential way to maintain security, and any well- and the ease of use has shown to increase repeat purchases. And
respected BNPL offering will include age limits, identification, for the increasing number of omni-shoppers, their BNPL account
residency checks and more. travels with them, both online and offline, giving retailers data on
It’s critical to fully understand the risks and benefits for the their shopping habits and making shopping easier.
consumer, too. After all, you need to communicate this to your Some retailers assume that setting up a BNPL service in-store will
customers and proudly offer the BNPL option with confidence. be more hassle than it’s worth. This is yet another misconception,
Responsibility is key, so always make sure your business is as integration with BNPL is actually as simple as turning on a switch.
choosing BNPL for the right reasons. By giving their customers the ability to pay straight away,
And what about risks to the retailer’s cash flow? Actually, it’s a retailers are able to inject a sense of freedom and flexibility into the
common misconception that there are additional cash flow-related purchasing journey. This, in turn, helps them maintain a healthy cash
risks involved to the retailer when offering credit through BNPL flow and regain a feeling of control over their business. IRW
services. In reality, the majority of BNPL services take the risk on
themselves, meaning most of these concerns are unfounded. Libby Minogue is the chief revenue officer at Flexigroup, the pioneer
Retailers receive full payment the very next day, meaning the of buy now, pay later in Australia, and the engine behind humm.
BNPL service providers are the only ones at risk should the shophumm.com.au
8 insideretail.com.au
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Beyond a seamless cross-brand loyalty
Last year, to take its customer relationships experience, Perks data also allows Cotton On
Cotton On’s global retail management IT
to the next level Cotton On launched ‘Perks’ – to better understand its customers at
infrastructure relies on Retail Directions’
a global loyalty program encompassing all the an individual level, helping to enhance
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Group’s brands, in multiple countries, in one customer interactions across all
platform (www.retaildirections.com),
state-of-the art scheme. touchpoints and channels.
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For most retailers operating at a scale similar high-throughput transactional system,
Cotton On’s CEO Peter Johnson said,
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“The Perks loyalty program provides
across twenty countries and seven brands – runs a whole spectrum of functions at
the data that helps us understand the
bringing a loyalty program like Perks to life Cotton On’s head office.
products and experiences our customers
would have been a major challenge. But, not truly love, while giving us insight into
for Cotton On. Group Director Ash Hardwick
how and where they like to shop our
has commented that Retail Directions
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Significant competitive advantage software provides the business
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Cotton On runs a single, dynamic retail
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management system that handles the bulk of
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Having a single source of real-time The Retail Directions platform was first A tremendous success story for Australia’s
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customers and stores was a fundamental business operated just 53 stores.
9
Q&A
From the source:
Felicity McGahan, Strandbags
Strandbags may be a 100-year-old
business, but it’s just undergone
a major transformation under
the wing of experienced CEO
Felicity McGahan. Here, she
discusses how she worked
with the team to roll out the
brand evolution, what she
loves about being a leader
– and how she’s not winding
down in her career, she’s only
just winding up. Interview by Jo-Anne Hui-Miller
Inside Retail Weekly: Tell me about last year’s Strandbags can be the reverse [for others]. The customers that love us love the
transformation and what it involved. range, the value, the wide assortment, the service, the people and
Felicity McGahan: I came into the business 18 months ago and the stores.
it was a very healthy business, and I think that’s a very important Then for the non-customers, it had to be more curated. It was a
component. When you take roles like this, you have to be clear on bit overwhelming and we had to be clear on what we’re offering and
the brief and why you’re being hired. Some people are looking for a communicate that to them. It was also about telling them the brand
different style of leader and when you hire me, there’s a certain thing story – we’ve never really talked about the brand before. And they
you’re going to get. weren’t coming over the lease line because of our clutter. We were
When [owner] Michael Lewis interviewed me, the brand was starting to get them over our digital [channels], but it was about how
healthy and doing really well, it just needed that new generation to to get them across multiple channels.
evolve the business. You can’t age with your customer and that was
the initial brief – to come in and elevate the brand and experience. IRW: How would you describe the transformation process?
Let’s get a vision. Where are we taking this business? It’s 100 years FM: The first bit was the discovery phase and it was really about
old. The family I work for has worked with it for 40 years, and it was understanding the brand and customer.
ready for its next injection. Then there was definition. The team and agency were really strong
I did a lot of work with the customer and across the agency to and we just defined our vision and where we wanted to take the
just really spend time with them and ask them what do you love business. We landed on a brand platform – Strandbags is always by
about us and what have we done well? We spent a lot of time with your side. It was fantastic. It’s so authentic and feels so comfortable
non-customers, which is quite confronting. We have a very loyal for us as a business. When we landed on our positioning – let’s
customer base so we had to be careful not to alienate them, we had create the most loved destination for the perfect bag – it gave us
to bring them with us. clarity.
Then from that, we started to develop all the creative and all the
IRW: What did you learn from those non-customers? touchpoints. Internally and externally, you start to line them up
FM: We found that a lot of the strengths of what your customers love against the new platform. That’s been the last 12 months.
10 insideretail.com.auQ&A
to work together. It’s such a solid business, it was very ‘let me run
my function and get my job done’ but we spent some time out of the
You have to be honest with
office to hear from other departments, learn and collaborate a bit
more. They were really open and it made a big difference.
yourself and say, ‘If I went
I pride myself on relationships. I’m not a CEO who goes in and
says ‘Here’s my team’. Trust me, when you go into these kinds of
tomorrow, would anyone
roles, you’re on notice more than they are. They love their brand
and they’ll be like, ‘Well, who are you?’ so you need to earn their
really care’? trust and respect... But once you start getting the wins, that’s when
people start thinking, ‘Right, she’s OK.’ ►
In life’s milestones – first day of
school, first job, first big trip –
having the right bag is important.
That shoots out a new store design, your culture, your values,
everything starts to align with where the business is going and who
you are. That’s where we are now – we’re in the execution phase. We
did the deep diving, we landed it, delivered it and now we’re testing
and responding. Some things will work and others won’t work. We’re
not this crazy risk-taking business, we read the customer’s response
and adapt, but we make sure we get those reads before we go big.
We’ve been opening new stores, evolving product, putting in
new product against that new platform. It’s just been phenomenal,
because we spent so much time at the front end and clarifying it.
Sometimes in businesses, you just want to jump in and change, but
the more time you spend upfront and nailing it, [the better] – then
everyone and everything can follow you and you’re clear about
where you want to take the business.
IRW: Can you elaborate on what ‘phenomenal’ means to you?
FM: We talked about being digital and evolving the business digitally
and driving those digital channels – the response to that over
Christmas has been great. There’s a lot more work to go – we’ve just
touched the sides. We’ve always run e-commerce, but I’m talking
about the total evolution of it, making it more personalised, bringing
the channels together to work more effectively and understanding
the customers.
Whether they’re researching, buying, being loyal – whatever step
they’re at – they’re jumping across channels all the time. So now
it’s about getting clear with the data and finding out how to catch
them on the different pieces of their journey and communicating
with them. For example, you’ve walked into a store, you’ve done
research, you know the case that you want, you just want someone
to get it for you and then check out through a mobile POS because
you’re not interested in lining up at the enormous queue over them.
IRW: You started at Strandbags 18 months ago and started the
transformation six months later. That’s a lot of change for a
100-year-old business. What was it like rolling it out and were
people on board with you?
FM: I think the key is when you come into a role like this, you need
to learn the business, understand it and build relationships before
doing anything. So I spent the first six months really focused on that
piece of it, then through that process I started to bring the team on
the journey.
The thing is, the team developed it, I didn’t – I put the team in the
room, but I didn’t develop it and we brought an agency in to help
us keep on track with customer feedback. The team was ready
to evolve the business. It wasn’t an uphill battle. They were very
excited about having a leader come into the business who was
ready to take it to the next generation. We did it together and they’re
a strong team. Where I probably added the value was getting them
11Q&A
IRW: How would you describe yourself as a CEO? there and check out? The customer’s thinking, ‘I’m standing out the
FM: I’m very driven by people, I feed off them and I get inspired not front with my two kids and a suitcase here’.
just by leaders, but my team and customers. It’s the same as click-and-collect and other things we’ve put into
I’m a retailer. I was born to do this. I was raised in retail and I the stores. I think building on all of that is going to be the key focus
love retail. My mother was one of the original sales consultants at for us for the year.
Sportsgirl. I used to go to work with mum and loved retail. I love
being in centres and stores, so I think [as a CEO], I’ve got the retailer, IRW: You’ve had some great experience at some major retailers
the people side and that customer experience. I love the customer during your career. What are some of the interesting things
experience – I love understanding how customers are evolving and you’ve learned?
evolving the experience for them. FM: An inspiring leader said to me ‘You don’t have an MBA, you
have an MBWA – a ‘masters in business by working around’!’ It was
IRW: 2020 has had a lot of store closures, a few of which had actually a very true comment because I’ve just been very fortunate
been around for awhile. What’s your take on that? to work in amazing businesses for their time – Sportsgirl in the day
FM: I think it’s very sad. There are people who are attached to all
these brands. The reality though is retail has always been a change-
or-fail world. You have to keep evolving the business. The customer
has control now. They have it in their hand. We have to now change
our model because they have control, whether it’s the landlords or
the retailers – we all have to, it’s a different world. And you’ve got to
do it quickly. It’s not a destination, it’s the journey we’re all on. We’ve
been through massive things before. Every decade has shifts, this is
just a tsunami right now.
You have to be honest with yourself and say, ‘If I went tomorrow,
would anyone really care? Or would they just go somewhere else?’ I
think the reality now is that with having two channels for customers
to play in, they can find what they want and we’ve either got to
deliver it to them at the price they want or they’ll just go somewhere
else. It’s that simple.
Then there are certain categories that are over-penetrated in this
market and that’s the reality of what’s going on.
IRW: What brands do you think are doing well?
FM: I think there are lots of brands doing great jobs. I think brands
that aren’t here anymore were doing well in certain areas, but
I think you have to be very consistent, it’s the combination of
understanding how your back end is connected to the front end of
the business. I think there are great brands – Mecca’s a phenomenal
brand. I think that Cotton On is a phenomenal brand – they do
amazing things and they’ve globalised the business. I think there are
lots of good things happening, the question is is it fast enough and
are the changes big enough for the business’s starting point?
IRW: If we look at Strandbags in the next year, what are your
plans for the business?
FM: The thing for us now is we’ve put a strategy in place and we’re
in the implementation of it, so we have to continue right-sizing the
business with our mega-strategy. We’ve had incredible success with
our large-store format. That’s a big opportunity for us.
Our luggage and travel category only gets bigger as the whole
world travels. It has gone from being a commodity product that
serves a function to get you from A to B to an accessory that
supports your personal style. There’s a massive shift that’s
happening in that category and we still see enormous growth in that.
From a digital perspective, we’re understanding now how you get
to that personalised experience. We’re collecting a lot of great data,
it’s just about how we’re using it to deliver value to the customer and
value-add technology.
We rolled out our mobile POS for Christmas. It was insane to walk
Due to an expanded range in
into the stores on Black Friday and Christmas and see no queues.
megastores, Men are becoming more
Why should the customer go where we said she should from a store comfortable shopping at Strandbags.
design perspective and walk through those three sections, go over
12 insideretail.com.auQ&A
of [former CEO] David Bardas; Esprit in the day of [founder] John
Bell; Gap in the day of [CEO] Mickey Drexler. Sussan with [CEO]
Naomi Milgrom; [founder] Nigel Austin at Cotton On and now [owner]
Michael Lewis with Strandbags.
They’re such different leaders so what I hope is that bits of them
When you go too fast as a
have chipped away and created the brand that I am. I’ve been
incredibly lucky. I’ve had great brands, great leaders and I surround
CEO, it can be hard for the
myself with really good people. You don’t get into roles like this
without the team around you. What excites me and what I feed off
team to keep up with you.
is being an inspirational leader who people want to work with and
surprising them with how good they are.
When I can go into a business, I can assess it quite quickly
and work out where I can add some value and work with the team your team and to make decisions and think and learn on the way
on delivering that. But likewise, I know when it’s time for my next because the business is going so fast. Whereas Strandbags is a
chapter – I’ve moved the family five times and we lived overseas for great business that allows you to coach your team, which is really
20 years. I do what I love and while I’m adding value, I keep doing it. nice, but it might be just where I’m at in my development myself.
And when I see something come up, I just see where it takes me – A mentor told me that there are three stages of your career. You’ve
I’ve taken many leaps of faith. Retail’s a bit of luck and success and got those early stages where you’re like an athlete, then you become
it’s all just paid off. a warrior and then you become that statesman. I think I’ve still got
a bit of warrior and athlete in me, but it’s nice to be able to coach
IRW: Black Friday has snowballed quite quickly in the last few and develop your team and give them more framework [instead of]
years. It’s huge now. How has it impacted Strandbags? driving every decision too hard. It gives them space and you can
FM: It’s one event but it’s the globalisation of events that’s watch them develop around you. When you go too fast as a CEO,
happened, which is great. Now you’ve got to create reasons to drive it can be hard for the team to keep up with you. I’m very much
traffic and volume and there’s an event somewhere in the world enjoying that piece of this and I love learning new things. I’m winding
every week. So you don’t have to go to China for Chinese New up, not winding down in my career and I’m in a place where learning
Year or Singles Day or the US for Black Friday. I think retailers were a new category made me uncomfortable again and I love that.
getting there, but I think the customers really ‘got it’ this year. Black
Friday was one of the most exciting days [of the year]. If you love IRW: Why do you think Strandbags is still around after 100
retail, it was brilliant. People were in centres, people were online, years?
every channel was buzzing, stores were buzzing and people were FM: It’s been around because they’ve evolved the product, every
buying gifts for themselves and others – it was everything you want decade. It used to be a lot less fashionable, so they’ve moved
retail to be. It wasn’t a day, it was an event that ran over multiple product along – luggage has continued to grow. There’s a really
days and it really kicked off the season, like it does in the US. It strong technical planning logistics backend to Strandbags that had
kicked off Christmas for us all very strongly. to be built to make the business successful because it’s about big
products, small footprint and high volume. Growing our own brand
IRW: Some retailers have criticised how Black Friday has has been another piece of that success, too.
impacted their Christmas sales. I’ve actually fallen in love with the category. I’ve literally turned
FM: I think you complain if you get caught out because you don’t into the bag lady. Because I fly to Sydney every week, I have my
have a plan. It’s a 13-week period now and it kicks off on that Black handbag, work bag and my carry-on. But through our research, we
Friday, then you’ve got December trade then Boxing Day at the end found that a bag is by your side in every moment of your life and it’s
of it. So you’ve got these enormous bookends now and it’s just part of your milestones. Your first day of school? It’s all about your
understanding from a product perspective and offer perspective bag. Your first big job? It’s all about your bag. Your first overseas
how you pulse all of that to make sense of what the customer is trip? It’s all about your bag. In all of your life’s adventures and
looking for. The better we all get at it, the bigger an event it will all journeys, you have a bag by your side. It holds your life now – it’s
become. gone from function to fashion to your whole life.
Xxx It’s an incredible category to actually participate in and it’s
IRW: What have you learned about your new role that surprised amazing. When you see customers come in, there’s excitement. You
you? see women walk in who are about to go on a cruise and you can
FM: I love this business because it’s very streamlined. It’s not big, it almost see them holding a cocktail when they walk out with their
hasn’t been built up too much and it allows us to come together as bag – it’s very tactile, a very real beginning of the journey. We have
a small team, make quick decisions and I’m loving that. I know what a huge amount for customers that do click-and-collect. It way over-
to be careful of when you’re in a business like this that has growth penetrates in this category. The majority of customers buy online
coming, but now I can apply those learnings – how do you keep it and still want to come in-store, touch the bag and open it up.
really resourceful and quite tight but keep it growing and really inject Now as we’ve opened these megastores, we’ve seen our
those layers and investment? When you get a good business, you customer base – which was so strongly female – become much
start to think, ‘Let’s keep going’ but then the challenge is there’s more unisex. I think in the bigger stores, we can create two stores
nowhere to go and things start to turn down – you want to be in very clearly – the travel world and the fashion world – and it’s
control of those levers. becoming a place where guys are a lot more comfortable to shop.
Fast fashion can be so fast that it can create some spinning and You can see that because our backpack sales are through the roof.
it can be difficult for teams. Sometimes it can be difficult to develop People don’t realise we have a big men’s business. IRW
13FEATURE
ASOS’s comeback: The 4
strategies you need to know
How did ASOS bounce back so quickly after a gruelling
2019? Retailers can take some valuable lessons from its
quick turnaround. By Phung Yi Juan
O
ver the past year, British online fashion and cosmetics Aside from internal setbacks, ASOS faced an external issue too:
group ASOS has struggled to fix some operational teething younger competitors rising up the ranks. Boohoo, for example,
issues. As the complications drove up costs and impacted saw an 83 per cent surge in its pre-tax profits, its share prices
sales, investors lost confidence in the one-time disruptor of the far surpassing ASOS’s. Boohoo had the speed too, as it easily
e-commerce landscape. manoeuvred according to market demands, delivering trends
The company first displayed troubling signs in late 2018, when much faster.
it issued two profit warnings within just a few months – the first in With ASOS battling rising competition and struggling to contain
October, the second just before Christmas. Data reveals that the persisting operational woes, its financial review in 2019 closed at
brand’s sell-out rates for October and December dropped year £33.1 million, a stark contrast to 2018’s £102 million.
on year.
In October 2017 sell-out rates hit 49.71 per cent, but then fell to Getting back on track
31.6 per cent by December. A year later sell-out rates had fallen to The company knew it had to pick up its pace.
28.11 per cent in October 2018, and fell further to 27.98 per cent by “This financial year was a pivotal period for ASOS,” CEO Nick
December 2018. Beighton said in October last year. “This was more disruptive than we
Then, in March, operational problems came to light. ASOS had originally anticipated.”
ambitious plans to shift to a global model, ramping up warehouses ASOS promised to deliver better results – and it did. By early 2020,
in two countries simultaneously. But it had severely underestimated the online retailer saw a resurgence, citing a 20 per cent increase in
what was needed for these big plans. Automation issues and a delay retail sales, beating analysts’ forecasts. The numbers were also lifted
in orders ensued, which lead to its third profit warning, in July 2019. by strong customer engagement throughout the last four months of
The biggest problem was its sales forecasting. ASOS pitched sales 2019, as well as record Black Friday sales.
to be at £120 million ($233 million) for 2019. Stocks were purchased How did it get back on track so quickly? There are four key
accordingly to reflect the numbers, but the operational issues insights into ASOS’s turnaround, and how it signifies a larger
indefinitely affected newness offerings and product presentation. consumer shift.
14 insideretail.com.auFEATURE
These are: cent sell-out, with 69.5 per cent sold out at full price – showing clear
Paying attention to sustainability; demand.
Paving its own way with pricing; One of ASOS’s biggest power moves was joining the Global
Smarter discounting; and Plastic Pact, pledging to reduce its use of plastic in its deliveries,
Having representation at the forefront. reducing waste significantly.
Its returns policy was updated too, citing that it may investigate
Beyond fast fashion serial returners. It also introduced a new sizing tool, See My Fit,
The fashion industry has written off the fast-fashion customer as which it hoped would prevent some returns.
being driven only by speed and value, but this is beginning Boohoo may have overtaken its lead in 2019 in sales, but
to change. the brand scored much lower than ASOS in 2019’s Fashion
Traditional ownership models are disintegrating. Younger Transparency Index.
consumers are leaning more towards subscription-based services When it comes to pricing, ASOS isn’t aiming to be the cheapest.
– with access being more important to them than ownership. For Its pricing architecture differs from its main competitors Boohoo
fashion, the same trend can be seen in the rise of the resale market. and Missguided. Those retailers price most of their product within
There’s a broader consumer shift here – and it’s all tied in with the US$10 to US$30 range, but ASOS leans more towards the
concerns about climate change. $US20 to $US30; the $US30 to US$40 range; and US$40 to $US50
Retailers that regard sustainability as a trend, or worse, range. For ASOS, the key is in its product offerings, not the price
greenwash, will find themselves at an increasing disadvantage. factor.
Consumers, especially the younger ones, are demanding change.
They’re environmentally aware of the fashion industry’s high Smarter discounting
consumption of resources, and are unafraid to call out large The same approach applies to its discounting, too. While other
corporations for it. competitors opt for a continual discount model, ASOS prefers to
Consumers are still hungry for newness, but not at the expense of focus on its key offerings. On average, Boohoo releases 150 to 250
the environment. products on a first-time discount, daily. ASOS, on the other hand, is
Despite its operational setbacks, ASOS understood the more reserved.
importance of sustainability and brought it to the fore. This was apparent in its Black Friday sales. Data showed that
ASOS delivered a strong performance in 2019’s Black Friday, a
Steps to sustainability much better result than 2018.
ASOS has added a “responsible filter” so that consumers can ASOS saw a high total sell-out, yet it had the lowest percentage
search for sustainable brands. According to data, the products of discounted products. It also had the highest stockout rate in the
made of recycled materials and sustainable fibres had a 43.8 per 10 to 49 per cent and 80 to 89 per cent discount range. ►
ASOS has grasped diversity, recognising
that beauty is not homogeneous.
Xxx
15FEATURE
Diversity rules avoid overstocking problems that add more environmental costs.
There was one thing the consumers wanted that ASOS grasped Not everyone wants cheaper prices and higher discounts.
pretty quickly: diversity. Rihanna’s Savage x Fenty fashion show In a world where consumers are increasingly values-driven,
was a pivotal moment in the industry – the outpouring of positive understanding what your audience wants is important. This helps to
sentiment proved that consumers have long wanted diversity, and if set clear, defining lines in product, pricing and presentation.
Rihanna can do it, why can’t other brands? Blindly following the crowd is a surefire way to lose a brand
Victoria’s Secret, once the darling of lingerie, still promotes a identity. IRW
homogenous view of beauty standards. While racial diversity was
up by 50 per cent in its 2017’s Shanghai show, over the past 23 Phung Yi Jun is the lead content editor at Omnilytics, a data
years, models that walked the runways got thinner. Its lack of body platform powering business decision-making with deep and
diversity has sparked backlash and boycotts, joined by the ranks of actionable insights. Yi Jun built her career as an independent
models Ashley Graham and Robyn Lawley. fashion writer and uncovered the latest news and trends in retail
The rise of the #MeToo movement has redefined female before transitioning to her current position at Omnilytics. Her
empowerment and changed the narrative of how women dress – it’s previous work can be found in Retail Asia, Harper’s Bazaar and
no longer all about the male gaze. Even Bella Hadid, who walked Female magazine.
for Victoria’s Secret for three years, confessed that she felt sexier
walking in Savage x Fenty’s 2019 show. Younger consumers
are hungry for
The final blow came when Ed Razek, Victoria’s Secret’s chief change and prioritise
marketing officer, infamously told Vogue that the show won’t hire progressive brands.
transgender models, as the brand “sells the fantasy”. He stepped
down soon after, but the damage was done.
Even if fashion retailers “don’t market to the whole world”,
as Razek said in the same Vogue interview, this fact remains:
consumers are drawn to brands that are values-driven – and if it
means leaving once-dominant brands behind, so be it.
A decade ago, ASOS was the disruptor of the e-commerce scene,
but it understood that just like any other brand, it needed to evolve.
In its 2019 annual report, it stated that even though it was one of
the early e-commerce retailers, it still needed to “stay ahead of the
game” and be “relevant despite customers having more choice in
front of them”.
Back in 2018, ASOS was already championing representation
by collaborating with Paralympian Chloe Ball-Hopkins to release
its disability-friendly collection. That year also marked the second
time ASOS has worked with GLAAD, an organisation that protects
LGBTQ rights.
In 2019, the company launched its third collaboration with the
organisation a few months ahead of Pride Month. The collection
is also available in plus sizes (both ASOS Curve and ASOS
Plus), delivering its promise in offering a variety of styles to
20-somethings.
Modest fashion – clothing aimed at customers who prefer less
revealing pieces – is another focus for the retailer. Its first ever
modest fashion edit launched in April last year, as ASOS believes
that “everyone should be able to confidently express themselves
through fashion”. The website also allows customers to filter by
silhouettes, which gives consumers something most mainstream
fashion brands withhold: the power of choice.
Future-proofing works
While ASOS still has much to do to stay ahead of the competition,
its positive numbers highlight its ability to do a quick turnaround. Its
tumultuous year is a lesson for all retailers, even online players – the
retail storm isn’t just restricted to bricks-and-mortar stores.
Retailers that choose to ignore sustainability and inclusivity
will be left behind. Younger consumers will continue to prioritise
progressive brands, and it’s essential for retailers to craft future-
resistant strategies.
But how does a retailer know which trends work, and which to
avoid? Increasingly, they are looking at data. Having access to hard
numbers enhances merchandising and buying skills, which helps to
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