News

Super Retail Group is tapping shareholders to improve the customer experience, analytics and supply chain of its omnichannel business and take advantage of new opportunities as a result of the disruption caused by COVID-19.

The company, which owns and operates the Supercheap Auto, Rebel, Macpac and BCF retail chains, is issuing approximately 28.2 million new shares to raise $203 million at a fixed price of $7.19 a share.

The equity raising, which comprises an institutional entitlement offer that opened on Monday, June 15, and a retail entitlement offer, has the support of company founder, Reg Rowe, who has committed through the entities he controls to take up his full entitlement of $59 million.

Super Retail Group CEO Anthony Heraghty said he was pleased with the company’s trading performance during COVID-19, adding that it is well positioned to take advantage of shifts in consumer behaviour observed during the pandemic.

“We are very pleased with the robust trading performance of the Group despite COVID-19 and thank our team members for their dedication to the business during the pandemic,” Heraghty said in a statement released to the ASX on Monday.

“The execution of our strategy has continued during COVID-19, with our four core brands well positioned to take advantage of shifts in consumer behaviour that have been observed through the pandemic.

“The equity raising enables us to continue the execution of our strategy, further strengthen our omni-retail capabilities and continue to organically grow our four core brands.”

Super Retail Group saw a 26.2 per cent drop in sales during the month of April (March 29-April 25) compared to the previous corresponding period, but like-for-like sales rebounded in May (April 26-May 23), growing 26.5 per cent.

Group online sales more than doubled during April and May compared to the previous corresponding period to represent 18.2 per cent of overall sales.

The company attributed to the strong performance to its recent investment in its omni-retail platform and supply chain, which enabled it to meet the significant shift to online and click-and-collect purchasing. It also repurposed costs to areas of high activity to meet demand.

Super Retail Group said it has continued to benefit from the strong consumer environment in June.

Supercheap Auto’s sales for FY20 to May 23 totalled $987 million, a 4.6 per cent increase on the previous corresponding period. Rebel’s sales for the same period were $945 million, up 2.1 per cent on the previous corresponding period.

BCF’s sales were $478 million, down 0.6 per cent on the previous corresponding period, and Macpac’s sales totalled $109 million, down 10 per cent.

Macpac was impacted more than the group’s other core brands by the New Zealand government-imposed closure.

Fashion retailer City Chic will shutter 14 stores after failing to negotiate reduced rents with landlords as it seeks to refocus its capital expenses following the impact of COVID-19.

The remaining 92 stores will remain open with reduced rents moving forward, as well as agreed-upon rent reductions for the time spent in hibernation. 

“The decision to close these stores reflects our focus on appropriate store economics,” said City Chic chief executive Phil Ryan. 

“We remain committed to opening new stores and converting stores to large formats where deals can be structured to reflect the current retail environment.”

A City Chic spokesperson confirmed to Inside Retail the Miranda, Tuggerah, Kotara, Liverpool, Sydney, Knox, Southland, Doncaster, Woden, Belconnen, Northlakes, Westlakes and Tea Tree Plaza stores in Australia would be closed, as well as the Rickerton store in New Zealand.

Ryan said the majority of staff were redeployed to nearby stores, though an undisclosed number of staff are now out of work.

These staff join the 823,000 Australians currently unemployed according to the Australian Bureau of Statistics, as the unemployment rate reached 6.4 per cent at the end of April 2020 – compared to 5.2 per cent in January.

The store closures also partly reflect the shifting tide of online shopping, Ryan said, with City Chic focusing on connecting with customers across multiple touchpoints and executing on its digital strategy. 

During the lockdown period City Chic’s online sales grew by 57 per cent due to the business quickly adjusting its product range toward intimates, streetwear and casual wear. 

Sales in these sections of the business grew while sales in its higher-end ranges fell, though increased promotional activity pulled online gross margin down despite an overall increase in activity.

Household spending is starting to show signs of recovery, according to a new report from the Commonwealth Bank of Australia (CBA) that includes data to the end of May 2020.

Retail spending intentions jumped in May, driven by food, general retail (department and discount stores) and household furnishings and equipment. This is consistent with CBA’s weekly card spending data, which showed a 6 per cent increase in the week to June 12 compared to a year ago.

Entertainment spending intentions also improved in May, driven by an improvement in ‘recreation’ spending, although restaurants, cinemas, theatres and other venues are still seeing weak spending.

Home buying spending intentions also jumped in May, likely driven by falling house prices, while travel spending intentions stabilised, as domestic tourism started to seem more likely.

CBA’s monthly Household Spending Intentions (HSI) report is based on near real-time readings of household transaction data and relevant search information from Google Trends to provide a forward-looking analysis of consumer spending intentions.

The report covers seven key areas – home buying, retail, motor vehicle, entertainment, travel, education and health and fitness – which cover around 55 per cent of total consumer spend in Australia.

The HSI report is just the latest analysis to point to a recovery in consumer spending, a key factor for retail growth. ShopperTrak has reported steady growth in shopping centre foot traffic for the past six weeks, and the Westpac-Melbourne Institute Index of Consumer Sentiment returned to pre-COVID levels in May, after a weak April.

While Australia is still officially in a recession, the staged reopening of the economy and the implementation of fiscal support policies, such as JobSeeker and JobKeeper, appear to have given Australians the confidence to loosen their purse strings.

However, this also raises the risk of a relapse if the government’s fiscal support policies end before business fully stabilises.

“While we know that the Australian economy is in recession, the path to recovery is becoming clearer,” Stephen Halmarick, Commonwealth Bank’s chief economist, said in the HSI report.

Here are more recent reports showing signs of a recovery in retail spending.

Independent retailers see turnover increase

According to data from 13,962 independent retailers compiled by point-of-sale system Vend, turnover increased by an average of 45.3 per cent nationwide in May compared to April.

Retailers in all states, except the ACT, saw an increase in the month, with Western Australian retailers seeing the biggest jump of 65.8 per cent. The national average turnover in May was still 12.8 per cent lower than it was in February.

Recovery varies by sector

Zip’s Weekly Spending Index, which is based on granular transaction data from more than 1.8 million Australians, showed the first signs of a retail recovery in May, however, the different restrictions in each sector means this recovery is highly fractured across industries.

While hospitality overall is still struggling, restaurants and cafes are recovering quicker than pubs and bars. Spending in restaurants was down 19 per cent in May 2020 compared to April 2020, and down 39 per cent in cafes. Spending at pubs and bars was down 74 per cent in May 2020 compared to April 2020, nearly equal to the 79 per cent decline seen in April 2020 compared to March 2020.  

Sectors that saw a big increase in spending in May 2020, compared to May 2019, include security and safety system installation (up 133 per cent), surf schools (up 102 per cent), online marketplaces (up 89 per cent) and trade services (up 30 per cent).

Sectors that saw an increase in buy now pay later spending in May 2020, compared to May 2019, include cosmetics (up 103 per cent), jewellery (up 55 per cent), outdoor gear (up 47 per cent) and furniture and homewares (up 19 per cent).

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell wants federal legislation requiring small businesses to be paid in 30 days.

It comes amid a fresh wave of big businesses using the COVID-19 crisis as an excuse for poor payment times, she claimed. 

It’s a key recommendation made in ASBFEO’s final report regarding its Supply Chain Financing, which reflects a recent surge in larger businesses pushing out payment times to their small business suppliers.

“Large businesses extending or in some cases, suspending payments to small businesses are on notice that this behaviour is unacceptable,” Carnell said.

“There’s no denying businesses of all shapes and sizes are enduring extraordinary challenges as a result of the Coronavirus crisis, but small businesses are being hit hardest.

“Many small businesses have been forced to close their doors and a lot may not survive the coming months, even with significant support from the government. That’s why it is more important than ever to ensure small businesses are paid on time.

“We know that if small businesses are paid on time, the whole economy benefits. On the flip side, a lack of cash flow is the leading cause of insolvency.

“Legislation requiring SMEs to be paid in 30 days is the only way to drive meaningful cultural change in business payment performance across the economy.

“If Australia were to go down this path, it would not be alone. Just recently, legislation was tabled in the UK that stipulates a uniform 30-day statutory limit for payment of invoices and provides for enforcement of financial penalties for late payments.

The Supply Chain Financing Review calls out several household-name businesses that have engaged in poor payment practices.

“Myer, David Jones, Just Group, Sussan Group, Carlton United Brewery and CIMIC are named in the report as having payment policies that are damaging to their small business suppliers.

“Our Review has revealed the voluntary Supplier Payment Code is not effective. There is no compliance monitoring and it is actually unenforceable. This is consistent with similar systems internationally.

“While we support the Payment Times Reporting Framework as a useful tool, it’s unlikely to result in the systemic change that is needed.

“When used appropriately, supply chain finance is a legitimate and effective product that can be used to free-up cash flow for small and family businesses. In fact, it may be particularly useful to small businesses that need to be paid faster as they navigate their way through the COVID-19 crisis.

“However it is critical that harm inflicted on small businesses as a result of misuse of these products be urgently addressed.”

The jackets and skirts in Armani's Autumn-Winter 2020 collection envelop the body with what the designer calls "a subdued romanticism". 

For the veteran Italian designer, the changes wrought by the virus present an opportunity to re-introduce consumers to the Armani world view. "My mission as a designer has always been concerned with the idea of comfort," he explains. "That is why I pioneered the idea of deconstructed tailoring back in the '80s, and experimented with new techniques and lighter-weight, fluid materials which I have continued to develop since."

Giorgio Armani's Autumn-Winter 2020 collections take these concepts further than before. The men's collection sees suiting stripped down to its essence, with fluid jackets cut like cardigans: lightweight and free of rigidity. For women, there are jackets and skirts – many crafted from soft velvet – that envelop the body with what Armani calls "a subdued romanticism."

Armani is not the only one betting on the resurgence of tailored pieces. "Suiting will always be a mainstay, no matter what the climate," says Camilla & Marc's co-founder and creative director Camilla Freeman-Topper. "There's a sense of confidence that tailoring brings that will always be relevant for women, especially now, with so much unease in the world."

Like Armani, Freeman-Topper believes comfort will define the clothes women wear to work for the rest of the year, and perhaps beyond. "While I do believe suiting will dominate, it will evolve to reflect the current mood," she says. "That means a more relaxed silhouette that is effortless, with a sense of ease – pieces that transition from the office to the lounge room. A soft tailored jacket and a relaxed wide-leg pant, styled with a T-shirt and flats, will be prioritised over more traditional corporate suiting styles."

The designer says Camilla & Marc's upcoming collections will mirror the simplicity women are craving. "Utilitarian pieces will rule the day: easy, durable pieces that will stand the test of time. When there is so much change going on in the world, a well-curated wardrobe makes life simple."

Australian retailers say there has been a move towards more comfortable and versatile workwear for several seasons, and that COVID-19 has simply solidified the trend. "We decided a while ago, in the midst of a much-needed reinvigoration of our menswear collections, that the 'Harrolds man' was needing versatility," says the luxury department store's head of buying, Kathleen Buscema.

"The biggest boost in suit sales in decades happened in 2008, after the GFC, because people were interviewing and they wanted to look sharper," he points out. "People also became a lot more conservative with their workwear: very clean, very classic. Necktie sales spiked around that time."

Johnson believes women will be key to smartening up office attire post-pandemic. "P Johnson has only just started making custom suiting for women, but we're seeing exponential growth, and I think that pattern is going to continue," he says.

"It's a new conversation," he adds. "It's not about women dressing like men: it's a woman's suit for a woman. And I think that's going to grow quite a lot, because the inequality we've seen in the workforce is getting balanced out, albeit incredibly slowly."

Matthew Keighran, managing director of Hugo Boss SEAPAC, believes suiting will remain de rigueur in corporate environments, but says louder and more expressive styles could gain popularity as professionals start mingling again. "I think the idea of going very conservative is not going to draw customers to stores or websites," he says.

"Suiting had been moving in a different direction for a few seasons prior to COVID-19 in that it had become something a customer wanted to buy to feel good, rather than simply something to wear to work," he adds. "I believe that desire to 'dress up' will re-emerge."

Bridget Veals, general manager of womenswear and accessories at David Jones, concurs. After terrible events, she says, fashion has historically returned to glamour and escapism. "Joy is brought back through the use of print and bold colour. As we come out of this period, I believe there will be a shift back somewhat to customers wanting to dress up once again."

One thing all the experts agree on: today's customer wants workwear that will last. "There's no longer time to waste on a disposable mentality," says Freeman-Topper. "Women and men want to invest in quality and longevity over all else."

It sounds like a good sales pitch for a well-tailored suit.

In an ordinary runway show (though there is never anything ordinary about Chanel's), Pavlovsky says, you have “20 minutes to convince.” Will a series of Instagram posts convey the same sense of excitement? “In a way it’s so difficult to translate the feelings you have in a show, but this is quite nice. If you asked me what we’d prefer, we’d prefer a show, no doubt. You cannot compare it to a show.”

Pavlovsky has a long history with Chanel – after a stint at Deloitte in the late 80s, he started at Chanel in 1990 in audit and management, working his way up to his current position in 2004. If new creative director Virginie Viard was widely regarded as Karl Lagerfeld’s right-hand woman, Pavlovsky is the left-hand: the business mind that supports and guides the maison’s design directive.

He is biased, he says, about the collection the world is about to see. “I’m not a good judge of the collections,” he says, laughing gently. “I am always positive about them. This collection is quite special for us; it’s the first time we’ve had a collection without a show.”

Indeed, Chanel will be the first major French brand to present a collection at all – online or not – since the country went into lockdown in March. Adding to the symbolism of the show – a value Chanel hangs its logo-stamped hat on – the show’s erstwhile location, Capri, was partly chosen as a nod to Lagerfeld, who spent time there in 1997 photographing the Villa Malaparte.

Gabrielle Chanel is credited with inventing the cruise collection, and Lagerfeld reinstated the idea in 2000, along with a show that travelled each year to a different exotic location (Grand Central Station in New York, the Eden Roc in Cap d'Antibes, the Bosquet des Trois Fontaines in the gardens of the Château de Versailles, The Island in Dubai, even Havana, Cuba, the country’s first fashion show since the communist revolution of 1959). Cruise collections may lack some of the drama and extravagance of a haute couture show, but they contribute handsomely to a house’s finances; there are many more clients who look for a cashmere Breton knit than a rarefied couture ball gown.

Pavlovsky does not go into budget specifics, but does note that cancelling the collection altogether would have been disastrous for the company’s suppliers. “Our first thought is for our own business, but as you can imagine, manufacturers are not in a good situation, the coming months will be quite difficult because a lot of orders have been cancelled. If people are not doing collections they will not get any more orders. For us, it’s symbolic but it’s important that in the past and the future [cruise] will be part of Chanel.”

So what about the clothes? As with most Chanel collections, there is tweed, but here, reinvented for the summer months: a sherbet orange bolero, a shirt knotted at the midriff paired with a drop-waisted maxi skirt, a balconette bra worn under a sheer draped blouse, the kind of thing you might wear to sip champagne on, yes, a Mediterranean cruise. Pavlovsky, who has known Viard since 1990, says she has brought a new sense of femininity to the clothing. “There is something, I think, about a woman designing for other women.”

We’re not designing a new collection because we want to design a new collection ... it makes sense for the business and the brand.

— Bruno Pavlovsky, Chanel

In July, the Paris couture collections will be held digitally, rather than on runways. Pavlovsky is hesitant to put a time on anything returning to normal, but is hopeful that by Paris Fashion Week in September, models will at least be able to walk the runway, albeit to digital audiences.

“But between now and then, so many things could happen. At this stage probably we’re planning a show without an audience that we will livestream. Nothing has been decided, it is far too early. We need to be very agile and able to adapt.”

On this, I press Pavlovsky. There is a mood right now in the fashion industry at large that the rapid cycle of collections and the vast sums spent on shows are out of touch with a world battling climate change and global pandemics.

In May, Belgian designer Dries van Noten spearheaded an open letter, signed by the likes of Tory Burch, Carolina Herrera, Jil Sander and retailers such as Nordstrom, Bergdorf Goodman and David Jones, to change the way fashion is run: an adjustment to the deliveries of collections to stores, a shift in the fashion calendar, changes to the discounting season and more. In April, Saint Laurent announced it would not take part in the catwalk season as normal. Giorgio Armani has announced that his January Armani Privé runway collection will be "seasonless" and what is seen as a harbinger for the rest of the industry, Gucci declared it would go from five to two shows a year.

But what of Chanel?

Pavlovsky is firm when he says, “We have six collections a year today, and we don’t do it just because we want to, but because our business demands it, our customers want it. We’re not designing a new collection just because we want to design a new collection. We are designing a new collection because it makes sense for the development of the business and the progression of the brand.

The show cycle, he says, is more than just showing for the sake of it. “For the past thirty years we have been a key partner for Paris Fashion Week. It is a key cultural moment, it is a tradition, it is something very important … to the economic activity of a city. We are very supportive of that.”  

None of that is disputed, of course. But if a major brand such as Saint Laurent is changing the way it operates, what might happen to the calendar?

Pavlovsky is politely dismissive.

“Each brand has to decide what they want to do. Any brand can do whatever they want. But I think there is a strong common interest in Paris, to support the Fédération de la Haute Couture et de la Mode [which organises Fashion Week]. But brands can decide not to participate, but at the end of the day, that will make life more difficult.”

As our time comes to an end, I ask Pavlovsky: how will the team celebrate this new collection, considering each show is usually followed by a sumptuous party? On this, he is subdued and reflective.

“We will celebrate with Virginie. [But with] the situation at the moment, we will continue working on the couture collection, the spring/summer collection. Our mindset is to be careful, we don’t want to go too fast. It’s not about celebrating so much but about getting back to something much easier, more normal, by September.”

Because, of course, the show must go on.

Food delivery platform Easi is turning up the heat on global rivals Uber Eats, Deliveroo, DoorDash and Menulog, with the Melbourne-based business’ global customer base ticking past a million users despite the coronavirus pandemic.

Easi's distinctive square yellow delivery boxes are a familiar sight in inner city areas but the inner workings of the platform, started in Melbourne in 2014, and its founder Jie (Jason) Shen, have largely stayed out of the limelight.

"Not many people know about me, but most people know the yellow box," Mr Shen told The Age and The Sydney Morning Herald. "People email us and they want to know what is in the yellow box."

The 34-year-old Shen migrated to Australia with his family from China 20 years ago and after running Melbourne restaurant Yabby House saw an opportunity to use that experience to build a delivery platform.

"We started with one motorbike and two drivers and now it's over 20,000 drivers," Mr Shen said. "I didn't have much money so sometimes the orders I had to deliver myself ... sometimes Melbourne weather is really bad and I told myself 'If I can't deliver it, no one else would'."

While Easi's multinational competitors have thrown a lot of money to grab market share in Australia, Mr Shen said his company has grown by focusing on the needs of restaurants and drivers.

Easi takes a commission of between 15 and 25 per cent from restaurants compared to the 30 per cent charged by Uber Eats. Meanwhile, Easi delivery drivers, who operate as independent contractors, are paid $5 for a 1 kilometre delivery and $1.20 for each kilometre further.

The delivery platform began by focusing on the "niche" Asian market to save costs but has now expanded to offer a range of restaurants, including major franchises Pizza Hut and Domino's.

"Because I used to own a restaurant I know how much margin is (good for them) and I want everyone to make money and everyone have a happy ending here," Mr Shen said.

The platform operates across 11 cities in Australia and has expanded internationally to the United States, New Zealand, the United Kingdom, Canada and Malaysia, with Singapore next on the horizon.

"Many years ago people came to Australia and they tried to find gold but not everyone digs for gold, (he) who sells the shovel is (the one) who makes the money," Mr Shen said.

"That's why I wanted to become the one to sell the shovel, to make the platform."

Mr Shen sold a majority stake in Easi to a consortium of investors in 2018 and now holds, in his words, "a small piece of the cake". He also remains the chief executive of the business. Mr Shen declined to name the investors or provide further information on Easi's sole director, Australian-based Jan Liu.

He added that while the COVID-19 pandemic has hit the restaurant sector hard, Easi has recorded a 15 per cent increase in sales on the back of customers placing larger orders.

Industry analysts Ibisworld expect revenue in the restaurant industry to decline by 25.1 per cent in 2019-20, to $15 billion as a result of coronavirus, with food delivery platforms playing a vital role in a restaurant's survival.

"These platforms have boosted takeaway sales, and have informed customers of which local restaurants are still operating during lockdown," Ibisworld said in a report published last month.

Meanwhile, hospitality consultant Ken Burgin said while food delivery apps had "grown like weeds" during the coronavirus pandemic, Easi stood out with its low commission and growing fleet of riders and drivers.

"The technology is one side, the people on wheels is another," he said.

"Restaurants have realised doing takeaway and delivery is hard, people are going to have to keep doing it, the clever ones are streamlining that."

Mr Shen said he is focused on Easi's growth trajectory, which has been buoyed by the restrictions to contain the spread of COVID-19.

"We say in China, everything can be delivered, so I think last-mile delivery will be the future," he said. "People realise delivery is more convenient for them."

The billionaire co-founder and chairman of Harvey Norman, Gerry Harvey, believes many retailers will go to the wall in the midst of the recession, saying the coronavirus pandemic has probably accelerated the demise of businesses that were weak to begin with.

He said the ills afflicting many sectors of the retail industry were like an “act of God” and that while some categories such as hardware and food might not only survive but thrive, businesses in clothing or fashion had been caught out.

The retail strength of Harvey Norman was put on show yesterday when the chain released its latest trading update, reporting massive sales growth of 17.5 per cent for its Australian stores in the second half.

It also announced a special dividend of 6c per share to be paid at the end of June.

News of the dividend followed its April decision to cancel a ­planned interim payout of 12c per share.

This saved almost $150m at a time when Mr Harvey felt it was prudent to hold on to cash as many believed the world was heading for a depression. The special dividend helped put a rocket under Harvey Norman shares on Wednesday.

It came at a time when many investors hungry for yield are facing slashed or eliminated dividends.

Mr Harvey said it was the right time to pay a dividend.

“At the time we cancelled the dividend people were talking about the Great Depression and we were just about ready to pay it, we agreed to pay it, all the events happened and we could have been closed down. We had the money to pay it but we decided not to.

“We had no idea what could have happened and it would have been irresponsible of a board to pay it out.

“I’m in a situation where Katie (CEO Katie Page, Mr Harvey’s wife) and I argue about it at night.

“She thinks it is going to be better and I don’t agree with her but she might be right.

“I don’t think she knows and I’m bloody sure I don’t know.’’

Mr Harvey said many retailers would not survive the recession and economic shocks from the coronavirus pandemic. “Unquestionably some will (fail), but most of the strong ones I would have thought are OK.

“The ones that won’t last are probably the ones that wouldn’t have lasted anyway. Sometimes these things hurry things up a bit.

“If you are in food or electronics you are fine, or like hardware with Bunnings, but if you are in Flight Centre or travel or you are in clothes, shoes and things like that it doesn’t matter how good you are — they have taken a big hiding.

“This is act of god stuff.’’

Harvey Norman’s flagship Australian stores recorded first-half sales growth of 0.1 per cent, rocketing to 17.5 per cent for the second half to date. For the full financial year to date sales for its Australian franchise stores were up 7.4 per cent.

Harvey Norman said government decrees saw many stores across its network in New Zealand, Malaysia, Singapore, Ireland, Northern Ireland and Europe close between March and April. This had an impact on revenue, with sales in the second half to date down 38.2 per cent in Northern Ireland, 21.7 per cent in Singapore, 7.3 per cent in New Zealand, 5.5 per cent in Slovenia and Croatia, up 1.3 per cent in Malaysia and up 25.4 per cent in Ireland.

The special dividend will be paid on June 29 to shareholders registered as of June 23.

The Reject Shop CEO Andre Reich: "We've benefited from COVID, but ... it hasn't been a pure profit exercise. It's come with a lot of costs."  

"Like others ... we benefited initially from the panic buying and then that flowed into stay at home and home schooling, so areas like stationery, and just recently back to school have picked up as well."

After withdrawing guidance in March, JB Hi-Fi group chief executive Richard Murray now expects profits to rise at least 22 per cent. Wayne Taylor

Demand accelerated in April and May, as sales in the March quarter were up 11.6 per cent, lifting sales for the year to date by 11 per cent.

At appliances chain The Good Guys, demand was even stronger, with sales rising 23.5 per cent in the June-half to date - after rising 13.9 per cent in the March quarter - taking growth for the year to date to 10.7 per cent.

However, sales in New Zealand, where JB Hi-Fi stores were closed for about six weeks, fell 19.3 per cent in the June-quarter to date, dragging sales for the year to date down 7.3 per cent.

The company is reviewing the carrying value of assets in New Zealand, given a history of underperformance, and expects to book non-cash impairments of $A25 million after tax.

Even Kmart, whose stores are generally located in the large malls that were virtually empty for three months, managed to gain 4.1 per cent in sales. And as for Target - well its sales fell by a lesser percentage than the same period last year.

If, for the sake of argument, one discounts the performance of Target which was in trouble before the pandemic and which Wesfarmers has already announced it will shrink to a fraction of its existing size, the rump of the conglomerate’s retail assets have defied the odds.

Wesfarmers has by accident or good fortune found its businesses pitched perfectly for pandemic.

Right time, right products.

Householders have used their time in isolation to nest at home and undertake those DIY jobs that had been sitting down the bottom of the to-do list. House sales slowed to a trickle as buyers disappeared so investment in smaller-scale renovation surged.

Office evacuees that were forced to work from home fitted perfectly for Officeworks which sells everything from desks to computers.

The challenge for Wesfarmers management is to keep these sales (or at least some of them) after COVID.

Capping off the perfect suite of Wesfarmers' assets is Catch - the online marketplace business it acquired last year. Its sales grew by 68.7 per cent as consumers took to shopping from their lounge rooms.

In total Wesfamers has grown e-commerce sales by 89 per cent over the past five months -using Catch as a means to increase its addressable retail market.

The sales update from the company, which is led by Rob Scott, attempted to inject a touch of caution into its announcement. Firstly this boost in sales comes with some extra cost. In the case of Bunnings there is a $20 million impost resulting from more cleaning and security plus a $70 million drag from the temporary closure of New Zealand stores and the permanent closure of some small format ones also across the Tasman. The $70 million also includes some write-off of legacy IT e-commerce platforms.

But putting this into perspective, Bunnings’ earnings before interest and tax and revenue came in at $1.6 billion and $13.1 billion respectively last year so these additional costs are not particularly significant.

The challenge for Wesfarmers management is to keep these sales (or at least some of them) after COVID.

Meanwhile, GPT joined the list of retail property landlords to update investors on the financial damage sustained during the pandemic.

GPT, a diversified property company, revealed a near $550 million hit to the value of its shopping centre portfolio - an 8.8 per cent decline since December. Like other mall owners, GPT is struggling with the short term challenges of tenants’ inability to pay full rents or in some cases any rent. The longer-term issues for landlords will arise if, as expected, some portion of retail tenants do not survive. The larger structural issue, which has been exacerbated by COVID, is the ongoing retailer push to reduce rents and space.

Early in June fellow mall landlord Vicinity tapped investors for $1.4 billion to bolster its liquidity having experienced a fall in the value of its retail property assets of between 11 per cent and 13 per cent.

Other than supermarkets, large mall tenants are heavily skewed towards the discretionary end of the market. While there is evidence that foot traffic has picked up there has been limited visibility on retail sales by brand.

The market’s response to GPT and Wesfarmers were, on the face of it, counterintuitive.

GPT share price wildly outperformed the broader market, spiking up more than 7 per cent. Its fellow retail real estate companies received a similar level of love from investors. Wesfarmers wildly underperformed - managing to rise only 0.3 per cent compared with the S&P/ASX200 which surged ahead 2.5 per cent.

But it was a day when investor’s risk appetite was turned up full volume.

Mr Scott acknowledged there would be additional costs across the business for the heightened health and safety provisions, but said he did not regret the actions Wesfarmers had taken in the pandemic as they helped give customers and employees confidence that its stores were safe.

Wesfarmers shares jumped 2.3 per cent to $42.68 following the announcement. They were still up 0.8 per cent at $41.03 during late morning trade.

Supermarket giant Coles is aiming to capitalise on the trend towards in-home dining driven by COVID-19 lockdowns, as restaurants, pubs and cafes grapple with social distancing rules.

With many consumers still reluctant to return to eateries due to health concerns, Coles has introduced a homestyle convenience range to fill the gap.

Coles Kitchen, which features 34 ready-to-heat meal products, joins the retailer’s portfolio of meal brands, including Coles Finest and Nature’s Kitchen.

General manager of Own Brand Brad Cook said Coles Kitchen gives customers “real food fast, not fast food”.

“Coles team of Chef’s and Product Developers have trialled, tweaked and tasted every meal to ensure it not only tastes great, but is packed with quality ingredients and nutrition. The majority of the meals have a 3 or 4 health star rating, the soups have up to 3 serves of veg and unnecessary salt has been removed from the Coles Kitchen range to help support a healthier, balanced diet,” he said.

In total, the retailer has introduced 100 meals and sides to its convenience offer, over half of which are Coles branded products with the remainer supplied by brands such as Pitango, Latina Fresh and YouFoodz.

The products include Italian, Asian, Indian and Australian cuisines, with meals starting from $6.50 each. From June 22, roasts will also be on the menu, with the launch of a hot roast beef and a Mexican-style hot roast chicken.

The supermarket giant said its recent acquisition of ready-made meal supplier Jewel Fine Foods, has helped transform its convenience offer with affordable, premium quality meals.

“Our customers have told us they’re looking for quick and easy meals for lunch and dinner that are made from quality ingredients. And since COVID-19, we have seen a growing demand for Australian restaurant-quality food that won’t break the bank and provides healthier alternatives to fast food,” Coles general manager for Fresh Convenience, Dairy and Freezer, Charlotte Rhodes, said.

Last month, Woolworths overhauled its convenience offer with the introduction of over 60 new products. At the same time, Coles added over 30 bulk products as part of its ‘Big Pack Value’ sale.

By November, more than 220 Coles supermarkets will include ‘Food to Go’ convenience departments.

PAS Group, the owner of several wholesale fashion brands including Review and Jets, has entered voluntary administration, despite the board believing the company is solvent.

The move is a last-ditch effort to restructure the company in a way that will enable it to operate sustainably into the future.

In a release sent to the ASX on Friday, the board said that Stephen Longley, David McEvoy and Martin Ford – the administrators from PwC – will undertake a preliminary review and assessment of group operations.

Longley told Inside Retail that while it’s too early to be definitive, “some of the fundamentals would suggest that under a different model, the business could be more sustainable, noting the challenges presented by COVID-19”. 

The news comes roughly one month after PAS Group said it was working with advisors to accelerate a review of operations with the goal of reducing complexity and creating a more focused business largely through the closure of unprofitable stores.

PAS Group’s earnings in recent years have been impacted by the shift away from wholesale and department stores, the rise of online shopping and a challenging retail environment more broadly. The company exited 42 stores in FY19 and said it wanted to focus on more profitable locations and online.

But unfavourable market conditions and the COVID-19 crisis have made it difficult to execute a restructure, according to CEO Eric Morris, who deemed administration the best way to effect change while protecting all stakeholders.

“Against the backdrop of many retailers closing their doors, we have taken proactive action to put PAS Group in the best possible position to navigate through the pandemic and subsequent economic challenges,” Morris said in a statement on Friday.

PAS Group employs 1300 people and operates 225 stores across Australia and New Zealand. Its retail and wholesale brands include Review, Black Pepper, Yarra Trail, Jets Swimwear and Designworks, which supplies Everlast, Mooks and other brands to major retailers, including Target.

Stores will continue to trade as normal, in line with current local restrictions across Australia and New Zealand. All store credits and vouchers will be honoured.

The company’s securities have been suspended from quotation.

British luxury clothing store Jigsaw London has shut down all of its Australian stores due to the COVID-19 pandemic. 

The brand announced it was immediately ending all of its operations Down Under with a statement on its website and Instagram on Friday.  

'After many wonderful years, Jigsaw London will be closing its doors on Friday 29th May,' the company wrote. 

'Due to exceptional circumstances the business has made the difficult decision to close its Australian division to simplify its business and focus on its home market in the UK.'

In the FAQ section of its website, the brand confirmed it was the COVID-19 pandemic that decimated its business, forcing them to shut down.

'The coronavirus outbreak has had a severe impact on retailers around the world,' the website read.

Jigsaw's Australian fans were deeply saddened by the news and flooded to Instagram comment section. 

'Devastated. You are one of my favourite labels in Australia,' one person wrote. 

While many people were sad, others were angry that Jigsaw announced it was closing on the day of its closure. 

'Are you kidding? We’re told on the actual day it’s closing; no warning? No more Australian online presence either?' one person wrote. 

'The 29th is already over, so you closed the stores for good THEN made the announcement?' another person said.   

One person said: 'There could have been some kind of warning, very poorly managed!'  

Jigsaw's Australian website now just a 'goodbye' statement and an FAQ section with no online shop, meaning that customers can no longer purchase clothes. 

Meanwhile, the British version of the website only delivers to the UK and EU.  

Customers can still return products they bought online or in-store until July 1.  

The brand has not ruled out returning to Australian shores in the future provided the retail market is favourable.

'We are always looking for opportunities, so if one arises for us to reopen here – we will certainly take it!' the website read. 

Jigsaw's closure comes after PAS group, which owns 225 shops in Australia and NZ, went into financial administration. 

Some of its stores included Review, Black Pepper, Yarra Trail, Designworks and JETS Swimwear and it also supplied stock to Myer and other stores.

Meanwhile, David Jones is set to shut down its less profitable department stores. 

Target will also shut down 53 of its stores within the next 12 months, while another 53 will be converted into Kmarts.   

Sales have remained above the 30 per cent threshold required for JobKeeper, however, meaning the business did not get "one single iota" of assistance from the government, Ms Berchtold said.

"It's just so disappointing there's not more they could do. Keeping people employed is one thing, but it's about keeping that whole ecosystem alive," she said.

Ms Berchtold is working with the industry on a plan to help the retail sector through the virus recovery, focused on helping businesses migrate online. The Iconic has also launched its own fulfilment service and a digital factory outlet centre to help brands move out-of-season stock.

Retailers are preparing their businesses to pivot heavily towards online following the pandemic, while also looking to extract themselves from untenable or unprofitable store leases. Major department store David Jones announced last week it would accelerate its plans to axe 20 per cent of its floor space by 2025.

But the difficult discussions with landlords will be just the first challenge facing these companies as they move to online, Ms Berchtold said, noting traditional retailers were "not exactly experts" when it comes to internet shopping.

Retail spending has taken a deep dive across the country with less shoppers spending their cash.

"How do they tell their shareholders that they're going to take a big provision to shut all of these stores down and shift into an online business that isn't their expertise and that's probably not as profitable?" she said.

"That's an interesting conversation they're going to need to have."

Robbie Cooke, the chief executive of listed payment group Tyro, is a glass half-full type of guy. And the data on the slow reopening of the Australian economy is only adding to his confidence in better times ahead.

Tyro, in an example of transparency for which it deserves much credit, has been releasing weekly data on the transactions going through its platform, which serves 32,000 mainly small and medium businesses around Australia concentrated on hospitality (about 45 per cent of Tyro’s activity), retail (35 per cent) and health (12 per cent).

What Cooke has seen is a gradual but unmistakable fightback in the Australian business community.

“We’re seeing this nice improvement as each week goes on and that’s very much coming through in the retail space,” Cooke says. “As more and more shops open up that will continue to come through.”

Optimism gets some momentum

It’s data like this, and similar measures of spending, mobility and activity from around the world, that is also starting to make investors pretty optimistic.

Another solid night on Wall Street overnight, where investors were buoyed by more glimmers of hope on COVID-19 vaccines and the further reopening of the US economy, means the S&P 500 now sits just 2.45 per cent below the level seen as the start of November 2019, the month when we now know the virus first emerged in China.

The gap in Australia is a little wider, with the ASX 200 down 13.3 per cent since the start of November. Nonetheless, optimism appears to be building here, as the picture of increasing economic activity painted by data such as that from Tyro becomes a bit clearer.

This was neatly demonstrated on Tuesday, when the ASX 200 climbed 2.9 per cent and officially emerged from a bear market (although Wednesday has seen some of those gains given up).

Two neat ways to think of the extraordinary change in investor psychology were provided overnight by quant legend Dan diBartolomeo, the founder of Northfield Information Services, who revels in solving tricky investor questions and is perhaps most famous for helping to finger Bernie Madoff.

DiBartolomeo has been watching the expected level of the annual volatility of the S&P 500 gyrate wildly over the past six months, from around 12 per cent in November 2019, to a peak of more than 60 per cent on March 13, and back to 40 per cent on April 15. The current level is around 26 per cent.

Using volatility and return expectations (and some maths well over Chanticleer’s head) Northfield has also been estimating US investors’ implied expectations about the length of the pandemic crisis.

In mid-March, as fears about the spread of COVID-19 surged, investors were expecting that the financial world wouldn’t get back to ‘new normal’ for about seven months, or around the middle of October.

By April, as governments and central banks turned the stimulus tap on full, the implied length of the crisis had fallen to five months, or a finish in mid-September.

But as of last night, the implied length of the crisis is now just 26 days, which Northfield says underscores the shift from pessimism.

“Investors are now acting in a way that says things will be back to whatever the new normal is, or at least not having financial markets disrupted, in late June,” diBartolomeo said.

Credit markets are looking better, too

He points out that the implied market expectations for a return to "normal" are much faster than the recovery predicted by health models such as that of the University of Washington, which see the medical emergency passing in August or September.

DiBartolomeo is also feeling increasingly optimistic about the outlook for credit markets given the recovery that has seen global equity markets come within 3 per cent of November levels; should worst come to worst, firms should have little problem raising equity to pay off interest and even principal.

“We don’t think that this is something that is going to have a material effect on credit-worthiness, other than a few industries where the effects of COVID-19 are being particularly felt.”

As a first step in that strategy, the South African parent company said it has found a buyer for David Jones' menswear store in Melbourne's Bourke Street, with the sale to be completed before the end of July and the final price in line with the property's estimated $500 million valuation.

UBS will also look at sale options for the David Jones' flagship stores in Bourke Street and in Elizabeth Street in Sydney.

Discussions are also underway with local landlords over an "accelerated restructure" of David Jones' store network and floor space, which will see the retailer close some stores and shut floors at some of its larger locations, Woolworths said.

The company has previously indicated plans to axe 20 per cent of floor space by 2025, a process which has now been expedited.

David Jones operates 48 stores across Australia, the majority of which have continued to trade throughout the pandemic even as main rival Myer shut all its locations. Despite trading through the crisis, sales at its department stores across March and April plunged 35.8 per cent.

Stablemate CRG saw a 50.4 per cent decline over the same period as all of its stores were shut.

Online sales across both companies have managed to only soften some of the blow, even though they have doubled since the start of the year for David Jones and grown 20 per cent for CRG.

The partnership may help revive the retail business, whose value has recently fallen by millions of dollars.

To help David Jones through the downturn, Woolworths Holdings will give the department store chain a $75 million lifeline, with an additional $25 million loan to be provided if needed, and seek to get Australian banks to suspend conditions on their loans.

The $75 million loan will not be used as cashflow for operations, The Age and The Sydney Morning Herald understand, but will act as an assurance for local lenders to provide covenant suspension. Woolworths expects it may come close to breaching some of the conditions attached to its loans throughout the second half of the year.

Newly-appointed Woolworths Holdings chief Roy Bagattini said Wednesday's trading update reflected the "tough and unprecedented" conditions hurting global retailers, and the changes were key to ensure the company's long-term growth.

"Notwithstanding the significant challenges we currently face as a business, we are well placed to respond rapidly and effectively to changing customer dynamics and capture the market opportunities that arise," he said.

Closures across the David Jones store network will come as a further blow to Australia's ailing retail sector, which saw sales plunge a record 17.9 per cent in April as social distancing measures forced shoppers to stay home.

On Friday, Wesfarmers announced it would shut or convert 167 of its Target discount department stores, with chief executive Rob Scott saying the rise of international competitors had made it increasingly difficult to operate a department store in Australia.

Scott Morrison’s plan to overhaul industrial relations and vocational education in Australia is welcome news to the ARA’s new CEO Paul Zahra, who says the current systems are outdated and holding retailers back.

“We live in a world where Australians can choose to shop 24/7. Retailers need to be able to operate flexibly to meet the demands of their customers. When they are constrained by outdated regulation and training, it negatively impacts Australians, retailers and their employees,” Zahra said in a media statement after the prime minister spoke to the National Press Club on Tuesday.

The address outlined two key points in Morrison’s so-called “JobMaker” program: industrial relations and vocational education.

The prime minister said the current industrial relations system is not fit-for-purpose, especially given the scale of the jobs challenge that Australia now faces as a nation.

“Our industrial relations system has settled into a complacency of unions seeking marginal benefits and employers closing down risks, often by simply not employing anyone,” Morrison said.

“The system has lost sight of its purpose – to get the workplace settings right, so the enterprise, the business can succeed, so everybody can fairly benefit from their efforts and their contributions.”

Zahra agreed that the current Retail Award is not working for businesses or their employees.

“The current Retail Award has us locked into a rigid and outdated system of inflexible hours.  where retailers are unable to honor the working needs and preferences of their teams,” he said.

Zahra said the ARA would like to see more allowance for flexibility and a more pragmatic and balanced approach on issues such as penalty rates and trading hours.

“The complexity of the current Award system is creating a substantial amount of the challenges that we are seeing. There are hundreds of rates of pay that can apply under the retail award, related to such areas as: the role the employee is performing, their tasks, their age and, most critically, the way they work their hours,” he said.

On the topic of job training, Morrison said vocational education should have more input from industries about the skills future workers really need and be more transparent and consistent across states.

“We need Australians better trained for the jobs businesses are looking to create,” he said.

Under his plan, there would also be greater consistency between the vocational education and training, and higher education sectors.

The National Skills Commission will provide detailed labour market analysis and other up-to-date data in a bid to identify emerging skills shortages.

Zahra said the ARA welcomes a renewed focus which links funding with the skills that businesses really need.

“COVID-19 has accelerated retail transformation as we are operating in a consumer landscape that is active 24/7 through online and social channels and with multiple paths to the delivery of products and services. As businesses adapt to this new reality, they need a workforce that is equipped and ready to address these new opportunities,” he said.

Morrison also rejected calls for government to play a major role in recovery over a longer period of time.

“At some point, you’ve got to get your economy out of ICU,” he said.

“You’ve got to get it off the medication before it becomes too accustomed to it.”

Made-to-measure suit brand InStitchu has expanded into womenswear with a new range of suits and separates for female customers.

The range was supposed to launch in mid-March but had to be delayed after the coronavirus pandemic forced the brand’s showrooms in Sydney, Melbourne, Brisbane, Perth, Canberra and Adelaide to close.

Now those showrooms are open for business again, and the brand is ready to introduce its custom suit offering to a whole new audience.

“It’s not a competitive landscape at all for made-to-measure suits for women, especially at our price point,” James Wakefield, InStitchu co-founder and managing director told Inside Retail.

That might explain why a growing number of women have been buying InStitchu suits over the years, despite the fact that the patterns are designed for male bodies.

Wakefield said the numbers really caught his attention about three years ago, and ever since, the business has been working to develop patterns for women’s blazers and pants, select new fabrics with stretch and adjust the fit algorithm in the back end.

“We’re really excited with the collection. It appeals to the female who wants to wear a corporate style suit to work, but also to the female who wants to wear a suit as a fashion item and mix and match a blazer with jeans on the weekend,” Wakefield said.

InStitchu plans to market the new range primarily through word of mouth, which is how most customers find out about the brand, according to internal data.

“That network effect has proven to be InStitchu’s catalyst for growth,” he said.

Wakefield believes the women’s range could easily account for 30 per cent of revenue going forward, but said he’d like to see it drive 50 per cent of the business or more.

“Our business is about giving customers what they want, even if our customer base changes over time,” he said.

London store launch postponed

Wakefield started InStitchu with friend Robin McGowan as an online-only business in 2012. Since then, the pair have opened 11 bricks-and-mortar showrooms across Australia and one in New York City.

They have also received a $3 million investment from Chinese suit manufacturer Dayang Group as part of a strategic partnership to grow the brand internationally and reduce the production time of its custom orders.

Last year, InStitchu opened a concession in David Jones’ Sydney flagship store, and recently, it moved into David Jones’ refurbished menswear floor on Elizabeth Street. Wakefield calls it his favourite showroom.

Like most retailers, however, the fast growing business has been hit hard by the coronavirus pandemic and social distancing restrictions.

On top of temporarily closing stores in Australia, InStitchu was forced to indefinitely postpone the opening of its first store in the UK in London’s renowned Covent Garden.

“We were due to launch on April 1, but now we’re treading water and not sure what date we’ll be opening,” Wakefield said.

InStitchu has also been affected by the widespread postponement of weddings, which typically make up 30 per cent of revenue. Even though it continued to trade online while stores were shut and offered fitting consultations by video, sales didn’t match pre-pandemic levels.

“A tailor-made suit isn’t the sort of purchase someone is buying when they’re in isolation at home,” Wakefield said.

But business is finally starting to return to normal.

Wakefield said InStitchu recently received a flurry of orders from couples ordering suits for rescheduled weddings, average delivery times out of China are down to five days and all showrooms are back open with intense new hygiene procedures in place.

This includes hand sanitising stations at the front of every store, which customers must use upon entering, as well as optional masks and gloves, and temperature checks for staff at the start of the shift.

“We’re appointment only by nature, so that gives us confidence we can track every person who comes into the store,” Wakefield said.

The retailer even managed to open its 11th showroom in Australia, on Queen Street in Woollahra, during the shutdown. The location was based on data about where its core Sydney customers live.