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Union calls out Noni B over workplace issues

Inside Retail reported that The Shop, Distributive and Allied Employees Association (SDA) says it has received numerous complaints from Noni B employees on a range of workplace issues, from cuts to part-time hours and take-home pay, to health and safety concerns, to consistent understaffing and pressure to meet unrealistic sales targets. The complaints follow the SDA’s refusal earlier this month to approve a proposed enterprise bargaining agreement that it had been negotiating with Noni B after the Fair Work Commission ordered the fashion chain to scrap its previous agreement by March 4. That agreement, which expired in 2014, allowed staff at the recently acquired Specialty Fashion Group chains to be paid below the industry award, with no overtime, evening or weekend penalty rates. According to a report by the AFR, the SDA was on board with the proposed new agreement until Noni B declined to back pay employees and cut part-time hours by 20% in the final days of the old agreement.

Retailers at risk as consumer spending stalls

The AFR reported that more than 900 retailers are at high to severe risk of collapse in the next 12 months as consumers tighten their belts and lenders withdraw credit amid falling house prices and the fallout from the financial services royal commission. Data from a recent commercial risk outlook report shows that 916, or 2.6% of Australian retailers, are facing commercial ruin. Though it must be noted that this figure is down from 1460 in March 2018 and 1413 in March 2017. According to Deloitte Access Economics, retail sales growth is expected to slow to 1.6% this year as cash-strapped, heavily-indebted consumers cut back on spending, before returning to 2.2% growth in 2020.

Premier plays hardball with retail landlords

The AFR reported that Premier Investments is fanatical about understanding how the retail property landscape is changing, and how its retail chains are going to be affected. Recently, with landlords trying to plug the empty holes left by retail chains collapsing, Premier has noticed a new trend. Mall owners are offering reduced rents and other incentives to new entrants in the fashion category, and not extending the same deals to long-standing tenants such as Premier. And where landlords aren’t budging, Premier is voting with its feet. The group has shut 101 unprofitable stores in the past six years and 16 stores in the past 12 months. The pressure on bricks and mortar retail is, of course, a global issue, and Premier is clearly thinking hard about the property commitments it will make in the future. This includes taking a new, capital-light growth plan that will see Smiggle move quickly into new markets via wholesale agreements, new transactional websites, concessions in department stores and a broader online push.

Sigma to shut warehouses and cut staff

Nine Finance reported that Sigma Healthcare will lay off 300 warehouse employees and let go another 200 agency staff as it adapts to the loss of its My Chemist/Chemist Warehouse supply deal. Sigma reported a 33.7% fall in full-year profit on Thursday and said it will close distribution centres in Shepparton, Victoria; Newcastle, NSW and Launceston, Tasmania late this year. The layoffs involve those workers and other staff across its distribution network. The layoffs are part of what Sigma's plan to save $100 million over two years based on recommendations from global consulting firm Accenture. The company currently has 15 distribution centres serving 4,000 pharmacies across the country, making over a million deliveries a day.

Myer cuts a further 50 jobs

The AFR reported that beleaguered department store chain Myer has promised customers will not be affected by another major redundancy program. Myer chief executive John King has cut another 50 jobs, mainly in marketing and merchandising roles and store administration, in an attempt to reduce labour costs and pressure on margins as sales continue to slide. More job cuts are likely when Myer starts shrinking its store network by handing back floor space to landlords. On a positive note, Myer shares have jumped 48% this month after Mr King delivered the retailer's first underlying profit growth in eight years by pulling back on discounting to boost gross margins and counter weak sales. Mr King, the former CEO of UK department store House of Fraser, has warned that revenues will be "lumpy" over the next year but Myer can grow earnings nevertheless by cutting costs and abandoning profitless sales.

Officeworks defends against Amazon with experience

The AFR reported that Officeworks has unveiled its latest defence against Amazon, opening the world's largest office supplies store where customers can test pens, paint and office chairs while experimenting with voice technology and home automation. The new store in Mentone in Melbourne's south east is almost 6500 square metres, four times the size of the average Officeworks store, and carries about 35,000 products, more than double the number in a typical store. Mentone customers will be able to book a home visit from Geeks2U, the tech services business Officeworks acquired earlier this month, and order customised sports and corporate gear from ONTHEGO kiosks. Officeworks has also taken a leaf out of Bunnings' playbook, opening its first in-store cafe and playground.

Another fad seems to be over

The Wall Street Journal reported that Bitcoin is in the longest slump of its 10-year history, forcing even ardent supporters to shelve dreams of global disruption and focus on simply outlasting the downturn. Also wounded in the crash have been many companies and technology platforms that promised to transform institutions from Wall Street to Silicon Valley, and raised billions of dollars through initial coin offerings.  Bitcoin now trades below US$ 4,000, massively down from its peak of US$19,650 in December 2017.

Bunnings to roll out full e-commerce offering

The AFR reported Bunnings is cutting expenses in stores to offset the cost of the biggest investment since its ill-fated expansion to the UK: selling its entire product range, from packets of screws to pot plants and garden sheds, online.  Bunnings managing director Michael Schneider expects Bunnings to have a fully transactional website offering more than 60,000 products in 18 months. However, Analysts fear the cost of establishing and operating a full e-commerce offer, including click and collect, home deliveries, staff picking orders from shelves and developing online content such as DIY videos, will crimp Bunnings' margins, which are currently the highest in the world in home improvement.

Big W faces huge rise in wage bill

Big W's wage bill is set to jump tens of millions of dollars, even as it struggles with losses, after it reached a new enterprise agreement for the first time in seven years. Most of the retailer's 17,000 workers voted in the agreement on Monday that will deliver wage rises, restore penalty rates and casual loadings and lift redundancy pay. The deal replaces Big W's long-expired 2012 agreement that has allowed the company to pay workers significantly below the amount they would have earned under the award. Conservative estimates by The Australian Financial Review last year had the retailer set for a $30 to $40 million jump in its labour costs once it restored award rates, excluding any annual pay rises.

How Costco thrives in the age of Amazon

Inc. reported on how Costo thrives in a rapidly changing retail environment. While legacy stores like Sears and Toys "R" Us have gone bankrupt and are left for dead, and Walmart is desperately fighting to hold off Amazon and the e-commerce tsunami - Costco just reported over 7% growth and a surge in net income (27%, to US$889 million). Comparable store sales continue to grow, as does the company's e-commerce business. And worker satisfaction is off the charts. So, how does an old-school company like Costco flourish in the modern age? A key ingredient in the retailer's success is the pursuit of a people-first culture, consistently rewarding employees, both financially and emotionally but with a focus on fostering employee pride in the organisation and employment security. The second part of its 'secret sauce' is the ability to give customers what they want - no-frills merchandising combined with high-quality and great value products. When you take a look under the hood, it's easy to see why Costco is so successful at keeping customers happy. Great pay. People first. Customer satisfaction. Emotional intelligence.

Chemist Warehouse's profit power waning?

The AFR reported that the private company that operates a large chunk of the powerful Chemist Warehouse retail pharmacy chain may have passed its peak when it comes to profit growth. It had a tougher time in 2016-17, according to financial statements lodged with the corporate regulator only on Monday. Chemist Warehouse is notoriously private and has an estimated market share of more than 25% of Australia's highly competitive pharmacy market. Its partner entity, East Yarra Friendly Society, which houses many Chemist Warehouse pharmacy outlets, generated revenue of $300.9 million in the year ended June 30, 2017, according to the financial statements lodged with ASIC. This was 25% less than the $400 million in revenue reported by East Yarra in the 2015-16 financial year. Profits slid to $12.96 million in 2016-17 compared with $101.2 million in the previous year, which appears to have been a high-water mark. However, both directors, Jack Gance and Mario Verrocch said in the latest statements they considered the 2016-17 results to be "satisfactory" considering the changes to business operations.

Myer trialing RFID technology

The AFR reported that Myer is looking to reduce theft and supply-chain costs and boost sales by installing radio frequency identification or "smart" tags in its $500 million private-label brands. The beleaguered department store chain is at the forefront of a major push by Australian retailers to explore the benefits of RFID. Myer started testing RFID tags in September 2017, applying the thumbnail-sized tags to technology products sold in its flagship Bourke Street store in Melbourne. Many Australian retailers have trialed RFID technology unsuccessfully, time will tell if Myer can be one of the first to pull it off. In the meantime, there are many other areas of operation that, in our assessment, Myer should be focusing on - what about simply having staff on the shop floor to take payments when customers want to buy something?