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Allbirds co-founder Tim Brown has brought his sustainable footwear brand to London, but is not stopping there

You may not have heard of the San Francisco-based footwear brand Allbirds or recognise its simple, unassuming shoes, but, having conquered the US, it is on a mission to change that.

The direct-to-consumer business launched just two years ago with one style of shoe and has been quickly, yet quietly, kick-starting a sustainable footwear revolution – one based on simplicity, comfort and sustainability.

In two years, it has sold more than one million pairs of shoes. It now counts a raft of famous names – including Barack Obama – as fans, and actor Leonardo DiCaprio is one of its investors.

Last month, it completed a $50m (£39m) round of series C venture capital funding. The company is thought be valued at $1.4bn (£1.09bn), although it will not disclose the actual amount.

Allbirds has now landed on UK shores with its first store outside of North America, which opened at 123 Long Acre in central London’s Covent Garden on 17 October.

“At Allbirds, we’re dedicated to making better things in a better way by using premium natural materials to create supremely comfortable and sustainable products,” co-founder Tim Brown tells Drapers. “We believe that you shouldn’t have to harm the environment to make a pair of shoes that look and feel great – or, really, anything else.”

As a former professional soccer player, Brown would regularly receive free footwear from sportswear companies. He noticed that most were “over-designed” and bore huge logos, garish colours and constantly changing details, driven by the demands of seasonal collections.

“I felt there was a real gap in the market for a shoe that was simple, used natural materials over synthetics, and actually prioritised comfort,” he says.

After representing his native New Zealand in the 2010 FIFA World Cup, Brown retired from sport to pursue Allbirds, then a “curiosity project”.

“I grew up in New Zealand, the land of 29 million sheep, so I’ve long been aware of wool’s incredible properties,” he explains. “It is moisture wicking, temperature regulating, and, most importantly, extremely soft. I wondered why it hadn’t really been used before in footwear, so I set out to try to develop a merino wool fabric that could stand up to the wear and tear shoes go through on a daily basis.”

The process was “extremely challenging” and took Brown and his Allbirds co-founder, engineer Joey Zwillinger, years of research and development. It resulted in a unique superfine merino wool fabric that is soft, itch free, durable and water resistant.

Allbirds took this and launched with one style of shoe. The Wool Runner is a simple, pared-back style for men and women. It retails at £95 and remains core to Allbirds’ offer.

“When people talk about innovation, the assumption is that it’s about adding new components or functionalities,” says Brown. “However, I believe it can be just as revolutionary to take things away. With our products, we focus on simple forms that allow our natural materials to shine, rather than crowding them with superfluous details.

“We launched with only one shoe, which is the complete antithesis of what a typical footwear company does. We’ve intentionally kept our product line limited, making sure that each new launch solves a specific comfort problem and meets our standards for sustainability and design.”

These new styles include a second fabric, called Tree, which is made from eucalyptus pulp and uses only 5% of the water and one-third of the land that traditional footwear materials require.

This summer, Allbirds added a third innovation, which focuses on outsoles: SweetFoam

Brown elaborates: “Though we had developed bio-based or recycled solutions for every other part of our shoes, finding a sustainable option for the outsoles was an enormous challenge. That’s why, three years ago, we convinced Braskem, a massive [petrochemical] company in Brazil, to take a chance on us and help us develop a green alternative to the petroleum-based EVA foam widely used in casual footwear. The result: the world’s first carbon-negative green EVA, which is the primary component in our SweetFoam soles.”

Not participating in a wholesale cycle means we have more control over our product development and pricing

Allbirds decided to open-source the technology so the wider footwear industry could utilise the innovation.

This focus on sustainability is core to the Allbirds business, says Brown: “Right from the start, Joey and I decided to treat sustainability as non-negotiable. This extends to every aspect of our business – from the materials we use, to the elimination of single-use products in our office, to how we decided to package our shoes [the brand uses 90% post-consumer recycled cardboard in its packaging].”

Allbirds is one of an emerging group of brands built around the direct-to-consumer model, and Brown says it does not intend to adopt wholesale.

“A direct-to-consumer business model gives us the opportunity to use premium materials and invest in sustainable practices while still keeping our products affordable,” he explains.

“Not participating in a wholesale cycle means we have more control over our product development and pricing, while also building a direct relationship with our customers. We’ll continue to pursue a sales strategy that allows for the best customer experience and pricing structure. That doesn’t currently involve widespread wholesale distribution.”

Having initially launched online, Allbirds opened its first store in San Francisco in March 2017, joined by a second permanent store in New York in September 2018. A pop-up store in Toronto that opened in May has now closed.

This omnichannel approach is now an important part of the business’s future growth plans, says Brown: “Over the past year, we’ve been able to provide our customers with a unique store experience, and have seen the advantage to having a physical retail space for ourselves. As a brand that’s focused on comfort, seeing the reaction to that initial try-on moment helped us understand how important it was to get our products and materials into the hands of curious shoppers.”

And Brown plans to get his brand in front of many more customers: “We’ll be continuing to invest in retail and global expansion, with the goal to bring sustainability to more closets around the world.”

The ability to pack well for a holiday is an enviable skill that still remains frustratingly elusive to most. Fashion designer Sarah-Jane Clarke discovered this when she was globetrotting after selling her label Sass & Bide; but crucially she also realised that the right clothes to pack were just as elusive.

“I spent a lot of time exploring the world and I wanted to arrive in my destination looking stylish but it had to be comfortable and versatile and travel well,” Clarke tells WISH over a coffee at Camp Cove beach in Sydney. “I found a gap in the market for luxurious easy-to-wear pieces that were made from natural fibres. So I decided to create a collection that I would want to take on holidays with me.”

It has been four years since Clarke and her business partner and best friend Heidi Middleton sold Sass & Bide to Myer for $72.5 million. The pair, who started their business selling low-cut jeans at London’s Portobello markets in the late 1990s, sold the iconic brand in two tranches: the first for $42m in 2011 and the remaining stake in 2014 when they departed the company. It was an extraordinary 15 years for the pair, whose clothes were worn by Sarah Jessica Parker, Elle Macpherson and Kate Moss, and who showed at fashion weeks in New York, London and Sydney. Sass & Bide became a household name in Australia and had huge international appeal.

Middleton and Clarke also managed to fit in having families during that 15 years, with Clarke having three boys and Middleton two girls. What eventually drew Clarke back to the world of fashion was her experience of needing a wardrobe to travel with and a desire to return to design.

“While having my sabbatical, I really felt I wanted to reconnect with like-minded people again,” she says. “I like the idea of creating. I think once you create, it is such a magical feeling, when you are creating something beautiful, that you want to do it again and again. But I really wanted to do it differently to what we were doing at Sass & Bide. This is a much gentler approach to fashion and is tightly curated. I am not doing four seasons [like at Sass & Bide], I will do two seasons a year.”

Clarke’s first collection for her new eponymous label includes 15 pieces that feature high-quality fabrics, are crafted in Australia, and can take you from beach to dinner. “There are lots of soft, flowing dresses, which you can then wear with different belts with so you can create different looks with one dress. And all the pieces are just made to throw in the suitcase,” she tells WISH. “Linen looks beautiful crushed. They are pieces that last for a lifetime and they are not seasonal.”

Clarke sourced linen from small family-run mills in Italy and worked with Australian makers in Sydney to create her garments. She believes that women who buy her clothes will consider them investment pieces that will last a lifetime, as opposed to the current fast-fashion model where pieces are often thrown away after one season. “It also encourages thoughtful consumerism, which is really important to me,” she says. “I think we have been given too much choice and women are looking for a more curated collection.”

The 43-year-old has been “quietly” working on the label for over a year. As well as a collection of clothing, it will include vintage finds by Clarke or candles, scents and ceramics she picks up on her travels. Her aim is to be stocked at “beautiful seaside boutiques and luxury hotel stores” all over the world as well as being available online. Her first collection is inspired by a recent visit to Morocco, in particular to Marrakech, Essaouira and Berber Lodge on the way to the Atlas Mountains.

“I just fell in love with Morocco; the smells, the noises, the festivals, the sensory overload,” Clarke says. “I love places where there are artisans and people working with their hands and Morocco is full of artisans. A lot of the pieces are inspired by the trip there, especially the sun-bleached colours that I use throughout the collection.

“When I am designing I do think of places and what I want to wear in that place,” she says. “And I have noticed a big trend now that women now shop a lot more before they head off on their travels because they want to have their outfits ready when they land.”

And there is also the added attraction of having a legitimate reason to do more travel for her new foray in fashion, whether it be for research, for inspiration or even to meet with fabric makers in Italy to India.

“I really want it to work for me, this business,” Clarke says laughing. “It is just celebrating freedom, this brand, and that anything is possible. For me, freedom is travel, freedom is exploring other cultures and other places and just being inspired by what you see.”

Myer has appointed Tourism Australia’s general manager of global media, PR and social, Geoff Ikin, as its chief customer officer.

Ikin's appointment comes one month after the retailer made its marketing and customer executive general manager Louise Pearson redundant.

The new chief customer role will bring together Myer’s customer facing functions including online, marketing and advertising.

“Geoff brings considerable skills, knowledge and expertise to this new role and is committed to putting customers first through all of Myer’s customer facing channels.

“Geoff’s career has been all about the customer. Through this new structure, he will ensure that we continue to build and grow our multi-channel offering including our MYER one loyalty program as well as delivering the best possible marketing and advertising to promote our brands and offers to our customers,” John King, CEO of Myer, said in a statement.

Prior to his three year stint at Tourism Australia, Ikin was Westpac’s head of mass media, advertising and agency management for three years.

He has also worked with rival department store David Jones as its marketing and program manager for six years.

At the start of the month Myer brought back its 'My STore' brand positioning and campaign after it shifted away from the tagline four years ago.

Myer’s agency roster currently consists of Clemenger BBDO and Ikon.

Washington | The US economy slowed less than expected in the third quarter as a tariff-related drop in soybean exports was partially offset by the strongest consumer spending in nearly four years, keeping it on track to hit the Trump administration's 3 per cent growth target this year.

Gross domestic product increased at a 3.5 per cent annualised rate also supported by a surge in inventory investment and solid government spending, the Commerce Department said in its first estimate of third-quarter GDP growth. While that was a slowdown from a 4.2 per cent pace in the second quarter, it still exceeded the economy's growth potential, which economists put at 2 per cent.

Compared to the third quarter of 2017, the economy grew 3.0 per cent, the best performance since the second quarter of 2015.

But business spending stalled and residential investment declined for a third straight quarter, potential red flags to the economic expansion that is now in its ninth year and the second longest on record.

Economists polled by Reuters had forecast GDP expanding at a 3.3 per cent pace in the third quarter.

The economy is underpinned by a $US1.5 trillion tax cut and increased government spending. The fiscal stimulus is part of measures adopted by President Donald Trump's administration to boost annual growth to 3 per cent on a sustainable basis.

Yet the government is also locked in a bitter trade war with China as well as trade disputes with other trade partners and the last quarter's slowdown mostly reflected the impact of Beijing's retaliatory tariffs on US exports, including soybeans.

Farmers front-loaded shipments to China before the tariffs took effect in early July, boosting second-quarter growth. Since then, soybean exports have declined every month, increasing the trade deficit. There were also decreases in exports of petroleum and nonautomotive capital goods. Strong domestic demand, however, sucked in imports of consumer goods and motor vehicles.

The widening trade gap chopped off 1.78 percentage points from GDP growth in the third quarter. That was the most since the second quarter of 1985 and reversed the 1.22 percentage point contribution in the April-June period.

Some of the rebound in imports reflected a rush by businesses to stockpile before US import duties, mostly on Chinese goods, came into effect late in the quarter. Imports are a drag on GDP growth. But some of the imports likely ended up in warehouses, adding to the stockpile of inventory, which adds to GDP.

Inventories increased at a $US76.3 billion rate after declining at a $US36.8 billion pace in the second quarter. As a result, inventory investment added 2.07 percentage points to GDP growth, the biggest contribution since the first quarter of 2015, after slicing off 1.1 percentage points from output in the second quarter.

Excluding the effects of trade and inventories, GDP grew at a 3.1 per cent rate in the third quarter compared to a 4.0 per cent pace in April-June.

The dollar rose to a session high against a basket of currencies on the data while US Treasury prices fell.

Solid third-quarter growth is expected to keep the Federal Reserve on course to raise interest rates again in December, despite a recent tightening in financial market conditions brought about by a stock market sell-off and a rise in US Treasury yields.

The Fed raised rates in September for the third time this year and removed a reference to monetary policy remaining "accommodative" from its policy statement.

The GDP report showed the Fed's preferred inflation gauge, the personal consumption expenditures (PCE) price index excluding food and energy, increased at 1.6 per cent rate in the third quarter. The core PCE price index rose at a 2.1 per cent pace in the April-June period.

Growth in consumer spending, which accounts for more than two-thirds of US economic activity, increased at a 4.0 per cent rate in the third quarter. That was the fastest pace since the fourth quarter of 2014 and followed a 3.8 per cent pace of increase in the second quarter.

Consumption is being supported in part by a tightening labour market, characterised by an unemployment rate that is at a near 49-year low of 3.7 per cent.

But headwinds for the economy are growing. Business spending on equipment increased at a 0.4 per cent rate, the slowest in two years, after rising at a 4.6 per cent pace in the second quarter. Businesses are struggling to find workers and the import tariffs are increasing manufacturing costs for companies, such as Caterpillar, 3M and Ford Motor.

Higher interest rates are pressuring the housing market, which contracted at its steepest pace in more than a year in the third quarter.

Tech and electronics retailer JB Hi-Fi has narrowly avoided a first strike form shareholders despite appearing to buck a discretionary spending downturn, though its 2016 acquisition of The Good Guys continues to weigh.

More than 21 per cent of shareholders at the company’s annual general meeting in Melbourne on Thursday voted against adopting its 2018 pay structure, just under the 25 per cent needed to cause a first strike and place more pressure on the board.

Chief executive Richard Murray had earlier reaffirmed JB Hi-Fi Group’s $7.1 billion sales guidance for the coming year, which is up from $6.9 billion in 2018, despite a competitive retail scene that has been further disrupted by new online players.

Consumer discretionary stocks have been sliding since late-August.

The Good Guys, meanwhile, has continued to struggle with its home appliances competitors with a total first-quarter sales growth of 2.3 per cent, and comparable sales growth of just one per cent.

In comparison, total first-quarter sales growth for JB Hi-Fi Australia was 5.3 per cent, with comparable sales growth of 3.4, while JB Hi-Fi New Zealand grew four per cent, with comparable sales growth of 9.8 per cent.

JB Hi-Fi acquired the Good Guys in November 2016 for $870 million.

The Group had 311 stores in Australia and New Zealand at June 30, with eight new JB Hi-Fi Australia stores and two The Good Guys stores opened in FY18.

JB Hi-Fi shares were buying $23.12 at 1555 AEDT after fluctuating throughout the day’s trade between a morning high of $23.93 and a lunchtime low of $22.53.

The world's 100 largest luxury goods companies generated sales of $US217 billion ($306 billion) in the 2017 financial year, according to Deloitte's annual Global Powers of Luxury Goods report. Almost 60 of the top 100 increased their sales year-on-year, with 22 reporting double-digit growth.

Drilling down, the Australian luxury goods market is expected to grow by a healthy 6 to 8 per cent each year until 2024. However, the sector's growth appears to have peaked at 16 per cent in 2016.

Deloitte's national retail leader, David White, signalled continued "significant growth" in online sales, while also pointing to "the rise of the flagship store" as a key trend.

"Australia can expect to see the arrival of further international luxury brands," says White. "Those already in market will continue to expand their store footprints."

David White, Deloitte’s national retail leader, says that international luxury brands are targeting the Australian market.
David White, Deloitte’s national retail leader, says that international luxury brands are targeting the Australian market. Louie Douvis
Given Chinese tourists make up about 30 per cent of our luxury consumers, retailers have responded by opening stores in peak tourist areas in Sydney and Melbourne, as well as on the Gold Coast and around Brisbane's CBD.

Meanwhile, as China's economy continues to rebalance, CommSec Research finds "consumer confidence is around its best level in 20 years", supported by the second-best spending on jewellery in three years. Gold, silver and jewellery sales in China rose by 14.1 per cent in the year to August, up from 8.2 per cent in July.

Thus little surprise that American luxury house Tiffany & Co reported sales surging by 28 per cent in Greater China over the June fiscal year.

Superyacht sales
Turning to one of the ultimate tests of the discretionary spend, superyacht brokerage recorded its strongest performance in a decade in 2017 with just shy of 430 sales, according to Boat International.

Superyacht sales had their strongest performance in a decade, partially due to the "Trump effect" of low taxes.

At the annual La Belle Classe Superyachts symposium, held this year at Yacht Club de Monaco, many spoke of the continued "Trump effect" of stimulating sales by removing taxes.

At the same time, it was noted the rise in the world's number of millionaires has had no impact on boat orders. Olivier Blanchet, yachting and aviation specialist banker at BNP Paribas, painted the picture, saying only 3 per cent of the world's high-net-worth individuals owned superyachts.

"Our priority is to find out why 97 per cent of these people do not own a yacht," he stated.

The answer could lie in the adage that boat stands for "break out another thousand".

Last holiday season, retailers subverted the narrative of a “retail apocalypse,” racking up $692 billion in US sales and posting a year-over-year increase of 5.5 percent — the biggest jump in nearly a decade.

Now, as department stores are starting to put up Christmas decorations, retailers and analysts are predicting another stellar performance. The National Retail Federation forecasts holiday sales growth this year to be between 4.3 percent and 4.8 percent, while Bain has a similar range of 4.8 percent to 5.2 percent. In the US, a strong labour market and sky-high consumer confidence are expected to boost spending during the all-important two-month stretch, where retailers do about a fifth of their annual sales.

A Deloitte survey found consumers expect to spend 20 percent more on presents this year. Clothes are likely to be a popular gift, as women update their wardrobes to reflect a wide-legged, more conservative silhouette.

“Our forecast accommodates the fact that we have to lapse a high hurdle from last year,” said Jack Kleinhenz, chief economist at NRF. “But rarely do we see as many gauges so strong, whether it’s in consumer confidence, business spending and a somewhat volatile but still elevated stock market, that give us a sense of optimism.”

But competition for those dollars is stiffer than ever, with retailers fighting to offer the most convenient shipping for online orders and enhancing their in-store pickup options. Costs are also rising, from tariffs on Chinese-made leather goods to soaring wages for warehouse and store workers.

Here’s how retailers are preparing to make the most of what’s expected to be a strong holiday season.

Rising Costs, But Not Rising Prices

Chinese-made handbags, belts and other leather goods were among the items hit with a 10 percent tariff in the US last month. Retailers from Walmart to Gap Inc. have indicated that price increases are possible down the road, though most companies are likely to wait until after the holidays.

If a competitor is offering 20 percent off, you can easily compete by hosting an in-store event or offering free shipping as long as you market it online.
Growing labour costs is another headwind. The US unemployment rate stood at 3.7 percent in September, the lowest in 49 years. Big retailers like Walmart and Amazon raised their minimum hourly wage this year, pressuring the rest of the industry to follow suit. Labour costs tend to spike around the holidays when retailers need hundreds of thousands of temporary workers in warehouses and stores. Those costs will eventually be passed along to consumers.

Retailers are trying to offset costs, nonetheless, by investing in automation and tightening control over inventories because doing so would allow for reduced discounting, which hurts margin, just like heightened labour costs and tariffs.

Some stores are designing in-store attractions to draw customers, rather than relying on promotions, said Evan Bakker, a senior associate at Gartner L2. Net-a-Porter and its sister retailer Yoox are using exclusive capsule collections with brands such as Montblanc and Fornasetti to entice consumers to their websites.

“If a competitor is offering 20 percent off, you can easily compete by hosting an in-store event or offering free shipping as long as you market it online,” he said. “Retailers can often take for granted the holiday traffic and get stuck in the old-school mindset of ‘if you build it they will come to you,’ but that’s not always the case.”

Raising the Bar With E-Commerce

With the majority of shoppers already planning to shop online for the holidays, amenities like free shipping are table stakes. Target, for instance, is starting in November offering free two-day shipping on any order without a minimum purchase, and Walmart is expanding free shipping to third-party merchants on its website, with a minimum order of $35.

But with shipping costs on the rise, retailers are encouraging customers to pick up online orders in store. This will be Old Navy’s first holiday season offering in-store pickup, which launched in July for the brand. It has also deployed mobile checkout and price checkers in stores, said Blair Dunn, SVP and general manager of Old Navy online.

Only a little over half of brands that Gartner L2 tracked last year offered in-store pickup for online orders, with beauty and activewear lagging behind big-box retailers, said Bakker.

In-store pickup was popular with Bloomingdale’s shoppers after it was introduced last year, and this season will feature faster turnaround times, said Erica Russo, the department store’s VP of fashion direction. Some items are available for same-day pickup.

“It speaks to a new way people shop,” she said.

Stores are making a comeback ... if you think about the overall share of holiday sales, it’ll still be predominantly in stores.
Brick-and-Mortar Makes a Comeback

The focus in past holiday seasons was on boosting online sales. But after store traffic unexpectedly rose in 2017, many retailers are redoubling efforts to draw customers to stores. Last year, digital sales grew 14.6 percent, about the same pace as in 2016, according to Gartner L2 data. Sales in stores rose 4 percent, double the rate from the previous year, the report shows.

“Stores are making a comeback ... if you think about the overall share of holiday sales, it’ll still be predominantly in stores,” said Bakker.

For Bloomingdale’s, season programming is as important as ever. This year, events include designer appearances, cooking demos, book signings and a personalisation event that would allow shoppers to add monograms onto denim or leather garments, as well as home goods.

Setting up “instagrammable” tableaus is a new push, Russo said, and holiday themes make for the perfect fodder. At its 59th Street location in Manhattan, for instance, the store will feature a life-sized gingerbread house, ideal for social media.

Many online brands are opening temporary physical outposts to take advantage of a season when customers are more willing to shop in stores. The Outnet, owned by the Yoox Net-a-Porter Group, will host exclusive customer cocktail events in London and New York.

Fashion in the Spotlight

This year’s fashion boom will extend into the holidays and beyond. Part of why retail sales have been so strong is that the fashion cycle is renewing itself, prompting mass consumers to update their wardrobes to fit a brand new silhouette. While labels on the luxury end have been enjoying the tides for a while now, mid-tier retailers are finally catching up.

We’re feeling optimism come back with fashion in general.
“Women’s apparel will be huge this year, especially for women in their 30s and 40s. This is the first time they’ve had new clothes in years because looser proportions are now in favour — instead of the plunging v-necks and crop tops of the past five years,” said Rebecca Duval, a retail analyst at BlueFin Research Partners.

Streetwear will be popular category headed into the holidays. Virgil Abloh’s Off-White was the “hottest brand” in the third quarter, according to Lyst, and Nike’s 2018 England Football Shirt and M2k Tekno Sneakers were among the top 10 most popular product in menswear.

“We’re feeling optimism come back with fashion in general,” said Jonny Ng, director marketing strategy and campaigns at Zalando, “[especially] with a little bit of nostalgia,” a big trend that’s driving the new fashion cycle.

Bloomingdale’s store-in-a-store concept, Carousel, will have a new theme next season: “Past Made Present,” in partnership with Kodak. ASOS design director for menswear and womenswear Vanessa Spence anticipates that 70s-inspired garb will be a “huge trend.”

“It’ll be this kind of glam, over-the-top, embellished look… with flared silhouettes. We were very inspired by the Freddie Mercury film that’s coming out,” she said.

Amazon reported sales that missed analysts’ estimates, and issued a disappointing revenue forecast for the busy holiday quarter, suggesting the online marketplace may be reaching a saturation point in the US.

Revenue gained 29 percent to $56.6 billion in the third quarter, the e-commerce giant said Thursday in a statement. Analysts’ projected $57.1 billion. Sales will be from $66.5 billion to $72.5 billion in the current period, falling short of analysts’ average estimate of $73.8 billion. Shares declined as much as 6.5 percent in extended trading.

US shoppers are projected to increase their online spending by as much as 22 percent this holiday season, according to Deloitte Insights. Amazon is poised to benefit from that shift, capturing almost half of all US online sales, according to EMarketer Inc. While Amazon has dominated e-commerce in the US, it faces stepped-up competition from rivals like Walmart.

The company showed slowing revenue growth in all categories quarter over quarter, including online sales and subscription sales, Amazon Web Services sales and its fast-growing advertising business. Amazon has relied on the growth of its Prime members, estimated at about 97 million in the U.S., who pay fees in exchange for shipping discounts, video streaming and other services.

Amazon’s stock had gained about 50 percent this year, as investors bet on the Seattle-based company’s continued dominance and its expansion into new areas. The shares have dropped about 15 percent from their September high amid a broader market downturn and closed at $1,782.17 before the results were released.

Amazon also is investing in physical stores and the pharmacy business. It purchased online pharmacy PillPack in June, which followed its $13.7 billion acquisition of Whole Foods last year to jump start its grocery business. It has opened cashier-less AmazonGo stores — which sell pre-made sandwiches, salads and grocery items — in San Francisco and Chicago. The company’s fast-growing cloud computing and advertising units, which are more profitable than its main e-commerce business, help fuel Amazon’s investments in more retail categories, video content and devices such as tablets and Echo smart speakers.

Amazon Chief Executive Officer Jeff Bezos spends heavily to keep ahead, building new warehouses and data centres around the world, inventing new devices and trying to re-imagine the convenience store experience. Investors can get skittish when signs suggest the company is ramping up expenses without regard to maintaining a profitable business.

Parcel delivery capacity issues and a tight labour market could prevent Amazon from meeting demand. Amazon plans to hire 100,000 seasonal workers this year and pledged to pay all of its warehouse workers at least $15 an hour, which could help it secure the extra staff it needs during peak season. The company also launched a new program to help people buy vans and start their own businesses making Amazon deliveries.

Amazon reported net income of $2.88 billion, or $5.75 a share in the third quarter, from $256 million, or 52 cents, a year earlier. Analysts estimated profit of $3.11 a share.

PAS Group chief executive Eric Morris has announced he will retire after 13 years at the helm of the retail company and transition into a non-executive director role in 2019.

Morris will be succeeded by PAS Group chief commercial officer Paul Burdekin in July.

“It has been a privilege to have built and helped steward PAS from its single brand roots over 13 years ago through the integration of nine acquisitions, the company’s 2014 public listing, and meaningful investment in growth across both our retail footprint as well as in new brands and digital transformation,” Morris said during an address to shareholders during PAS Group’s 2018 AGM.

“This is the right time for me to move on, and welcome Paul as my future successor.”

Burdekin has a background in branded apparel and accessories, a space that, he noted, loves and has been successful in.

“Looking outward, we see a world that is ever more digitally connected,” Burdekin said.

“Fashion cycles are fast, trends are moving faster, and distribution channels are shifting as online continues to expand. All of this is being driven by the customer.

“Developing, building and harnessing that consumer connection across all channels and mediums is something I am passionate about, and something I am excited to work with the PAS team on.”

Morris said the business continues to be affected by the macroeconomic and competitive pressures that all retailers face, and PAS Group would continue to focus on store profitability – with 20 stores currently slated for closure due to being unprofitable.

A focus on accelerating digital transformation across the business’s portfolio is noted as a key opportunity for FY19.

PAS Group chief executive Eric Morris has announced he will retire after 13 years at the helm of the retail company and transition into a non-executive director role in 2019.

Morris will be succeeded by PAS Group chief commercial officer Paul Burdekin in July.

“It has been a privilege to have built and helped steward PAS from its single brand roots over 13 years ago through the integration of nine acquisitions, the company’s 2014 public listing, and meaningful investment in growth across both our retail footprint as well as in new brands and digital transformation,” Morris said during an address to shareholders during PAS Group’s 2018 AGM.

“This is the right time for me to move on, and welcome Paul as my future successor.”

Burdekin has a background in branded apparel and accessories, a space that, he noted, loves and has been successful in.

“Looking outward, we see a world that is ever more digitally connected,” Burdekin said.

“Fashion cycles are fast, trends are moving faster, and distribution channels are shifting as online continues to expand. All of this is being driven by the customer.

“Developing, building and harnessing that consumer connection across all channels and mediums is something I am passionate about, and something I am excited to work with the PAS team on.”

Morris said the business continues to be affected by the macroeconomic and competitive pressures that all retailers face, and PAS Group would continue to focus on store profitability – with 20 stores currently slated for closure due to being unprofitable.

A focus on accelerating digital transformation across the business’s portfolio is noted as a key opportunity for FY19.

Global footwear business Skechers saw record sales of $1.17 billion in the third quarter ended September 30, 2018, a 7.5 per cent increase, with more than half of total sales, 55.5 per cent, coming from international wholesale and retail sales.

“Achieving record third quarter sales is a notable accomplishment given the strength of our third quarter 2017 sales,” Skechers chief executive Robert Greenberg said.

“Both our domestic and international businesses grew, and we remained a leader in walking, work, casual lifestyle and sandals footwear in the United States.”

Greenberg said there is a significant opportunity to further grow the brand through wholesale, company-owned and third-party retail channels, as it invests in its international infrastructure.

“We are looking forward to fourth quarter growth across both our domestic and international channels and a new annual sales record,” Greenberg said.

Despite the increased sales, the business saw a 1.7 per cent decrease in net earnings for the quarter due to a recently enacted tax reform legislation, pushing the applicable income tax rate to 13.7 per cent compared to 9.4 per cent for the same period in 2017.

Accent Group, the Australian distributor of Skechers, saw a decrease in the brand’s wholesale sales in FY18 compared to the previous period. It expects to continue to see moderate declines in wholesale sales moving forward, as it executes its strategy to grow the Skechers store network.

Accent Group currently operates 81 Skechers stores across Australia and New Zealand.

Discount retailer The Reject Shop has blamed stagnant wage growth and rising household costs for an alarming drop in sales that will decimate December-half profits.

Reject Shop shares plunged as much as 40 per cent on Wednesday to 12-month lows after the discount variety retailer slashed December-half net profit guidance from $17.7 million to between $10 million and $11 million.

Chief executive Ross Sudano said despite strong marketing and merchandising and in-store execution, same-store sales had deteriorated markedly during September and October, falling 3.9 per cent in the last eight weeks and dragging same-store sales for the year to date down 2.4 per cent.

Mr Sudano's previous guidance was based on a return to modest positive same-store sales growth in the first-half, when Reject Shop makes all its annual profit. The retailer's net profit rose 34 per cent to $16.6 million last year.

Reject Shop shares plunged $1.97 to a low of $2.50 before regaining some ground to close at $2.73. The shares have fallen more than 48 per cent this calendar year.

Mr Sudano blamed "the extremely weak retail environment", stagnant wages, rising household expenses and deep discounting by Woolworths and Coles for the fall in sales.

"We are doing everything within our power to manage the business for profitable growth through this extremely challenging consumer environment," he said.

"The continuing absence of real wage growth and increases in the cost of many basic expenses (including mortgage rates) ensures that competition for the discretionary spend of consumers remains high.

"In addition, we have seen increased investment in promotional pricing across many retailers, particularly in the fast-moving consumable goods (FMCG) space, resulting in additional investment in our FMCG pricing to ensure our value proposition is not damaged."

Early festive trade 'positive'
Reject Shop has been losing market share to larger discounters such as Wesfarmers' Kmart, Woolworths Big W and online retailers.

Nevertheless, the downgrade augers poorly for crucial pre-Christmas trading at other discretionary retailers if conditions do not improve.

Mr Sudano said Reject Shop had a strong seasonal program and many tactical activities in place to drive sales.

"Christmas plans are built on the successes from last year and the early trade of the Christmas merchandise has been positive," he said.

Chairman Bill Stevens told the annual meeting that despite the challenging environment and competition from new players, Reject Shop was pressing ahead with plans to lift store numbers from 358 to 400 to better leverage the group's infrastructure, including a new direct sourcing office in Hong Kong and a new distribution centre in Melbourne.

Sears Holdings is preparing to file for chapter 11 protection, a reckoning that would crystallise years of losses at the once iconic company.

Sears over the weekend reached a deal with lenders that would allow the troubled retailer to keep hundreds of its stores open through the holidays, according people familiar with the matter. That setup was expected today to be part of the filing.

The longer-term question is whether a smaller Sears ultimately emerges from chapter 11 protection or whether a bankruptcy case eventually leads to a liquidation or a sale and a final end to the storied department-store chain.

As part of the deal, Sears is expected to close at least 150 stores immediately after seeking bankruptcy protection, the people said. Meanwhile, an additional 250 stores will be under evaluation.

Currently, the company operates roughly 700 Sears and Kmart stores, according to one of the people.

Edward Lampert, chief executive officer of Sears, who has controlled the company through his hedge fund ESL Investments, believes the company can reorganise around roughly 300 of the most profitable stores, the person said, adding that it is possible even those stores will eventually be sold.

The plan that Sears and its lenders scratched out over the past week isn’t unfamiliar. Dozens of retailers have sought chapter 11 protection in recent years, because of the consumer shift to online shopping, expensive store leases and heavy debt burdens.

Retailers such as Claire’s Stores, Bon-Ton Stores, Payless ShoeSource, and Gymboree have all sought chapter 11 protection with early plans to close stores. Gymboree and Payless emerged from bankruptcy protection still operating, with a smaller footprint.

Others haven’t been as fortunate. Toys “R” Us and Bon-Ton Stores each sought chapter 11 protection with the hope of surviving. Bon-Ton, which operated more than 250 stores under banners including Carson’s, Bergner’s and Elder-Beerman, looked for an owner or investor that would keep the chain alive, but fell short and was sold to a small group of bondholders and pair of liquidators that closed the entire chain.

Toys “R” Us sought chapter 11 protection last September, and although it didn’t have a reorganisation plan or prospect to sell the chain, its management still hoped to survive the filing. Following a disastrous holiday season, though, it was ultimately decided to liquidate the more than 800 big-box toy stores in the US, and sell or liquidate its international businesses.

Sears’s lawyers and advisers were poised to file a so-called voluntary petition under chapter 11 today (AEDT) in the US Bankruptcy Court in White Plains, New York, said people familiar with the matter, formally beginning the restructuring process under court supervision. A late-night (local time) filing would likely put the company’s lawyers in front of a bankruptcy judge tonight (AEDT) at the earliest.

When a company seeks bankruptcy protection, it must receive a judge’s approval to cut any checks or make most decisions regarding its path forward, including paying its employees, its utility bills and other standard operations procedures. In addition, the company likely will seek immediate approval to begin using a bankruptcy loan, which will be used to make these payments and keep some stores operating.

Sears employs about 70,000 people, one of the people said.

The deal is expected to be presented to the judge following days of marathon negotiations between the pioneering American retailer and its bank lenders, Bank of America, Wells Fargo & Co, and Citigroup Inc. The banks are leading the provision of a so-called debtor-in-possession loan of between roughly $US500 million and $US600 million, which would be used to keep some of its stores open for the foreseeable future, according to people familiar with the situation.

The negotiations took place at the Manhattan offices of Sears’s law firm, Weil, Gotshal & Manges, according to a person familiar with the matter. Dozens of lawyers, advisers and bankers were present throughout the course of the negotiations that began Wednesday evening and stretched into the weekend.

The Wall Street Journal first reported last Tuesday that the 125-year-old chain hired M-III Partners, a boutique advisory firm, to prepare a bankruptcy filing.

The banks are the principal lenders on a $US1.5 billion asset-backed credit line, secured by store inventory as well as credit-card and pharmacy receivables. Much of that credit line has been drawn down, leaving the retailer desperate for cash as the holidays approached and a Monday loan repayment deadline loomed.

While Sears’s lawyers and advisers scrambled to reach an agreement with the banks in the past week, the retailer rebuffed offers of a lifeline from other investors earlier this year, according to people familiar with the matter.

Investors who owned the term loans backed by the same collateral as the banks made approaches as early as last year to discuss a potential debt restructuring or refinancing that would buy Sears more time, people familiar with the matter said. The company consistently said through its legal advisers there was “nothing to discuss,” according to one person involved in the talks.

The term-loan lenders were gradually paid off this year, receiving $US95 million in August alone, according to filings with the Securities and Exchange Commission. The repayments puzzled lenders, given the company’s looming debt obligations, scarce liquidity and negative cash flow, the person said.

Sears’s assets, including the Kenmore appliance brand and the Sears Auto Centers, could also be a part of bankruptcy-run sale, one person said.

One potential bidder could be Mr Lampert, the person said. The CEO who has controlled Sears for more than a decade has repeatedly bailed out the retailer with short-term loans, but baulked at providing another lifeline ahead of tonight”s (AEDT) deadline for Sears to repay $134 million in loans.

Mr Lampert, also the largest shareholder and biggest creditor, previously offered to buy Kenmore for $US400 million in August, but the deal never received the blessing of a special committee of Sears’s independent directors.

Jeweller Michael Hill International has suffered a collapse in its share price after plunging revenues in the last quarter raised concerns about its shift in strategy away from discount-based pricing.

Group revenue fell by 8.8 per cent to $122.9 million for the three months to September 30 with same store sales declining by 11 per cent in the same period.

Michael Hill shares fell by as much as 27 per cent and were down 24.7 per cent or 23c to 68c at 1.30pm (AEDT). The company’s shares have now lost 43 per cent of their value so far this year and are down nearly 60 per cent over the last two years.

Former deputy Myer chief executive Daniel Bracken will take over the top role at the ASX-listed chain on November 15 after the resignation last month of its current CEO Phil Taylor over health issues.

While reducing its reliance on discounting enabled a modest lift in its gross margin to 64.6 per cent in the three-month period from 63.1 per cent the prior year, the retailer (MHJ) conceded its strategy has encountered teething problems.

Its network of 169 Australian outlets saw same store sales drop 12.8 per cent to $71.6m with a 7.6 per cent fall from its 53-strong New Zealand network to NZ$25.3m ($23.1m). The company’s 84 Canadian stores saw sales drop by 11 per cent to C$24.4 ($26.3m).

The strategy shift “was not adequately supported by sufficient levels of marketing and promotional activities to drive top-line sales”, Mr Taylor said.

Michael Hill remains confident its bid to improve gross margin and reduce the level of discounting is the right strategy and will result in a brand and product “more valued” by its customers.

“While the transition is proving more challenging than expected we remain committed to the strategy and have taken many learnings from the first quarter which we are confident will drive performance in the critical December quarter,” Mr Taylor added.

The jeweller delivered a sharply lower full-year net profit in August, hit by one-off costs in relation to closures in its loss-making Emma & Roe and US businesses, which amounted to $25.5m.

Michael Hill booked an 85.9 per cent fall in net profit after tax to $4.6m, from $32.6m in the previous year. That was 18 per cent above consensus estimates.

Myer boss John King will this week reinstate the department store’s famous “My Store” marketing tagline that was dumped four years ago.

Recently returned from New York and London where he met fashion brand owners to secure new brands, Mr King has unleashed a furious pace of activity.

He has wasted no time since his appointment four months ago in unpicking his predecessors’ legacy, from sacking senior executives to closing clearance floors.

Central to Mr King’s strategy is to drag Myer back to the middle ground in terms of its fashion offer and reposition the company to better cater to the mass market, differentiating it from upmarket chain David Jones while delivering a premium offer to discount department stores such as Kmart, Target and Big W.

Having ended Myer’s 12-year relationship with store ambassador Jennifer Hawkins, Mr King has unveiled his next marketing plan, which will see the return of the My Store campaign, which included the airing of new television commercials last night.

High-profile models and celebrities strutting the catwalk or gliding through Myer stores are gone from TV ads, with everyday women the new stars.

The My Store marketing was replaced by then Myer chief executive Bernie Brookes in 2014 with “Find Wonderful”, which he said better reflected the ­aspirations and desires of Myer customers.

At the time the new slogan was the first shake-up of Myer’s marketing in a decade, but for all the enthusiasm, research and money behind the tagline, it failed to resonate with shoppers.

The retailer said the new campaign acknowledged Myer’s strong history, and the special place it held in the Australian community. “But it also looks to the future with a contemporary look and feel, to show how Myer is evolving and improving its product offering, online store and in-store experiences and service.’’

Mr King said the My Store tagline highlighted the department store’s strong tradition in the Australian retail sector.

“Myer is Australia’s department store,” he said.

“We have been there for generations of Australians, for their everyday life, but also for their most memorable and special occasions, whether that be: ‘My Birthday’, ‘My Christmas’, ‘My Father’s or Mother’s Day’ or ‘My Wedding’.

“The My Store campaign showcases how Myer has been, and will continue to be, a part of the Australian way of life.”

Mr King acknowledged Myer had in instances let down customers.

“We know that in recent times we have not always got it right for our customers. The new campaign will show that we exist for our customers, that we are putting them first, in every action we take and every decision we make — that we are ‘Their Store’ no matter where they shop with us in Australia,” he said.

Mr King, a former CEO of British retailer House of Fraser, has set a strong pace as the new boss of Myer, and while refashioning Myer’s marketing strategy he has cut down the retailer’s bloated executive ranks by making 30 senior executives redundant, including some veterans of the department store.

Upon his arrival in June he toured Myer stores and quickly came to the decision to dump predecessor Richard Umbers’s strategy of rolling out clearance floors across the country, declaring at his first press conference that he “hated” the concept.

Mr King also warned the landlords at Myer’s headquarters in Melbourne’s Docklands that he was prepared to exit the property and take out a smaller office elsewhere, and was looking to reduce the number of floors Myer occupies. He is prepared to move out of the Docklands if a better lease deal can’t be struck.

The Myer boss is, however, a fan of Mr Brookes’s Christmas format known as the “Giftorium” and has pledged to increase its footprint within its flagship stores.

Retail turnover saw a modest uptick over the month of August according to the Australian Bureau of Statistics, which noted a 0.3 per cent increase compared to a flat July.

Online retail sales contributed 5.6 per cent to total turnover, compared to 5.5 per cent in July, and 4.6 per cent the August prior.

The National Retailers Association called this increase the “weakest back-to-back results for 2018”.

“The August ABS retail figures are far from disastrous, but they do show that the sector is continuing to experience a modest sales period,” Acting NRA chief executive Lindsay Carroll said.

“[It] is certainly an improvement on July, with five of the six retail industries recording a rise in turnover, and all state and territories bar the Northern Territory seeing an increase in sales.”

Carroll added that these figures emphasise the need for governments to put retail-friendly measures in place ahead of the looming holiday period, urging for extended trading hours to be considered.

“It’s very important that we don’t get complacent ahead of the most important period of the year, especially with increases to Saturday and evening penalty rates being phased-in for casual employees in retail from 1 November,” Carroll said.

The Australian Retailers Association believe the strong figures enjoyed by the clothing, footwear and personal accessories (0.8 per cent monthly, 4 per cent year-on-year) and cafes, restaurants and takeaway food services (0.7 per cent monthly, 5 per cent year-on-year) are a consequence of the personal tax cuts starting in July.

“This quiet consumer confidence can be seen across various retail categories with consumers rewarding themselves with little luxuries across the market,” ARA executive director Russell Zimmerman said.

“We hope this boost to consumer confidence and discretionary spend flows through to the end of the year where retailers are hoping to see their biggest trade yet.”

When I first lay eyes on Rowena Bird, she’s marched barefoot onto a turf covered stage in dungarees and a blouse with impractical but mesmerising waterfall sleeves that swing hypnotically as she gestures to the auditorium about igniting a cosmetic revolution.

Her hair is as fluorescent as the lighting, reminiscent of LUSH’s glittery product range. As one of the five co-founders of the cruelty-free, largely vegan, eco beauty brand, Bird is also the inventor of its makeup range – injecting colour and playfulness into the everyday.

When I sit down with Bird on day two of LUSH’s annual global showcase, a Willy Wonka style beauty convention held in Manchester in the UK, Bird seems less flighty than her name suggests, admitting she was a bundle of nerves before this morning’s address. But it’s her important message that means she swallows that nauseous feeling to lead the beauty industry beyond the status quo.

“The future is naked. It has to be, because we have to save the planet,” Birds tells whimn.com.au, just moments after unveiling her reusable lipsticks, where customers replace only the product inside, not the whole unit, saving on plastic.

Naked, refers to LUSH’s innovation, inventing products free from traditional packaging of the beauty industry, where a foundation might come in a plastic bottle, housed in a non-recyclable but aspirational box, wrapped in plastic to ensure the freshness. Bird and the LUSH team, dream of a world beyond it.

40 shades in three undertones. Image: Lush Cosmetics

“We lead the way as the most unpackaged company out there and I would like to see others join in and realise you can make things solid and people still buy it,” she says, having released Slap Sticks, a naked foundation, Glow Sticks, naked highlighters and with a naked mascara made from 3D printing and naked Trix Sticks, used to conceal and contour, also less than six months away.

At the showcase Bird also announced an eye palette made entirely out of almond by-product that gets baked, and then the eyeshadow pigment pressed into it. Just. Wow.

“The almond gets mixed with glycerine and cornstarch which seals it and it’s baked like a biscuit and that’s the base. Once you’ve finished with it, you can put it in your compost or your garden and it will completely decompose,” she says with a twinkle in her eye.

It’s the sort of mad wizardry LUSH is leading the way in, and they have been for 23 years. While LUSH was founded in 1995 in Poole, the co-founders had actually worked together before that at The Body Shop and a mail order cosmetic business that actually bankrupted them, so this eco-campaigning isn’t born out response to seem relevant to consciously consuming Millennials, rather its woven into the very businesses’ fabric.

This is what a naked foundation looks like. Image: Lush

“It’s surprising when we opened the first naked shop in Milan, we thought we’d only open it for a couple of months and then change it back. It’s not changing back in Milan. People are loving it and realising ‘actually I can buy it without the plastic packaging’, even though our packaging is recyclable and you can do something with it, they’ll still buy it,” explains Bird.

“When you have a million lipstick tubes going into landfill, we need to reuse the packaging and give it another life and save the planet,” she declares.

Bird isn’t precious about having a monopoly here. In fact, she’s presenting next May at a global industry event in Berlin, after getting pissed off with the agenda.

“All the big beauty brands will be there. I was asked if I’d like to come and give a talk because LUSH is now known in the cosmetic industry now. I said, no, because we don’t have anything in common with these people. Look, I’m looking at your agenda list and you’re saying ‘cosmetic packaging’ and what you should be saying is ‘the end of cosmetic packaging’. She said, you should come and say that. So considering how sick I felt this morning before going on stage, I’m going to go and talk about it,” she laughs.

Rowena Bird is pioneering, package free. Image: LUSH

LUSH is proof businesses can do good things and still make a profit. The brand currently has 931 stores, 35 of which are based in Australia.

“One of the things we do as LUSH is that we are inclusive and all are welcome always and that includes other companies. They’re here [at the Global Showcase] and having a look and it’s well known brands look at us, and you’re welcome, look at our ideas, take them, we’ll tell you how we do them and let’s move forward,” says Bird, believing the industry needs a good shake down, using their palm oil soap story as an example.

“We created soaps and became really aware of palm oil and we became conscious of the orangutans and their habitats being destroyed. It took us two years to come up with a soap base that didn’t use palm oil but we did it. And we worked with them, we didn’t then say, look at what we’ve done, we’re very clever but you can’t use it, we’re the best. We didn’t do that. We said, alright everyone we’ve made a palm free soap base, please this is where you buy it from. It’s an independent company, use it. There’s no one else buying from them. So I want to stand on that stage, and ask why aren’t you buying it, why are you still using palm oil and putting virgin rainforests at risk? We have to go in and buy the rainforest back and replant it, we shouldn’t have to do that, it’s ridiculous.”

She’s proud of what she’s doing with the makeup range on two fronts: it’s sustainable and diverse.

“It’s groundbreaking because of the amount of makeup people buy, because it’s not bought on a needs basis.

“I also want everybody to be able to wear our makeup. The lipsticks and the colours, not everything has shimmer in it, if a guy doesn’t want to wear shimmer. This event, I’m meeting lots of people talking to me who are wearing makeup. It really is for everyone. Things shouldn’t be limited, which is why we don’t do a men’s range. Diversity and inclusion is so important to LUSH. We don’t label things; all our products are for a need.”

The new boss of Coles, supermarket veteran Steven Cain, will make his mark in the nation’s $90 billion grocery sector by driving one of the biggest shake-ups of Coles in more than a decade. It will see him kick out under­performing brands, narrow the range of brands within categories and fill the shelves with more private label goods.

Unveiling his five-year plan to the market yesterday, Mr Cain showed some of the steely determination and ruthlessness that have characterised his decades-long journey through the Australian and British retail sectors, as he confidently declared Coles would maintain its competitive edge by squeezing prices further.

Also under the gun would be brands that either failed to inspire shoppers or were merely mirroring what was already on offer — something Mr Cain said he had witnessed over his many years in the sector.
There is clearly more of an opportunity in the grocery space to differentiate and simplify ... but the way certainly I have seen these thing work in other places is that the big brands tend to get bigger, and brands that are just duplicating ... get smaller,’’ Mr Cain warned.

And Mr Cain showed he was a man in a hurry, as was his hallmark when tried to rescue a then failing Coles food arm back in 2003, before he was ejected from the business.

He has now returned with a much more powerful mandate from parent company Wesfarmers and a newly formed Coles board to drive through his changes at a rapid pace.

“The focus for me is getting on at it and as fast as we possibly can because that is a competitive advantage,’’ Mr Cain said.

“It will be about how fast we can execute it, how well we can execute it.’’

He has pledged that Coles will cut deeper on prices to put more grocery products on everyday low pricing while pulling back on heavily discounted promotions, and he believes private label, or supermarket-owned brands, should increasingly take shelf space.

Mr Cain could be about to start a war on two fronts when Coles emerges as a stand-alone ASX-listed company on November 21.

Stripping out some grocery brands could infuriate suppliers, while lower shelf prices could trigger a new price war with Woolworths.

During his maiden press conference and briefing with analysts Mr Cain fleshed out his five-year plan for Coles, after details of the $20bn demerger from Wesfarmers were released late on Friday.

“Obviously we will maintain our relative competitiveness in the market — that is not something that anyone wants to lose, the good work that has been done,’’ Mr Cain said. “Going forward, as we have said, more everyday low pricing, more own brand and fewer, deeper promotions is, we believe, the way forward.

“We will remain competitive on price and make sure that at Coles you are getting very good value.

“When I look at the five-year plan, that plan is to be better value in five years’ time than we are today.’’

Mr Cain, who has spent the past few weeks in the role touring supermarkets, said shoppers would notice changes to the stores under his watch and the curating of individual stores’ ranges to better serve local, ethnic communities, as well as improving its health food categories.

But the new boss of Australia’s second-biggest supermarket chain seems to have private label and the duplication of products high on his agenda.

“I’ll certainly have a watchful eye on simplification and removing duplication, but equally we know we have to do more on unique own brand products (private label) and we have got to do a better job for matching the stores for the local customer base.’’

Mr Cain wouldn’t nominate a target for private label penetration in Coles stores but said in some grocery categories there would be greater own-brand selection and fewer outside brands.

“In broad terms I would expect to see more small brands, smaller innovative brands in the store.

“I’d expect to see the removal of some duplication in some categories, particularly those in decline, and I’d expect to see more innovation in own-brand products around exclusive lines.’’

Mr Cain wouldn’t say which categories were “in decline’’.

However, there would be new brands, and not just private label, with suppliers able to benefit from this, he argued.

“The key to success will be around innovation and bringing new things to customers. By the way there will also be lots of new brands coming in, not just own brand and around that sort of ethnic and health space.

“The good news for suppliers is that the business is growing.

“I think it has had 43 consecutive quarters of growth. When we are growing it means the supplier base is growing.’’

Details released by Wesfarmers to the market yesterday showed Coles Liquor had sales of $3.3bn in 2018 and pre-tax earnings of $130m, while its convenience stores had sales of $5.8bn and pre-tax earnings of $133m.

But the once-struggling liquor arm of Coles, which includes its Vintage Cellars and Liquorland banners, has begun to turn around.

The Coles demerger scheme booklet shows that its liquor business on a pro-forma basis had pre-tax earnings of $100m in fiscal 2016, rising to $138m in 2017 and slipping to $130m in 2018.

However, Coles convenience stores reporting earnings of $190m in 2016, and the same in 2017, falling to $133m in fiscal 2018.

Coles has also shown to be holding $1bn of freehold property on its books.

ELI GREENBLATSENIOR BUSINESS REPORTER
Eli Greenblat has written for The Age, Sydney Morning Herald and Australian Financial Review covering a range of sectors across the economy and stockmarket. He has covered corporate rounds such as telecommunica... Read more

Shoppers are increasingly embracing mobile devices for purchases, with mobile now accounting for more than half of all transactions in the APAC region (51 per cent) during Q2 2018, according to new research from Criteo.

This number increases to more than 70 per cent for retailers that actively promote and support a native shopping app, with nearly half of purchases made in app (48 per cent).

The research found that customer conversion was six times higher in dedicated shopping apps (20 per cent) when compared to the mobile web (3 per cent), and four times higher than desktop shopping (5 per cent).

“Retailers in ANZ and across APAC are continuing to see shopper preferences shift as they become more reliant on the convenience and personalisation that mobile and in-app commerce experiences can offer,” Criteo head of Australia and New Zealand Pressy Sankaran said.

Sankaran said that it’s not enough to simply offer mobile apps and experiences; a strong omnichannel promotion strategy is required to generate increased sales on mobile. Omnichannel retailers that combine their offline and online customer data can apply over four times as much data to optimise their marketing efforts.

Additionally, while omnichannel customers only represent 7 per cent of a retailer’s potential customer base, they represent 27 per cent of sales compared to online-only shoppers, who represent 44 per cent of shoppers and 24 per cent of total sales.

David Jones is banking on the power of shoes.

The department store opens the first stage of its $200 million Elizabeth Street flagship redevelopment in Sydney’s CBD tonight, the much-anticipated “Shoe Heaven” at the top of the historic building.

“We’re looking to emulate the greatness the store once stood for,” David Jones chief executive David Thomas said.

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“We’re creating something unrivalled in Australian retail.”

Mr Thomas said the main inspiration for the shoe floor came via Paris department store Le Bon Marche, with nods to fellow Parisian Printemps and London’s Selfridges and Harvey Nichols.

Forty staff have been recruited specifically for the shoe floor, many of them with overseas experience, in addition to a continuing staff of more than 20.

Of the new hirings, 85 per cent are multilingual, and a number have been hired internationally.

With service top of mind, the offering also has to be impressive.

“We’ve got close to 100 of the world’s best brands together in one place,” Mr Thomas said.

“Our choice is not what to put in store, but what not to put in store — we’ve edited and curated a range ahead of the world’s best because of the brands that we have gone with.”

New partnerships have been forged with luxury labels Chanel, Louis Vuitton and Gucci, which will all have bespoke concession stores on the floor.

Brands new to the store include Christian Dior, Jacquemus, Malone Souliers, Roger Vivier and Rene Caovilla.

While the retailer won’t ­divulge sales figures on specifics, Mr Thomas said he expected sales to be “significantly more than we used to do — and we have very ambitious targets”.

To celebrate the launch, members of the Sydney Dance Company will perform tonight, and weekly for the immediate future, to bring “entertainment, shopping and theatre together”, Mr Thomas said.

Rafael Bonachela, artistic director of the SDC, is excited about the collaboration, the third with the retailer in his 10-year tenure at the company, which has ­included live performances at catwalk shows and appearing in campaigns.

“The dancers enjoyed it and I enjoyed it, and both organisations left wanting more,” Bonachela said. “Fashion and dance have always been connected in many ways.

“We celebrate the body and individuality and personality. There’s a lot of synergy between both companies.”

Bonachela will create a site-specific work for a group of dancers to accompany smaller vignettes from existing works.

“Every opportunity we get to be closer to the audience and ­people, it’s just about allowing the imagination to flow,” he said.

And, hopefully from the David Jones viewpoint, an opportunity for cash registers to ring.