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16
Jan-19
Wednesday

Luxury brands target Sydney and Melbourne

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The AFR reported that the rush of international luxury brands seeking a bricks-and-mortar presence on the east coast is showing no sign of slowing down in 2019, despite cracks emerging on prime retail strips like Melbourne's Collins Street. Among those hunting for retail space on Australia's east coast are Swiss watchmaker Audemars Piguet, French trunk and leather goods maker Goyard, French luxury jewellery and watches house Boucheron and high-end English footwear manufacturer Church's, according to well-placed sources.  They join legendary Italian designer Valentino and American fashion icon Tom Ford, German luggage retailer Rimowa, Italian luxury menswear designer Canali and shoe purveyor Roger Vivier, which the AFR reported last year were hunting for prime retail space.

Telcos and NBN on collision course over 5G

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The AFR reported that Australia's third-largest mobile provider Vodafone is pushing for the government to release a large swathe of unused 5G spectrum it says could lower the cost of 5G services, in a move that sets them on a collision course with the NBN. Vodafone said the NBN, which has exclusive access to this unused band, is not using a large portion of it, and that there is no justification for preventing other telcos from accessing it for their own 5G networks. But the NBN said it needed the spectrum to provide its fixed wireless broadband, and that as things stand, giving commercial telcos access to the supposedly unused spectrum would cause unacceptable interference. Bottom line, NBN Co is the feeling the heat as 5G technology fundamentally renders the NBN project obsolete, and, therefore, a very costly misstep.
15
Jan-19
Tuesday

Reject Shop hits earnings targets

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The AFR reported that battling retailer, The Reject Shop has overcome soft Christmas trading to achieve its revised profit guidance. Off the back of the results, the business has told shareholders to continue to ignore a $78 million takeover offer from packaging mogul Raphael Geminder. In a trading update delivered yesterday, The Reject Shop said it expects to deliver a net profit of about $10.5 million for the December-half, in line with guidance of between $10-$11 million issued in October last year.

Buyers dump credit cards for buy now, pay later options

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The AFR reported that Australians are ditching credit cards in favour of debit cards and buy now pay later services. The latest Reserve Bank of Australia figures, released on Monday, show that as of November 2018 there were 15.97 million credit card accounts, the lowest number since 2015.  KPMG's chief economist said the numbers suggest more people are consolidating their credit card debt into a single balance, as more banks offered interest-free periods to encourage consolidation. Another contributing factor was the rise of buy now, pay later products like Afterpay, he said, with more consumers using Afterpay as an alternative way to immediately access goods and services without having to pay for them upfront. According to regulatory data, in the last financial year two million consumers have used a buy, now pay later service at least once, compared with 400,000 customers two years ago.

Kmart set for revamp

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The AFR reported that Kmart will reduce its prices in an attempt to revive sales growth, which came to an abrupt halt in December after five years of uninterrupted gains. Wesfarmers CEO has attributed the trading results to weaker demand for womenswear and everyday items, as well as Kmart's decision to exit low-margin DVDs to make room for popular categories such as homewares. Shares in Wesfarmers fell 2.2% after the group warned that earnings from its department store division would fall about 7% in the December-half.

November 2018 retail statistics

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My Business reported on the latest retail turnover figures from the ABS, stating that they paint a bleak picture for bricks and mortar retailers. Covering November 2018, which included the Black Friday sales, the ABS said that retail turnover surged by 0.4 of a percentage point for the month, increasing on the 0.3 of a percentage point rise recorded in October. Online sales reached their highest level ever recorded in the ABS series, accounting for 6.6% of total retail turnover. A big jump from the 5.5% contribution that online sales made in the same month just a year earlier. However, as usual, the media neglected to include the YoY figures, with retail sales growing approximately 3.6% in November 2018 over the previous year it paints a much more balanced picture. All eyes will be on the December retail figures, to deliver a real snapshot of the state of the retail industry and consumer spending.
14
Jan-19
Monday

The new payment champions are...

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The Wall Street Journal reported on the somewhat bewildering proliferation of ways to pay for things in recent years. Hardware companies like Apple and Samsung, online ones like Google and Amazon, banks like JPMorgan Chase and retailers like Walmart have all unveiled their own new ways for Americans to make purchases, especially with their phones. However, the vast majority of the time, all these methods are really just different means of delivering your credit or debit card information to the merchant. As a result, the centrality of Visa and Mastercard has only been reinforced. Disappointing news to many - especially merchants - who had hoped that the rise of digital payments would disrupt these incumbents and relieve them of the associated transaction fees. The new payment champions: well, actually, they're the same as the old ones.

Mixed trading results from the US

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The Wall Street Journal commented that investor expectations for US retailers were high heading into the holidays. Low unemployment, rising wages and strong consumer confidence all boded well for spending. However, as sales reports for the Christmas period continue to trickle in, a divide is clearly visible between the weak and the strong operators. Macy's reported that its like-for-like sales during November and December were up just 1.1%. In contrast, Target reported 5.7% increase. Kohl’s same-store sales increased just 1.2%. J.C. Penney, which - according to WSJ - appears to be going the way of Sears, saw same-store sales fall 3.5%. With such diverse results, it looks like strong customer confidence is not enough to boost sales - the retailers have to be able to ride the wave as well.
11
Jan-19
Friday

Crabtree & Evelyn closure

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Inside Retail reported that beauty and home products retailer Crabtree & Evelyn announced the closure of its entire network across Australia (12 stores).  Crabtree & Evelyn recently announced the closure of its 12 Singaporean stores and 19 Canadian stores after going into bankruptcy protection.

Samsonite opens first mono-brand airport store in Australia

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Inside Retail reported that travel luggage retailer Samsonite has opened its first airport mono-brand store in Australia at the domestic terminal in Brisbane Airport. The new store, which features Samsonite’s latest fit-out design and “endless aisles” digital platform, also utilises the company’s new digital ordering platform to allow travellers to shop from the entire Samsonite offer with free home delivery anywhere in Australia. Samsonite Australia announced it will open more retail stores in other Australian airports in the next 12 months.

IKEA's digital revolution

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The AFR reported that new IKEA Group global chief executive Jesper Brodin is looking to use big data, smaller-format stores, and next-day delivery to snare more customers' dollars as the Swedish giant makes a late push into the digital world. Despite being the world's largest home-furnishing retailer, IKEA did not launch a full e-commerce offer in Australia until about six months ago. In his first visit to Australia as CEO, Mr Brodin is clear that, despite being late to the online game, IKEA was undergoing a digital revolution. The IKEA footprint has doubled in Australia in the past five years. IKEA now has three distribution centres to support online shopping, which comprises 12 to 13% of its total Australian sales of $1.39 billion in fiscal 2018.

Noni B reports a Merry Christmas

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The AFR noted that women's fashion retail group Noni B has reported that after acquiring Katies, Crossroads, Autograph, Rivers, and Millers in 2018 sales were up 140%. Like-for-like sales increased 1% in December, but the total first half-year like-for-like sales were down 3.1%. Substantial cost reductions were also reported. We remain cautious in our assessment as the true test after an acquisition comes in year two and three, when the retailer must switch to the business-as-usual model.  Continuing cost cuts could also have a detrimental effect, and apparently more are planned.