News

Jewellery and apparel sales are leading the post-pandmic purchase charge, according to the latest Mastercard SpendingPulse. 

Jewellery sales were up 107% in August compared to a year ago, with apparel coming up 83%. 

Overall retail trade increased 25.1% in August compared to the same month last year, while sales were also up 27.4% compared to pre-pandemic levels. 

The data, which measures in-store and online retail sales across all forms of payment, showed most retail categories recorded significant year on year sales growth. 

Australian Retailers Association CEO Paul Zahra commented that retail sales have strong momentum for now but cautioned there could be a slowdown in spending as we head into 2023.

“In August last year, our two largest states were in lockdown, so it’s not surprising to see discretionary retail categories record such significant growth compared to 12 months ago. What’s pleasing though is that sales are also up compared to pre-pandemic levels across most retail categories,” Zahra said.

“While consumer spending is strong for now, the concern is that we haven’t seen the full impact of the interest rate hikes hit household budgets. According to the government, inflation is also yet to reach its forecast peak, so we could see a softening of sales as we head into 2023.

“While the retail sector is performing well overall from a sales perspective, the results remain uneven with small businesses more acutely challenged by inflationary impacts and rising costs associated with fuel, energy, supply chains and rent. The government’s fuel excise cut is also about to come to an end, adding further pressure to businesses and consumers.

“It’s incredible to see retail sales perform so well in the face of cost-of-living pressures, however the coming months could prove to be more challenging with household savings starting to erode and mortgage holders being squeezed even tighter,” Zahra said. 

Retail spending remained buoyant in August, rising 0.6 per cent to a record $34.8 billion despite the Reserve Bank of Australia embarking on the most aggressive interest rate hiking cycle in almost three decades.

The larger than expected result was the eighth consecutive monthly rise, and suggests households are yet to feel the full brunt of the RBA’s four back-to-back interest rate rises to the start of the month.

Commonwealth Bank senior economist Belinda Allen said the strength in spending was likely due to a delay in higher borrowing costs being passed on to mortgage holders.

“In August households on floating rate mortgages only just began feeling the May 25 basis point rate hike,” Ms Allen said, adding that the lag time for customers of the nation’s largest lender was about three months.

Barrenjoey chief economist Jo Masters said sales should remain strong until the end of the year, bolstered by the strong labour market, wages growth and the flow of tax offsets and refunds.

“We expect this current strength in retail trade will weigh on future growth in consumption in 2023 as consumers run down the flow of household savings and the full force of monetary policy begins to bite,” she said.

Rachel Turner, cofounder of rock candy maker Sticky, said her store in the Rocks in Sydney was still trading solidly above pre-pandemic levels, which she hoped would continue into the new year.

“Downturns have always been OK for us because people say: ‘I may not be able to afford my mortgage but, damn it, I can afford a bag of lollies.’”

Ms Turner, who founded the company with her husband about 20 years ago, found success internationally during COVID-19 thanks to her candy-making videos becoming popular on social media. Sticky now has 6.5 million followers on TikTok and more than 2 million on YouTube and Facebook.

While lockdowns effectively ended all retail income for the small business, a surge in overseas orders from the United States not only helped keep the company afloat, but also exit the pandemic in a stronger position.

The development of a strong US customer base is now bolstering revenue as a falling Australian dollar against the US greenback increases the purchasing power of overseas customers.

“With the Aussie dollar coming down, people are buying more from the Australian store (online),” Ms Turner said, and while Sticky does now have a US footprint, online shoppers prefer candy made Down Under.

But inflation and higher borrowing costs are pushing up wages as the firm fights to attract and retain staff in the extremely tight labour market.

Wages rose by 4.1 per cent year-on-year in August, according to the Xero Small Business Index, led by construction and manufacturing salaries. It was the second-highest result since the series began in January 2017.

“Whilst faster wage increases add to running costs, higher wages also reflect the underlying health of the small business sector,” said the cloud accounting platform’s chief economist, Louise Southall.

The overall index, which is compiled using anonymised data from Xero customers, rose 7 points over the month, following a sharp slump in June. The rise was attributed to an increase in jobs, wages and a 16.3 per cent bump in sales over the preceding 12 months.

Overall retail sales are up almost 20 per cent over the same period, according to the ABS.

Growth in August was driven by food categories: cafes, restaurants and takeaway food services were up 1.3 per cent and food retailing was 1.1 per cent higher.

How much of this was due to turnover versus inflation will become clearer on Thursday with the release of new monthly inflation data. Food and non-alcoholic beverages inflation hit 5.9 per cent in the year to June 30.

The prospect of David Jones falling into new ownership has kicked up a notch, with the boss of its parent company telling investors that all options are on the table regarding the department store’s future.

Chief executive of South African retailer Woolworths Holdings, Roy Bagattini, said in the company’s annual report that DJs was now in “better shape than it had been in some time”, paving the way for it to consider how best to return value from David Jones back to Woolworths Holdings’ shareholders.

“David Jones is now debt free, self-funding, and has a clear road map to improving profitability,” he said.

“We are in a favourable position to explore all future options in respect of this business, and how best to further unlock value for the Group and our shareholders.”

Speculation about the sale of David Jones emerged after the company’s full year financial results in September.

It also reignited the prospect of David Jones and its rival Myer being owned by one entity, since any private equity interest in David Jones could also be tempted to snap up Myer.

Bagattini also told his investors that there would be no more capital flowing from its South African business to help David Jones, noting the company had “repatriated” 1 billion rand ($86.2 million) from David Jones during the year.

Woolworths Holdings’ ownership of David Jones Group includes the department stores and the apparel brands under the Country Road Group banner, including Country Road, Witchery and Trenery.

The company’s annual report suggests Woolworths Holdings sees more potential in these clothing brands and wants to hang onto them for the longer term.

“[Country Road Group] has a portfolio of leading Australian brands, and as the country’s preeminent omnichannel player, with a strong growth trajectory, we expect it to become an even bigger part of our group going forward,” Bagattini said.

David Jones reported a 2.6 per cent drop in turnover for 2022 as lockdowns affected results. Operating profit came in at $83.7 million.

By comparison, fellow department store Myer recorded its best numbers since 2017, with a 5.7 per cent profit jump to $49 million.

Myer’s toughest critic, retail billionaire Solomon Lew, told this masthead last week that Myer still has more work to do to turn around the business.

Lew’s Premier Investments, which owns close to 23 per cent of Myer, will nominate former Myer Grace Bros boss Terrence McCartney as a director at Myer’s annual general meeting in November.

David Jones declined to comment on a possible sale of the business but said its stores were in a strong position for growth.

“David Jones’s current Vision 2025+ strategy is delivering on its turnaround, with a solid profit, a strong balance sheet, and its status as a self-funding business underpinning its capacity for future growth and innovation,” a spokesman said.

Steve Madden is preparing for future growth through new category launches and concept stores in Australia according to Signal Brands, the licensee for Steve Madden in Australia.

Speaking with Ragtrader, Signal Brands marketing and PR manager Casey Pascoe-Webbe said extending Steve Madden’s category offering in the country is the “number one” priority. This is followed by growing its wholesale partners and opening “more and more” doors.

Currently, Steve Madden sells footwear and handbags with Signal Brands Australia.

"Each brand at Signal Brands Australia - Steve Madden, Guess and Nine West - have their own team that follows international guidelines for each brand,” Pascoe-Webbe said.

"In the case of Steve Madden, our product range will be extended towards the end of the year to include hats, watches and eyewear.”

According to Pascoe-Webbe, the eyewear range is pending Australian regulation sign off.

As the licensee for Steve Madden in Australia, Signal Brands operates Steve Madden and Madden girl labels. Pascoe-Webbe said that it also works on Dolce Vita “from time to time” for its wholesale partners.

She also noted that Steve Madden harnesses three core customer demographics: an “on-trend girl”, a “pump girl” and a “sneaker girl”.

According to Pascoe-Webbe, Steve Madden’s online market in Australia “generally hits that on-trend girl” as she is likely to wear boots all year round.

In regard to the price points of its Steve Madden range, particularly online, Pascoe-Webbe said there is a gradual curve upwards “for all the usual reasons.”

“I guess the customer can tolerate those increases though - because the brand personality and the cutting edge styling of Steve Madden footwear, in particular, always wins out with that customer.

“The Signal Brands Australia/Steve Madden website has always been a leading online channel for Steve Madden.

“We're driven really heavily by our socials - we invest really heavily in our online marketing as well - but our social and organic following is really real.

“That's where we see a lot of our growth coming from.”

As well as focusing on new categories, Pascoe-Webbe said the brand is also expanding its physical footprint.

Recently, Steve Madden opened a new concept store in Doncaster, Victoria, with another on the way for Shellharbour in NSW in November.

The new concept for these stores are seen in its “elevated finishes,” while still retaining the Steve Madden brand identity, Pascoe-Webbe said.

“So it's a mixture - or fusion - of different substrates. We've got metals, backward terrazzo; backs with iridescent walls, really large LED screens, and neons that talk about the brand personality.”

Currently, Steve Madden has six standalone stores across Australia, and a “handful” of factory stores as well. This includes a new outlet opening in Canberra. Its products are also stocked in David Jones, Myer, The Iconic, and "a number of" chain store streetwear retailers.

“So it's very much around the footprint of the store,” Pascoe-Webbe explained, “from the owned retail channel perspective.”

“Signal Brands is on quite an aggressive store opening growth strategy on a whole, actually.”

As well as new locally opened stores, Steve Madden is also preparing to launch another in Dubai Mall in the UAE “in the coming months.” It will be the same concept as those launched in Sydney and Melbourne.

“The Dubai Mall store is unrelated to the Signal Brands Australia operation, although we all are custodians of the Steve Madden brand,” Pascoe-Webbe said. “But it really takes that whole elevated, but still on-brand, experience that one step further.

“They've got chainmail walls, full iridescent walls, stadium style revolving LEDs. So globally, we're really excited to be right on the forefront of what's happening with the brand.”

“We're really thankful at Signal Brands Australia that it has continued to trade really strongly throughout.”

The Myer board led by JoAnne Stephenson has challenged Solomon Lew’s Premier Investments to make a full takeover for the retail company instead of creeping up its share register.

The board also declined to back the appointment of Terry McCartney, the billionaire’s long-time lieutenant, to the department store as a non-executive director.

In a tense exchange of letters before the November 10 annual general meeting, Premier Investments did not agree to Myer’s plea to stop buying shares unless a full takeover offer were made; it called the request “surprising and inappropriate”.

Mr Lew has been a thorn in Myer’s side on and off since the 1990s. His Premier Investments has been buying the maximum allowed – 3 per cent every six months – and has doubled its stake to 22.87 per cent from 10.77 per cent in July 2021.

Mr McCartney is a non-executive director of Premier and its wholly owned subsidiary, Just Group. He joined the Just Group board in 2008.

In August Myer said Mr Lew was seeking a board seat in his target. Mr Lew declined to comment on Monday.

On Monday, Myer revealed in its AGM notice to shareholders that it had written to Premier on September 7, raising concerns about a conflict of interest and possible sharing of confidential information.

Premier responded on September 20 that if Mr McCartney were to join Myer’s board, it had no expectation he would share any confidential information with Premier.

Premier declined to comment on Myer’s policy that at all times the majority of the board should be independent directors with an independent chairman.

Premier also did not agree to a standstill on buying shares, labelling the request as “surprising and inappropriate”, Myer’s statement said.

In notes accompanying the AGM notice, Myer said: “The board has therefore not made a recommendation as to whether shareholders vote in favour or against Item 4, being the election of Mr McCartney.”

At 3.40pm AEDT, Myer’s shares traded 0.9 per cent lower at 60¢, about double their 52-week low.

Premier planned to tout Mr McCartney’s retail experience, telling Myer shareholders that since joining the Premier board in 2016, its market capitalisation had increased more than 30 per cent to $3.3 billion as at July 30.

Premier successfully operates a portfolio of well-recognised brands through the Just Group, including Just Jeans, Peter Alexander and Smiggle.

“During this time, Premier has distributed over $640 million in fully franked dividends to its shareholders. Since 2016, Premier’s net profit after tax has increased over 160 per cent, to $271.8 million for the year ended 31 July 2021,” the Myer statement said.

While Myer’s board has maintained it is open to discuss appropriate board representation of Premier, it said any change of control should not occur without realising the inherent value of Myer for all shareholders.

Ms Stephenson, who is up for re-election and survived a board spill push by Mr Lew a year ago, said in the notice of meeting any Premier-nominated director would be required, along with other board members, to comply with the company’s conflicts of interest policy.

Confidential information restrictions

After receiving the nomination of Mr McCartney, Myer wrote to Premier in September advising that the board would need to be satisfied that existing and potential commercial conflicts of interest would be managed appropriately. There would also need to be restrictions on the disclosure and use by Mr McCartney of Myer’s confidential information.

Myer said it had no objection to Mr McCartney’s election as a director based solely on his credentials, and would be willing to work with him. However, since Premier would not agree to two significant points in its letter, the matter should be determined by the shareholders.

Ms Stephenson said Myer’s fortunes had turned, pointing to its recent full-year results. The company said in mid-September it had posted its best sales start to a new financial year since 2006 and tipped strong Christmas trade.

“Myer’s FY22 results reflect a stronger and more agile business that continues to gain momentum as we deliver against the Customer First Plan,” she said.

The board also recommended that shareholders re-elect independent non-executive director Jacquie Naylor; adopt the remuneration report; and grant performance rights to chief executive John King.

Ms Stephenson has been a Myer board member since 2016 but was acting chairman from October to September 2021, when she became chairman. Myer’s annual meeting is due to take place on November 10 at 2pm in Sydney.

Mr Lew was unsuccessful in ousting part of the board after Myer received a “second strike” against its remuneration report at its annual meeting last year.

It is not the first time Mr Lew has sought to install Mr McCartney to Myer’s board. The billionaire retailer put up the former managing director of Myer Grace Bros, as well as Steven Sewell and former UBS banker Tim Antonie in 2017 to then Myer chairman Paul McClintock, but it was never put to a shareholder vote.

Collapsed luxury footwear and streetwear retailer Sneakerboy has been sold to UK-listed apparel and sportswear firm Frasers Group for an undisclosed sum.

Multiple sources told The Australian Financial Review that staff members have been informed about the sale of Sneakerboy, which has been run by insolvency firm Hamilton Murphy since it collapsed in July.

Frasers Group will keep Sneakerboy staff and run the business. It will assume employee entitlements, but it will not take on any other liabilities of the original Sneakerboy business. It has also expressed an interest in keeping the leases of its remaining stores.

Hamilton Murphy declined to comment.

According to Frasers Group’s website, the company employs more than 25,000 people across 25 countries, including 769 stores in Britain. Brands in its portfolio include Evans Cycles, Everlast, Jack Wills, Lonsdale, Sports Direct, No Fear and Slazenger.

Sneakerboy has three remaining stores in Victoria. It previously had stores in Sydney and Queensland.

Hamilton Murphy’s Stephen Dixon told creditors in a report last month that he had received 40 expressions of interest when he initially advertised the business for sale. He disregarded 18, provided confidential details to 22 parties and received four indicative non-binding offers in late July.

By late September, Mr Dixon accepted an offer, and began finalising the terms and conditions of a sale.

‘Insufficient funds’

“While the purchase price and the anticipated distribution of funds received from the sale has been withheld due to confidentiality clauses in the draft sale agreement, I confirm that the purchase price will not be sufficient to discharge the quantum of secured creditors’ debts in full,” he wrote.

“The secured creditors are therefore entitled to prove in the administration of the company for the balance of their debts that are not discharged from the proceeds from the sale. Accordingly, there will be insufficient funds from the sale of the Sneakerboy business and assets to enable a distribution to the unsecured creditors of the company.”

Sneakerboy, which sells high-end footwear brands such as Balenciaga for more than $1000 a pair, had external administrators appointed by Sydney-based financier Octet Finance in July. Four related entities, including Luxury Retail Group, were also affected.

Before the administrators were appointed, Sneakerboy was 50-50 owned by holding companies held by directors Theo Poulakis and Nelson Mair, according to filings with the corporate regulator. The chain’s operating company, Luxury Retail Group, is similarly split between Mr Poulakis and Mr Mair, although through four entities.

The business collapsed owing staff more than $500,000 in superannuation and leave entitlements and bills of more than $17 million to suppliers, including more than $12 million owed to a related entity. In total, staff were owed $200,137 in annual leave, $23,647 in long service leave and $309,689 in superannuation.

There are only two secured creditors among the 57 firms Sneakerboy owes money to. They are Octet, which is owed nearly $2.8 million, and a related party Luxury Retail Treasury Pty Ltd, which has $12.3 million in payables owed.

Luxury Retail Treasury Pty Ltd was among the entities put into administration earlier this month, and Mr Mair and Mr Poulakis were the equal ultimate shareholders via four entities.

Strandbags is branching into new categories in a bid to attract new customers and expand its target market.

The retailer is planning to launch a youth line for mid-2023, and is also in the process of establishing a men’s travel/work range for late-2023.

The plan comes as Strandbags launched two new ranges earlier this year, Evity and Nere. 

Speaking with Ragtrader, CEO Felicity McGahan said that despite a successful Father's Day trading this year, women form the core of Strandbag’s customer base. She hopes to expand this for the company through new categories. 

“These two brands are a little different for us because they're customers that we want, not customers that we've necessarily got,” McGahan said.

Speaking on the upcoming youth line, McGahan said the range is targeted towards Gen Z.

“This brand really will sit in that kind of sweet spot of 18 to 25," she said. "It's very much the Gen Z, and making sure that we've got that youth offering.

“We've just finalised the brand name and the identity,” McGahan said. “We're on track to launch it mid next year.”

Felicity confirmed that the range will be available across all its stores and even outside Strandbags.

“We think that there's a big opportunity outside Strandbags as well,” she continued. “Just looking at whether there's a wholesale opportunity or marketplace that might be relevant for that."

McGahan confirmed the process has commenced with IP work across trademarks. 

As for the men’s space, McGahan said the new venture will expand on its current product proposition. 

"We do have a men's business today, but it's mostly a gifting business. It’s women buying because they know that it's there.

"We see an opportunity to do an accessible men's brand in this travel work space.”

McGahan said the new addition will create a full offering across accessible leather (Evity), value fashion travel (Nere) and its Gen Z brand. 

It is scheduled to launch next year, following 12 months of brand work. 

“When we talk about the ongoing journey for this business, it's about modernising and focusing on these value businesses,” she said. "It’s about hitting that very accessible spot in the middle and giving great design but at a great price."

Brett Ibbitson has been making beds since 1988. Hand-crafted to customers’ specifications and made from sustainable Australian timber, Ibbitson has dedicated decades to refining his techniques, and he’s not quite done yet.

“I still don’t think, after 35 years, I’ve got it quite right,” says the founder of Quokka Beds.

“It’s more or less a philosophy of living, you know? Just continuously improving, making incremental changes. That’s probably why I’m still in business.”

The 63-year-old has built a business from the ground up with a loyal but predominantly Perth-based customer list. But three years ago Quokka got a hop in its step, with its revenue rocketing sixfold, giving it the confidence to take the fight up to bed-in-a-box outfits like Koala.

In 2019, Ibbitson’s son Daniel joined the company (then known as Brett’s Beds + Futons), bringing several years’ experience in digital marketing – and a fresh pair of eyes.

“We have had many dinner debates,” says Daniel. “We catch up every week and all we talk about is what the other guys are doing in the market, how we could do a better job, how much his customers currently love his beds.”

Daniel, who was working part-time and figuring out his next career step after doing a two-year stint in a London agency, found a new project to sink his teeth into. His father, who in fact had every intention of scaling down the business, found a new path to growth.

“It was such a perfect match ... he was the product guy and a manufacturing expert. It was just an opportunity too good to pass up, on both our sides,” Daniel says.The pair had seen e-commerce play Koala successfully become a household name, as well as the broader boom of the bed-in-a-box sector. For Quokka, it was a simple matter of applying a start-up formula to a family business with a strong customer track record.

Under Daniel’s direction, the product offering was streamlined: a range of 10 bed bases was reduced to two. The elder Ibbitson found a way to pack all the parts into one box. Daniel got to work creating a website, taking the bricks-and-mortar company online for the first time.

“[We got a] huge response straight away,” Daniel says. “We couldn’t believe how many beds we were making, so we had to quickly hire more people.”

The brand got a makeover: Quokka Beds is less wordy and much simpler than Brett’s Beds + Futons. It is also a small nod to its better-known mattress competitor, Koala. “We definitely took inspiration as a little cheeky play on them as well,” says Daniel.

The pandemic helped to accelerate Quokka’s momentum. People were spending much more time at home, with online sales for furniture ballooning during that period. Quokka Beds raked in nearly $2.3 million in revenue for the 2022 financial year, compared to $380,000 in 2019.

They can back up their claims of being loved by customers, too: Quokka Beds’ timber base has been the winner of ProductReview.com.au’s annual awards in the bed category two years in a row.

According to the Ibbitsons, Quokka’s biggest point of difference is that the beds are entirely Australian-made. Where Koala received some backlash for its 2020 decision to move its manufacturing to China, Quokka’s bed bases are made with sustainable timber from certified Australian plantations and then hand-built in Perth.

Brett observes that furniture manufacturing has declined significantly in the last two decades. “We can make it here. Even though our costs are higher, we can still compete with these imported products,” he says.

The father-son duo want to prove they can operate like a start-up, while rejecting “fast furniture” in a commitment to quality. “There’s pretty much nothing out there made in Australia from solid timber – that’s definitely a big gap in the market we entered there,” Daniel says.

Meanwhile, their mattresses are made from organic Sri Lankan latex. “We need to find the best product, and that’s where it is,” says Daniel. Only four companies in the world supply organic latex, and three of those suppliers are in Sri Lanka. Its production is considered carbon negative, Brett adds.

The pair is still trying to keep up with demand. The Ibbitsons have started an equity crowdfunding initiative on the crowdfunding platform Birchal to move into a factory twice the size of their current facility and hire more people, though they acknowledge the labour market is particularly tight.

They also plan to increase their marketing spend. Despite the younger Ibbitson’s digital marketing prowess, they say most of their growth has been the old-fashioned way.

“The product kind of sold itself,” Daniel says. In the last three or four years, they have only spent about 1 or 2 per cent of their revenue on marketing. “Word of mouth, more or less,” Brett adds.

R.M.Williams has announced a multi-year partnership today with Rugby Australia. 

As an Official Partner of the Wallabies, Wallaroos and Australian Sevens teams, R.M.Williams will undertake a number of collaborations and dressing opportunities with the players.

This includes outfitting them with its leather boots as well as the introduction of a licensed product offering in 2023.

R.M.Williams co-owner and director Nicola Forrest AO said this is a strategic move forward following the company’s acquisition by Tattarang in 2020, re-securing the brand’s Australian heritage.

“Born in the Outback 90 years ago, our boots have been inspired by the resilience and endurance of the Australian people,” Forrest said. “And that unique national quality is no better represented in sport than by the Wallabies and Wallaroos.”

In addition to supplying boots, the Australian apparel brand will also launch a licensed product offering in collaboration with Rugby Australia around key moments in the Rugby calendar. The range will offer sporting fans an opportunity to support their favourite teams.

R.M.Williams will also have a roaming store popping up at official Rugby Australia matches and events across the country. This will be accompanied by players and representatives of the Wallabies and Wallaroos.

“We’re delighted to partner with Rugby Australia as it embarks on an exciting new chapter,” R.M.Williams CEO Paul Grosmann said. “Both ourselves and Rugby Australia are very keen that this partnership extends beyond a traditional sponsorship agreement.

“We’re particularly excited by the opportunity to create a licensed product offering and to bring the game to our customers in the heartland of Australia, as well as those in the key cities.”

Rugby Australia CEO Andy Marinos said he is “proud” to welcome R.M.Williams back to the sporting body.

“The Wallabies and R.M.Williams have always been an ideal match as iconic Australian brands,” Marinos said. “To be able to extend this partnership across all our national teams is especially satisfying.

“We look forward to a successful partnership with R.M.Williams as we continue to grow Rugby all around Australia.”

The partnership comes as Australian Rugby marks the calendar ahead, with a Women’s World Cup next month, plus a World Cup for the Wallabies in 2023, and a Lions Tour in 2025.

A boom in luxury shopping and demand for more space from retailers to service online orders are two drivers behind the resurgence of large, destination shopping centres this year, says Vicinity Centres chief executive Grant Kelley.

Mr Kelley said luxury sales across Vicinity’s portfolio, which includes giant malls Chadstone Shopping Centre and Emporium Melbourne, were up 30 per cent on an annual basis as part of an “extraordinarily strong” broad-based retail sales recovery.

“Before COVID, 80 per cent of luxury sales were to the overseas demographic. That’s switched round,” Mr Kelley told The Australian Financial Review Property Summit.

He said luxury tenants had repositioned their business models through “promotional activity events” to find a new pool of buyers within Australia.

“I think it’s actually again, a story of how resilience can lead to a surprising result when it’s executed well,” he said.

More broadly, Mr Kelley said while inflation was high it was still relatively benign in historical terms, and that most retailers were taking a five- to 10-year view on expanding their businesses.

“Retailers are seeing sales increasing, and while that continues, for landlords the value proposition around a shopping centre is a strong story,” he said.

He added that while leasing spreads – the key performance metric for mall owners, being the difference between what tenants pay on new or renewed leases versus prior leases– were still negative, the net effect was accretive to earnings as higher fixed annual increases kicked in after the first year.

On lease renewals, there were no incentives on offer and all operating costs were passed through to tenants.

Asked if tenants balked at these increases, Mr Kelley said no and pointed to Vicinity’s 99 per cent occupancy rate and 75 per cent tenant retention rate.

On the surprisingly positive impact from the online shopping boom, Mr Kelley said exorbitant last-mile delivery costs were making it more viable for goods to be delivered from malls to customers than via a truck from a warehouse in Dandenong or western Sydney.

“You know, within Australia, last-mile delivery costs are among the highest in the world. It leads to a click-and-collect model,” he said.

“So online has actually benefited retail landlords because it’s often meant that retailers are taking up more space because they actually need additional inventory to handle the customers who are coming in to collect the goods from their store, or they’re being dispatched from their store.”

In addition, he said Vicinity was trialling “micro-processing hubs” within their malls (making use of excess space such as in loading docks), where parcels can be collated for dispatch to customers. The first of the trial hubs is in its Glen Waverley mall in Melbourne.

While CBD malls remain the laggards to the recovery, Mr Kelley said there had been a steady improvement, with performance – sales and foot traffic – running at around 65 per cent of pre-COVID-19 levels in the June quarter compared to a 40 per cent average for the whole year.

“CBDs though are the challenge, and they’re a challenge on a Monday-to- Friday basis. Interestingly enough, on weekends, they’re actually pretty much at the same level of throughput as they were pre-COVID,” he said.

He said workers returning to CBD offices and the resumption of tourism were key to the recovery.

Amid the changing work, shopping and economic environment triggered by the COVID-19 pandemic, investors, landlords and developers are confident that by the end of the decade, Sydney will be a place where shopping centres are the new high streets, fostering community and social interaction.

A CBRE report has revealed that augmented reality will be central to the consumer retail experience, alongside unique in-store experiences, while warehouses will be hyperconnected, harnessing robotics to ensure speed and agility.

This vision was borne out by Peter Allan, outgoing chief executive of Scentre group, the country’s largest retail landlord at the results in August, who said its Westfield living centres were evolving into hubs with swimming pools, medical and bank branches and large-scale “experience-based” tenants.

CBRE’s NSW executive managing director, Andrew Roy, said that as Australia emerges from the pandemic, Sydney’s position as a global gateway city and investment hub is firmly back in focus.

Despite the current climate of uncertainty, Roy said the outlook was positive across all major commercial property asset classes.

“At a more fundamental level, Sydney is expected to be at the forefront as ESG considerations, consumer expectations and technological advancements reshape the property industry and investor decision-making,” he said.

Roy and the author of CBRE’s Future Sydney report, Sass J-Baleh, said that by 2030 Sydney would be entrenched as a global tech and life sciences hub, aided by the rise of technology-related businesses and the city’s competitive advantages.

Early evidence of this can be seen in the development of the $3 billion Central tech hub by Dexus and Frasers Property Australia, anchored by the Atlassian tower.

“To accelerate the tech sector in the precinct, the NSW government is providing rebates on rents and fit-outs for ‘scale-up’ businesses who move there,” J-Baleh said in the report.

“The pandemic created significant disruption for office users, with lockdowns and an increased adoption of hybrid working once Sydney reopened.”

JLL’s tenant representation NSW senior director, Sadaf Mayar, said technology-focused companies had overseen significant growth during the pandemic and wanted to increase their office footprints in Sydney’s CBD.

“Gaining an edge in the war for talent, improving brand image, cost efficiencies and a better working environment are the key benefits these firms want from high-quality real estate,” Mayar said in JLL’s Tenant Perspectives report.

Another significant change in outlook for property concerns the area known as ESG – environment, sustainability and governance – which will be at the heart of corporate decision-making as net-zero carbon buildings become the norm.

Roy said company brands would be intrinsically tied to how they affected society, and climate tech was the largest venture capital vertical.

Population growth would also be a critical driver in getting the economy back on track.

“Population growth alone will drive demand for an estimated 450,000 square metres of office floor space, $1 trillion in discretionary and non-discretionary retail goods and 2.3 million square metres of industrial and logistics floor space between now and 2030,” J-Baleh said.

This will be essential, as the latest office occupancy survey by the Property Council of Australia showed. It found the number of people going back to the office plateaued in August. The data revealed that office occupancy levels in Sydney for August were 53 per cent, with most people going to their workplace on Tuesdays, Wednesdays and Thursdays – known as the TWATS.

In response, the property council’s NSW deputy executive director, Lauren Conceicao, called for the state government to continue to support the CBD to “ensure the welfare of our economic engine room remains strong, vibrant and attracts people from across the world”.

“It is promising to see the upcoming ‘Flow and Glow’ festival by CBRE soon take place as part of Sydney CBDs revitalisation package,” Conceicao said.

Supermarket giant Woolworths is poised to expand its retail reach with a focus on homewares and furniture and sell Big W products across more platforms after its takeover of ecommerce business MyDeal gained court approval.

The Supreme Court of NSW approved the company’s purchase of 80.2 per cent of MyDeal shares on Tuesday, and MyDeal shares will be suspended from the ASX from Wednesday.

MyDeal investors voted overwhelmingly in favour of the offer for Woolworths to buy shares at $1.05 each, with founder and chief executive Sean Senvirtne to retain the remaining 20 per cent stake in the business.

While analysts questioned the purchase when Woolworths announced it in May, the grocery operator insists the purchase will boost its general merchandise offering as it amps up sales of everyday essentials online.

The impact of the purchase on MyDeal’s discount department store brand Big W has already been seen, with more than 20,000 Big W products hitting the MyDeal platform last month.

Big W stores were hit hard throughout pandemic lockdowns but Woolworths’ full-year financial results showed that sales had bounced back in bricks-and-mortar stores, up 11.9 per cent for the fourth quarter.

Senvirtne said this month that Big W and MyDeal were focused on serving Australian households searching for lower-cost products.

“Whether it’s homewares, toys, sporting gear or the latest in technology, with millions of products on offer, at MyDeal there has always been something for everyone, now there are even more from the brands Aussies know and love,” he said.

MyDeal posted record revenue of $65.4 million for 2022, beating its own full-year guidance - but the business recorded a $15.5 million loss.

When revealing the company’s earnings in July, MyDeal chairperson Paul Greenberg said he believed Woolworths was getting “the best e-commerce team in the country” through its purchase of the business.

Woolworths is not the first ASX-listed retailer to make a major acquisition in pursuit of a marketplace strategy. Wesfarmers bought online marketplace Catch in 2019 but ran into challenges, with the platform posting losses in its second and third years of ownership.

Stock watchers speculated that Catch’s growth ran into obstacles after it lost its start-up edge and its headcount blew out after Wesfarmers sealed the purchase.

In a presentation to investors last month, Woolworths highlighted it hoped to use MyDeal to complement its Big W offer and said there was also “strong opportunity to unlock value within MyDeal through the group’s platforms and capabilities”.

MyDeal investors have seen shares jump 40 per cent year-to-date as they edged up to Woolworths’ $1.05 offer price.

Investors sent Myer Holdings stock to its highest close in nearly three months on Tuesday after the department store chain flagged its 2022 full-year sales would soar by double digits, helping to double its bottom line profit in its best result since 2018.

Myer shares surged 21.25 per cent to 48¢ after Myer provided the upbeat trading update for the year to July 30, noting that its sales momentum had extended into the second half, helping its net profit to rise to as much as $60 million.

Myer expects full-year sales to gain between 12.3 per cent and 12.7 per cent to between $2.985 billion and $2.995 billion, compared with the $2.66 billion for the previous year which included an extra week of sales.

Shoppers appear to have kept spending after Christmas. Total sales in the July half gained between 16.5 per cent and 17.3 per cent, outpacing rival David Jones, which flagged its second half sales had rebounded by 4.3 per cent.

Myer had a tough first half year after the first quarter was heavily influenced by store closures and a January affected by the omicron variant, and declining consumer confidence.

Chief executive John King said the execution of the Customer First Plan strategy continued to deliver positive outcomes and that all categories had achieved sales growth over last year, even though more trading days were lost due to COVID-19 this year.

“The momentum in the second half in terms of sales growth, both in-store and online, profitability and strengthening of our balance sheet places us well as we go into the new financial year,” he said in a statement.

Full year net profit, excluding any significant items, is expected to be between $55 million and $60 million, an increase of between 86 per cent and 103 per cent when the $22 million of JobKeeper support payments are excluded from the prior year when stores were shut.

The South African owners of rival David Jones said that despite the impacts of rising inflation and interest rates, strong consumer demand had resulted in a better than expected rebound in sales in the second half after a tough start to the year.

David Jones sales fell by 2.6 per cent for the full year. Online sales increased by 28.7 per cent, making up nearly 23 per cent of group sales.

Woolworths of SA also owns Country Road Group (which includes Country Road, Trenery and Politix brands). Sales grew by 9 per cent in the second half, helping full-year sales into positive territory.

Investors Mutual analyst Lucas Goode said Myer management was executing on the turnaround strategy, which had helped the retailer to deliver its highest second half profit since 2013.

Mr Goode said: “While bricks and mortar is facing some structural headwinds, Myer started dividends again in the financial year. Myer will be delivering $1 billion of sales online within the next two years, and they already sell more online than Adore Beauty and The Iconic combined, so it’s a significant online business and one that actually generates a lot more profits.

“Homewares will likely trail off (in 2022), but apparel should be booming.”

Myer’s online revenue in fiscal 2022 is tipped to rise by between 32.5 per cent and 34.4 per cent. It makes up about 24 per cent of sales, between $715 million and $725 million.

Its balance sheet provides a strong foundation to finish the full year in a positive net cash position of more than $155 million, which could be used for a special dividend.

Stock on hand is nearly 10 per cent more than at the same time last year, mainly due to the bulking up of inventory to mitigate global supply chain delays. Mr King said clearance inventory, at 6.2 per cent of department store stock on hand, continued to be well-managed.

Myer anticipates releasing its 2022 final results during September, following a full audit that will include any significant items or other one-off costs.

Melbourne-based billionaire retailer and major shareholder Solomon Lew has long been a thorn in Myer’s side. Mr Lew was unavailable for comment.

In February, his Premier Investments bought another $15 million in shares, lifting its stake to the 19.9 per cent takeover threshold and giving Mr Lew a major say over Myer’s future.

In March, Myer’s long-suffering shareholders received their first dividend since 2017 – a 1.5¢ per share payout – indicating the department store was getting back on track.

Mr King about five years ago launched a turnaround strategy seeking to improve performance, which included closing stores and shrinking floor space and introducing new brands.

Rip Curl has revealed a host of ESG targets for 2025 and beyond, including extending its wetsuit recycling program and increasing the use of sustainable fibres. 

Speaking with Ragtrader, Rip Curl’s environmental, social and governance manager Shasta O’Loughlin said the company’s product teams have already made strides in this process.  

“By 2025 we aim to ensure a minimum of 50% of our products are using preferred sustainable fibres,” O’Loughlin said. “This percentage will increase year on year with aggressive yet achievable 2030 targets.”

“Sustainable practices have always been a part of our offering from the beginning, like offering great warranties, wetsuit and watch repair centers on-site to ensure our product will remain in use for as long as possible.”

Included with the targets, Rip Curl has outlined a number of circular fashion initiatives.

This includes upgrades to global repair centers which will extend product life on its wetsuit recycling program, as well as using 30% recycled materials on all polybags.

Rip Curl will move to 100% recycled materials on all polybags in the next 12 months.

The surfwear retailer will also move to ensuring all product trims are made from sustainable materials, which includes partnering with Arch and Hook for recycled ocean plastic hangers.

At a sourcing level, Rip Curl will ensure overseas partners are partnering with Higg Index for transparency and it will become a BCI Cotton member. 

“These are just some of the many sustainable initiatives that expand our sustainable footprint offering an end-of-life solution to our customers," O'Loughlin said. “There is always more to be done and Rip Curl is dedicated to continuing to strive forward in this space.”

The sustainability challenge

While the pathway to sustainability can present challenges, O'Loughlin revealed there are specific hurdles for sportswear and performance brands. 

“Generally, more sustainable practices come at a higher price and can often be to the detriment of performance,” O’Loughlin continued.

“We are currently dedicating our focus to finding innovative ways to ensure we meet our customer's expectations for performance and functionality along with being more sustainable.

“Unfortunately, the quickest and cheapest practice can often be the most wasteful. This is something we would like to avoid.”

Specifically in the sourcing of sustainable materials, the global surf brand has found that certain necessary materials do not offer much sustainable options.

“Polyamide and Elastane, which are the main fabric components in swimwear, have limitations with regard to supplier certifications. These fabrics are also not progressing as quickly as other materials in the sustainable space."

Despite these challenges, O’Loughlin said the brand is commited to find fibres and construction techniques that can be durable in salty and chlorinated environments.

“We continually strive to find solutions to the harsh demands of our environment.

“To do this we partner with ECONYL for our top performance (Mirage) and volume driving (Classic) ranges. The goal being to focus on durability and performance.

“We have also implemented LYCRA® XTRA LIFE™ and CREORA® Highclo™ across 90% of our collections to ensure maximum performance and long lasting materials with a lifespan significantly longer than regular Spandex."

O'Loughlin said being a sustainable business extends beyond just production.

“To truly be sustainable you need to support people and communities, embed circular principles into your design, and reduce operational waste, which will then reduce our company footprint to support our planet.

“Investing in community projects like Planet Day, working with Surf Rider for beach clean-ups and supporting grass-roots surfing events like the WSL, GromSurf and boardrider clubs is so important to our company by giving back to the comummites in which we operate.”

Gerry Harvey, the chairman of retailer Harvey Norman, says consumers are still spending on big-screen televisions, computers, ovens, new beds and sofas and there is no sign of any slowing even though cost-of-living pressures are rising.

Mr Harvey said the negativity of constant headlines when bank economists make predictions of heavy house price falls as the Reserve Bank of Australia liftsinterest rates to stomp on inflation, is at odds with what his stores are doing in daily sales in late August.

“We question what the hell is going on,” he said. The negativity needs to be tempered. “It feeds on itself,” Mr Harvey said.

He expects the low jobless rate and high levels of household savings will keep underpinning solid sales in the group’s stores, although he acknowledges that future steep increases in energy bills is a wild card that could affect confidence. But for now, trading is at solid levels.

“It’s right across the board. It doesn’t matter what department we’re talking about,” he said. He said the tradie shortage across Australia was causing some heartburn with the group’s “pending” deliveries at the highest levels ever in warehouses.

Customers who had bought new cookers, fridges and other appliances ahead of an expected finish date for their renovation or new home build were ringing up and saying the delivery date needed to be pushed further into the future.

The retailer’s Australian franchisees had a 10.7 per cent rise in sales since July 1, compared with the year-earlier period when lockdowns and restrictions curbed growth.

Mr Harvey, who is a regular on The Australian Financial Review’s Rich List, said sales were particularly strong in stores in regional locations where farmers were having very good seasons. “They’re very bullish at the moment,” he said.

On a comparable store basis, sales growth rose 10.3 per cent in the first two months of 2022-23, but the company emphasised that did not factor in the lockdowns and restrictions on the eastern seaboard in particular, which hurt sales in July and August a year ago.

Net profit fell 3.6 per cent to $811.5 million in the year ended June 30 with COVID-19 restrictions in the December half in major markets of Sydney and Melbourne a large handbrake, even though trading picked up substantially in the June half, the company told the ASX.

Earnings before interest, tax, depreciation and amortisation slipped 1.4 per cent to $1.44 billion. Revenue fell by $163 million to $9.56 billion. The group is paying a final dividend of 17.5¢, up from 15¢ a year ago.

Mr Harvey said supply chain disruptions were starting to lessen. “Supply is getting better,” he said. He estimated that price tags on most items had risen by between 5 and 20 per cent over the past two years as the group passed on inflationary rises from manufacturers, and higher freight and transport costs.

On August 15, JB Hi-Fi, Harvey Norman’s biggest competitor, reported a record full-year profit and said many younger consumers would further spend on technology, phones and computers because they are deemed as essential in the modern world.

JB Hi-Fi’s record sales revenue was propelled by consumer electronics and home appliances, helping to push its bottom line up 7.7 per cent to $544.9 million.

Analysts think that appliance retailers could be in for a more difficult time in the next few months because of rising interest rates and cost-of-living pressures.

Harvey Norman shares on Wednesday traded 2.8 per cent lower to $4.22 in late trade. They were at $5.71 on March 30.

Jarden analyst Ben Gilbert said overall, Harvey Norman looked to have reported “a good set of numbers” although the trading update for July and August was a little bit softer than rival JB Hi-Fi. He has a 12-month target price on the stock of $4.30.

The company has 109 overseas company-owned stores across New Zealand, Slovenia, Croatia, Singapore, Malaysia, Ireland and Northern Ireland. The overseas retail stores generated 25 per cent of total pre-tax profit excluding net property revaluations.

Harvey Norman also has an extensive network of property and land holdings. At June 30, 2022 the freehold property portfolio was valued at $3.74 billion, an increase of 10.9 per cent on a year earlier. The group said it had 544 Australian franchisees.

Mr Harvey said even if the Reserve Bank lifts interest rates a few more times in this cycle, those rates needed to be viewed in context. “They will still be historically low”.

Despite trading through another difficult year, marred by lockdowns and Covid-19 resurgences, David Jones has delivered a relatively strong full-year result: with the losses of the first half largely balanced out by the successes of the second. 

The department store giant’s adjusted operating profit rose 85.5 per cent in the second half, smoothing out its full-year figure to an overall decline of 0.6 per cent. 

Turnover for the full-year fell 2.6 per cent, with international owner Woolworths Holding putting the blame on the lockdown restrictions still in place at the beginning of the year.

Conversely, the business’ online sales jumped 28.7 per cent, making up almost 23 per cent of the business’ total turnover.

Additionally, Country Road Group performed well. Sales grew 3.1 per cent over the course of the year off the back of strong sales in Country Road, Trenery and Politix. Adjusted operating profit fell 22.3 per cent, however, due to a slimmer profit margin.

David Jones chief executive Scott Fyfe told Inside Retail that despite the slow start to the year, foot traffic across its stores is improving steadily. 

“It’s still not back at the levels of FY19, but customers are coming back and are enjoying our new assortment and services. It’s a really great result,” Fyfe said. 

And, with the support of the new leadership team he’s put in place, Fyfe is confident that David Jones has a new lease on life.

A four-pronged approach

The business’ new approach is built on four key principles according to Fyfe: Knowing your customers, delivering a strong omnichannel experience, ensuring seamless service, and future-proofing the business’ capabilities. 

The first principle, knowing your customers, is incredibly important to a luxury department store business like David Jones, Fyfe said. 

“We’ve got a relatively low customer base, so we want to attract, inspire and retain our customers,” Fyfe said. The way David Jones intends on doing that is by executing on the remaining principles.

“[We’re an] omnichannel retailer of world-class brands, and we’ve seen really strong momentum in women’s and men’s fashion, footwear and accessories, home and kids, and beauty.

“We’ve been really focused on what we need to do and we’re showing really good progress there.”

Additionally, since the onset of the Covid-19 pandemic, the business has improved its online offer substantially, with a far greater range and experience bringing over 107 million customers to the website last year. 

“The final bit is building our capabilities. We want David Jones to be a service-led business, and to make sure that we’ve got the right people, talent and capability in the business [moving forward],” Fyfe said. 

Flower power

On Thursday, the business launched its 2022 Flower Show — an underwater themed experience at its Elizabeth Street store which continues David Jones’ push into experiential retail. 

Following the launch of the business’ Spring/Summer collection, which brought together 400 customers at a set of fashion shows designed to introduce the season’s clothing and which is now touring stores around the country, David Jones is inviting its customers to come and unwind at its nine-storey flagship surrounded by a number of new blooms.

“Customers, more than ever, are craving human interaction,” said David Jones’ director of omnichannel Kate Bergin told Inside Retail. 

“The immersive and experiential side of retail is our point of difference, and we’re able to offer that because of the size of our stores. We’re focused on experiential retail and the services we can provide.”

According to Bergin, David Jones tends to see foot traffic spike by around 30 per cent during its intermittent events, providing a raft of new customers. In anticipation of this, the business will have attendants across its flagship that will be focusing on directing customers to where they want to go in an effort to maximise the sales opportunity. 

And, for the first time in several years, the Flower Show will be extended to the business’ Bourke Street store in October.

“It’ll be great to be able to offer the event across our two flagships,” said Bergin. 

Looking forward

However, with David Jones tending to cater to weather consumers, having positioned itself in the luxury and premium end of the department store space, Fyfe said he is well aware that customers will be facing financial headwinds in the months to come. 

“We’re really clear about there being headwinds, there have been for the last few years, but we’re overcoming some of these,” Fyfe said. 

“We’re really confident about what lies ahead for David Jones, particularly as we turn to Christmas – this year will give us the best run-in we’ve had to Christmas in the last three years.

“We’ve got a consistent plan about how we will celebrate these events with our customers. We’ve got lots in flight.”

In fashion, newness is everything. New products, new stores, new designers, new brand ambassadors: if you don’t have something groundbreaking to promote, then you have nothing to talk about.

But fashion brands also require a deep understanding of their customers’ needs, a handle on the changing nature of retail, a knack for predicting trends and finding their unique selling point, as well as more general skills such as managing staff, optimising output and balancing creativity and profitability.

Three Australian businesses celebrating anniversaries this year – A-Esque, a luxury handbag manufacturer founded by former Mimco owner Amanda Briskin-Rettig; jewellers Sarah & Sebastian; and Grace, an upscale Melbourne boutique that prides itself on introducing local audiences to the best of international fashion – have shown their mettle in not merely staying the course but thriving despite changing headwinds of fashion trends, a shift to online retail and, of course, COVID-19.

While their firms might be small, the founders have four key lessons for business.

1. Only communicate when you have something to say

For Briskin-Rettig, talking to customers is key. But the trick is to have the right kind of communication, at the right time. “Communicate when you have something to say,” she says. “Otherwise, let your product talk. We talk to customers, but we don’t shout at them.”

Although Briskin-Rettig has a dedicated social media team, she says it is not constantly posting. Rather, it tends to be reactive.

“Actually, my son can’t believe how little we post. We communicate more behind the scenes.”

Briskin-Rettig has a dedicated social media team that responds to client direct messages “all day, every day”.

“People want to hear from you on their terms. We answer questions quickly, we provide solutions. But we know our customers don’t need to hear from us every second of the day.”

2. Sell your customers the right product

Ilana Moses knows better than most the importance of creating a bond between customer and brand.

At Grace, her independent boutique in Melbourne, it is Moses’ job to ensure each client leaves the store happy – and stylish. Sometimes that means losing a sale, but long term it works in the boutique’s favour.

“We would never push a sale that didn’t make sense,” she says.

“People come back when they are happy. Our business card is our clients. We want people to leave the boutique looking amazing. We don’t let people buy things that don’t fit properly or don’t suit them. We want people coming back, and that is down to an honest and genuine rapport.”

3. Don’t pit staff against each other

Moses knows that the heart of any retail business is its staff. The former intellectual property lawyer offers staff bonuses based on the commission of the entire team, rather than individual effort, which she says can breed resentment.

“Be good to people. Customer service is everything to us, and that starts with treating our staff well,” she says. “We never pit staff against each other with individual bonuses. All bonuses are based on team effort.”

Moses also says that including team members in decision-making has been instrumental to the success of the business.

“It’s important to take your staff on the journey with you. Whether it’s new brands I’m considering or the buy for each season or the design of our new website, there is always room for their voices, and I value their opinions and ideas.”

By far the biggest investment Moses has made is in staff training. When clients are spending thousands on luxury items, they need to feel as if they’ve made a sound decision. Sales associates are critical here.

“We have 45 brands in store. Our staff need to know who they are, how they fit into the market, who the customer is. Sometimes it comes down to granular things, too. When a customer comes in and asks, ‘Where is the leather on this bag from’, I think customers deserve a proper answer. Consumers are switched on, they appreciate knowledge, they are conscious of what they are spending on.”

4. Offer something unique

Each business will have its own unique selling point. For Moses and Grace, it is introducing local customers to new and different international brands.

“Retail is so competitive,” she says. “Our USP (unique selling proposition) is being first to market with a number of brands in Australia. We were the first to stock [cult denim label] Rag & Bone, [New York designer] Jonathan Simkhai, [tailoring specialist] Petar Petrov,” says Moses, who found the brands through extensive travel and research. “When a customer trusts you, they trust you to introduce them to newness. And for the customer, they know it’s not going to be everywhere. It’s special.”

At Sarah & Sebastian, co-founder Sarah Munro trusted her gut.

“I was making the jewellery that I wanted to wear, and it was very different to the trends of the day,” she says. “It was fine, delicate, small. But we didn’t bow to trends because we found an audience with that style. People responded, and now we have more than 600 SKUs (stock keeping units). We’ll never change our aesthetic based on external pressure.”

In addition, Sarah & Sebastian has a soldering service, where a bracelet is soldered onto a customer’s wrist without a clasp (meaning it is worn long-term and not removed).

“It’s not a new thing,” Munro says, “but in Australia, it is our thing. It’s something our customers associate with us.”

At A-Esque, Briskin-Rettig allows clients to visit the atelier where her bags are made. It deepens trust and gives clients a unique experience, making them feel special.

“People aren’t necessarily watching a bag being made. It’s more about [thinking], ‘OK, that piece I am buying, it was made right here. I care about where things come from, it’s nice to buy things from good places.’ ”

Bunnings boss Mike Schneider says there is plenty of growth left in Australia and New Zealand for the big box retailer, focusing on the commercial business, including the national roll-out of Tool Kit Depot aimed at the professional power tool users.

The hardware giant is aiming for network expansion in its core warehouse brand as well as TKD and recently acquired tile retailer Beaumont Tiles to help drive sales as the DIY market tempers after a two-year COVID-19 induced boom.

Mr Schneider told The Australian Financial Review there are no plans to have another crack overseas (owner Wesfarmers abandoned the UK in 2018), and said there is room locally for TKD despite it being a fraction of the store network compared with rivals Sydney Tools and Metcash’s Total Tools.

From the 11 sites it currently has, TKD is aiming to expand over the next five years to 75-100 stores across Australia and New Zealand, ranging in size from 1000 to 2000 square metres.

It is poised to open two “dark stores” on the east coast in coming weeks to service TKD online orders, with the first stand-alone retail store to open before the end of the year in Queensland. WA has six stores which are honing in on areas such as the landscape garden market.

“The Tool Kit Depot business is helping us cater to more of the specialist trade customers. We’re able to deliver even more choice including an expansive power garden range used for landscaping, as well as an onsite service and repair offer,” he said.

Wesfarmers-owned Bunnings acquired Adelaide Tools in 2019 to deepen its relationships with trade customers, and has since renamed it TDK.

Mr Schneider is aiming to also double its frame and truss offering under its commercial arm from three sites now to six over the next year. The commercial side of the business constitutes about 40 per cent of sales currently, but the goal is to make it as even a contributor with the DIY side.

The head of the hardware chain hopes that staff absenteeism will continue to fall. It has halved after peaking at 11 per cent in January when omicron hit.

Over the past decade, Bunnings has evolved from a warehouse model offering around 34,000 hardware and home improvement products to an omnichannel business with over 110,000 home, commercial and lifestyle products across its instore, online and marketplace offers.

Bunnings has grown its addressable market from $39 billion in 2007 to $100 billion in 2022.

The business has invested heavily in online and digital, and is looking to make a push into more personalised digital communications to shoppers and expand Bunnings’ marketplace offering.

However, only $145 million, or about 1.7 per cent of group sales, were generated online in the second half of fiscal 2022. US giant Home Depot has double-digit online penetration.

Mr Schneider said online will grow over time as Bunnings adds more ranges. It also aims to get more than 100,000 items on its marketplace platform, where third-parties sell a range of goods from small kitchen appliances to pet care, and to ship directly to consumers.

Bunnings will join the newly revamped membership program OnePass around November. Its stablemates Kmart, Target and marketplace Catch are already under this subscription umbrella.

Mr Schneider said there has been “good traction” with FlyBuys which allows the retailer to use data and target shoppers with localised content.

At the recent full year results the retailer noted deeper digital engagement was contributing to sales growth online, instore and through the PowerPass app. Revenue grew 5.2 per cent to $17.8 billion in the past fiscal year, while earnings gained 3.7 per cent to $945 million following extraordinary growth through the prior two years.

Mr Schneider said there were around 650,000 hours of YouTube videos consumed over fiscal 2022 by DIYers with “How to Build a Deck” the most popular as people stayed at home and fixed up their abodes.

Australian dog owners are investing heavily in their four-legged companions driving online sales by almost 50 per cent in the past year, according to new data.

Shared by third-party logistics provider Estore Logistics and premium dog food brand Petzyo ahead of International Dog Day on August 26, the data shows pet owners shopped for a range of sustainable and nutrient-dense superfoods and designer wear products along with accessories like collars and leads.

According to Animal Medicines Australia, dog owners spent $20.5 billion last year alone.

Petzyo founder, David Latimer, said the demand for gourmet treats is largely “fuelled” by a growing number of health-conscious Gen Z and millennial dog owners in Australia.

“The huge spike in demand for our superfood dry food range year-on-year is driven by pet owners who are more conscious about what ingredients go into their pet food, with a strong preference for sustainable and natural options.”

Between July and December last year, sales of Petzyo’s Salmon & Oceanfish dry food surged 318 per cent, and of its Chicken & Turkey dry food by 232.

The company says online sales have jumped 77 per cent between January and July this year. The retailer revealed that dogs with “better taste buds” than others included cavoodles, staffies, golden retrievers and labradors.

Paul Sciberras, director of Estore commercial solutions, said the spike in sales can be attributed to pet adoptions during Covid and people spending more time with their dogs now.

“With traditional retail stores closed during lockdowns, dog owners became more accustomed to buying for their pets online. This trend shows no signs of slowing down, particularly as we know dog owners will look for any excuse to pamper their pups.”

Big business is on a collision course with unions at the Jobs and Skills Summit, after the second-biggest private employer warned that the Australian Council of Trade Unions’ push for multi-employer pay deals would hurt investment and wages, as Labor ministers openly consider the proposal.

Wesfarmers chief executive Rob Scott, who will attend the summit next week, said the historically low 3.4 per cent jobless rate and skill shortages must be used as a “burning platform” to fix the broken enterprise bargaining system to increase productivity and deliver real pay rises for workers without fanning inflation.

Mr Scott, who is also a board member of the Business Council of Australia, said “flexibility and innovation cannot be unlocked with collective bargaining or industry agreements”.

“In practical terms, in businesses that means that we need to invest in more productivity-enhancing technology.

“We need to work with our team to find new ways of working more efficiently.

“And that flexibility that we require can really only be unlocked, through enterprise agreements that are company-specific.”

Wesfarmers employs more than 100,000 workers across enterprises including Bunnings, Kmart, Target, Officeworks and Priceline. The conglomerate unveiled an annual profit of $2.35 billion, down 1.2 per cent.

Mr Scott said inflation pressures were likely to persist for the next six months, but a recent fall in the wholesale cost of timber, cotton, copper, aluminium and plastic were likely to help ease prices on store shelves for shoppers next year.

A shortage of workers and cost pressures were making it hard to commit to investing in projects, he said.

Business has been spooked by Industrial Relations Minister Tony Burke who said he was “interested” in the ACTU’s proposal for “multi-employer bargaining” to boost wages, which had failed to rise much despite the low jobless rate.

Business, economists and the Reserve Bank of Australia are increasingly confident wage growth will pick up to around 3 per cent in the second half of this year.

Some business community summit participants are anxious that the unions’ aggressive pre-summit public relations campaign has outmanoeuvred business, and left companies vulnerable to union-friendly industrial relations changes under Labor.

There is general agreement between the government, business and unions on increasing the 160,000 permanent immigration cap, investing in skills and the principle of increasing productivity to lift wages, which are likely to be agreed to at the summit in Canberra.

In urgent need of repair

Treasurer Jim Chalmers, who will chair the summit, struck a more conciliatory tone than Mr Burke by urging business, unions and community groups to “come together” and find “common ground” to “deal with the challenges in our economy”.

“There won’t be unanimous agreement around any of those, but let’s see if we can find some common ground in areas like migration, participation, skills and training, industrial relations, all of these important issues,” Dr Chalmers said on Friday.

“How can we tackle the gender pay gap and the issues of women’s participation in the labour market?”

Wesfarmers chairman Michael Chaney told shareholders in the company’s annual report that the “labour relations system is also in urgent need of repair”.

“Increasingly, employers are abandoning the higher productivity-achieving enterprise bargaining system in favour of awards,” Mr Chaney wrote.

“Enterprise agreement processes have become excessively complex and legalistic and the ‘better off overall’ test has lost its original, intended meaning.

“All parties need to attend that gathering with the common goal of finding reforms and ideas that benefit both employers and employees – the former with increased productivity and the latter with higher real wages.”

Dr Chalmers and Prime Minister Anthony Albanese have both said the enterprise bargaining system is “broken”, without supporting or rejecting the union push for multi-employer pay deals.

Mr Burke and others in the Labor Party have been more publicly supportive of the union push.

A business source said there were growing concerns that elements within the Albanese government, such as Mr Burke, were pushing a “Whitlam-esque” industrial relations agenda from the 1970s when wage rises for unionised and public sector workers exacerbated inflation.

In contrast, at the 1983 economic summit hosted by Labor prime minister Bob Hawke, unions agreed to moderate their wage claims to reduce inflation, while receiving superannuation and more social services for workers as a quid pro quo.

Woolworths chief executive Brad Banducci said he was looking forward to talking at the summit about increasing immigration before Christmas and the “link between productivity and wage growth”.

“We are believers in wage growth,” he said.

“We just need to make sure we get the right productivity conditions.

“I think the key to that, of course will be modernising the awards system in general for the retail industry, which is the one we’re mainly focused on.

“I think we also need to talk very constructively and openly on the topic of flexibility which our customers want and our team want.

“We need to make sure that we have the right protections around it, but that we do not constrain flexibility for people so they can choose how to best balance their lives.”

The thorny issue of enterprise bargaining, on which the Morrison government came close to securing business and union agreement, is expected to be passed to a labour market white paper to be worked on after the summit being held next Thursday and Friday at Parliament House.

No public unified front

In the spirit of co-operation that Dr Chalmers spoke of, Business Council of Australia chief executive Jennifer Westacott will appear in a joint interview with ACTU secretary Sally McManus on the ABC Insiders television program on Sunday.

Peak business groups have been loosely coordinating behind the scenes, including the Business Council of Australia, Australian Chamber of Commerce and Industry, Australian Industry Group, Small Business Council of Australia, Minerals Council of Australia and Master Builders Australia.

While they agree on the high-level principles on IR and other labour market matters, there has not been a public, unified front on the finer details.

The Council of Small Business Organisations Australia flagged this week it is open to discussing sector-wide bargaining rights with unions as a way to simplify the award system, going against the strong opposition from major employer groups.

Some business groups are wary of the BCA getting together with unions, and of the potential for a split among business groups like there was during negotiations over industrial relations with the Morrison government.

The BCA, ACTU and then attorney-general Christian Porter blindsided other business groups in 2021 with an agreed proposal to give preferential treatment and more flexibility to union-backed enterprise bargaining agreements.

Master Builders Australia chief executive Denita Wawn said: “There is an agreement across the board among unions and business that enterprise agreements need fixing, but the question is how?

“We’re all trying to achieve the same outcomes.

“Ultimately, we want to see productivity improve through the IR lever, but our concern is you can’t preclude one sector of the economy that is not unionised in having flexibility.”

In the lead up to the summit, business groups, unions and community groups have been meeting government ministers and departments.