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1
Apr-19
Monday

H&M turnaround strategy shows promise

15
An article on Reuters notes that fashion retailer H&M reported a much smaller than expected fall in quarterly profit last Friday as it sold more products at full price and margins held up, in a first sign that its turnaround strategy is producing results. Shares in H&M, the world’s biggest clothing retailer after Zara-owner Inditex, surged as much as 15.8% as the Swedish group said it expected sales at discounted prices to continue to fall in the current quarter. H&M has trailed Inditex in performance and seen its profits shrink and stocks pile up in recent years as it failed to react quickly enough to demand swings and a boom in e-commerce. Friday’s profit and margin beat indicated that H&M’s plan to revive profit growth, which has involved heavy investment in logistics, integration of stores and online business and an in-depth review of its stores and brands, was working.
29
Mar-19
Friday

Apple shifts to services

17
The Hustle reported on Apple's latest strategy, a shift to services. While Apple built its empire on hardware, recent announcements prove Apple needs revenue from services in a hardware-saturated world. With a range of flashy new services - Apple TV+, Apple News+, Apple Card, and Apple Arcade - the company hopes to transform its 1.4B active devices into monthly money-makers that consumers rely on to watch videos, read news, play games, and make payments. Twitter trolls and journalists dismissed Apple for hazy details on pricing and launch dates, and stock fell 1.2%. But if the past’s any guide, bets against Apple seldom pay off... When Apple released its first iPhone, TechCrunch said it was “about as useful … as a rotary phone,” and Microsoft’s CEO insisted, “There’s no chance that the iPhone is going to get any significant market share.”

Napoleon Perdis rescue?

15
The AFR reported that "Daigou queen" Livia Wang and former Witchery executive Henry Lee have come to the rescue of Napoleon Perdis, offering to buy his eponymous make-up empire, which went into voluntary administration in January. Ms Wang and Mr Lee have formed a private investment company, Kuba Investments, which proposes to take control of Napoleon Perdis Cosmetics through a deed of company arrangement  (DOCA). The value of their offer has not been revealed, but administrator Simon Cathro of insolvency firm Worrells said on Thursday the proposal would result in a better return to creditors than if Napoleon Perdis were liquidated. Creditors, who are owed more than $22 million and include the ANZ bank, the ATO, Australian Pharmaceutical Industries and Myer, are due to meet on April 8 to consider whether to accept the DOCA. Mr Perdis, who founded the business 24 years ago, and his wife Soula-Marie Perdis support the deal.

Chemist Warehouse strike ends

15
The AFR reported that Chemist Warehouse will increase workers' wages by as much as 22% and convert casuals to permanent following two weeks of strikes at its major distribution centres. The privately owned pharmacy giant reached an in-principle agreement with the National Union of Workers on Thursday that will result in its warehouse employees in Victoria and Queensland getting an 18.75% pay rise over the four years, with 8.75% to come within two weeks. In a joint statement the NUW and Chemist Warehouse said that the offer will see strong wage increases, greater security of employment, flexibility of working hours that will meet the needs of both workers and the employer, and a commitment from all to continue to have a respectful and productive workplace.
28
Mar-19
Thursday

Low-value GST generating triple the forecast revenue

20

Inside Retail reported that the GST on low-value imported goods generated $81 million in the first three months after it was implemented on July 1, the ATO this week revealed. That is already in excess of the $70 million the tax was expected to deliver in its first 12 months of use, and revenue continues to track at 300% of what was forecast. The ATO also revealed that the digital services tax has generated $272 million in its first year since being implemented, 1800% ahead of forecast. These figures, he said, prove the low-value international online sales tax and digital services tax were not an impossible nut to crack, despite the opposition they faced from some corners of the industry at the time. We had repeatedly advocated for low-value GST as a way to close a loophole that enabled overseas sellers to avoid charging GST on orders shipped to Australia that were under $1000, creating a price advantage over domestic bricks-and-mortars.

Retailers target plus-sized collections for revenue growth

18
DigiDay reported that more retailers are developing plus-sized collections - a sign they are starting to see them as bigger potential revenue streams than they have in the past. Recent announcements to this tune from Kohl’s and Anthropologie follow a steady march of brands like Ann Taylor Loft, Nike and J.Crew, which have released plus-sized collections for the first time within the past couple of years. And, retailers including Target and Nordstrom, which are starting to increase the size spectrum of brands carried in-store and online. Walmart’s acquisition of DTC plus-sized brand Eloquii last year also underscored the importance of this market. Recent research shows that the plus-size market is expected to grow to US$24 billion in the US by 2020, with an annual growth rate about twice that of the total clothing market.
27
Mar-19
Wednesday

Coles partners with online shopping leader Ocado

20
The AFR reported that Coles aims to steal leadership of the $3 billion online grocery market from arch-rival Woolworths, entering into a long-term deal with leading British online food retailer Ocado. Under the agreement, Coles will launch a new website and build two highly automated fulfilment centres in Melbourne and Sydney at a cost of as much as $150 million. The centres, which will each have about 1000 robots moving orders around, are expected to start operating in four years. Each will be able to handle products worth between $500 million and $750 million a year. Ocado, an online food retailer which is transforming itself into a global digital technology company, will install and maintain equipment in the fulfilment centres and provide Coles with its smart platform technology, including an online grocery platform, automated single-pick fulfilment technology and home-delivery solutions.

Kathmandu braces for tough second half

22
The AFR reported that outdoor clothing retailer Kathmandu is bracing for further weakness in sales in New Zealand this year following the terrorist attacks in Christchurch. Kathmandu's same-store sales fell 2.2% in the six months ending January, crimping earnings, and the retailer is expecting another tough half-year as the nation grieves for victims of the Christchurch tragedy. Kathmandu also expects gross margins in Australia and New Zealand to weaken in the July-half as costs rise and it steps up promotions to boost same-store sales. Kathmandu will attempt to counter the downturn in New Zealand by increasing sales in Australia, its largest market, and in North America, where the Kathmandu brand will begin trading after striking relationships with leading outdoor clothing chains.
26
Mar-19
Tuesday

Noni B responds to union's allegations

20
Fashion retailer, Noni B responded via ASX media release to news articles alleging staff employed by the group have not had enough time for toilet breaks and face unrealistic work demands such as sales targets. The articles came on the back of a media release issued by the Shop, Distributive and Allied Employees’ Association (SDA) as part of the union’s campaign against Noni B Group’s proposed Enterprise Agreement. In today's release, Noni B says the agreement has been approved by 81% of employees and that the Union’s campaign is not in the best interests of its members, and, is perhaps based on an incomplete understanding of the facts. The company says the wellbeing and safety of all team members is paramount and at the core of the Group’s corporate values, and, that it is very proud of its safety record and achievements in promoting the welfare and wellbeing of its team members. Noni B also expressed its disappointment in SDA's chosen course of action towards a resolution.

Retailers at risk as consumer spending stalls

22
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.
25
Mar-19
Monday

Union calls out Noni B over workplace issues

20
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.

Premier plays hardball with retail landlords

26
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.