News

Construction has kicked off on a large logistics facility in Melbourne’s south-east that could point the way for how many Australians will shop in the future.

The 19,650 square metre property on McNaughton’s Road in Clayton – a 10-minute drive from Chadstone Shopping Centre – will be the new national headquarters of listed toy, hobby and baby products retailer Toys R Us Australia when it opens this year.

Developed by industrial property giant ESR, it will house a 14,785sq m automated warehouse at the back and a first-of-its kind 3230sq m “experience centre” at the front where shoppers can touch, feel and interact with thousands of products.

Products ordered in the showroom will be delivered directly to customers from the adjoining warehouse via automated mobile robots (AMRs) – giant disc-shaped devices that transport stackable pallets.

“What we are doing [with our new warehouse] is not just how people are shopping today, but how they will shop in three to five years,” said Louis Mittoni, CEO and managing director of Toys R Us ANZ. “It’s the way of the future for many retail businesses.”

While the integrated Clayton facility may be among the first of its kind in Australia’s $6.3 billion toy, hobby and baby products retail sector, the crossover between logistics and retailing has become an established phenomenon during the pandemic as more people shopped online and embraced click-and-collect from their local neighbourhood centres.

Last year, listed convenience mall owner SCA Property Group highlighted the value of its portfolio as a last-mile logistics hub while noting that Woolworths was adding mini automated “e-store” distribution centres at the back of some supermarkets in its centres to cater for online orders.

“Woolworths and Coles are using our centres for last-mile fulfilment, both for pick-up and home delivery,” said SCA chief financial officer Mark Fleming.

Also seeing the opportunity created by online shopping has been Westfield mall owner and operate Scentre Group, which has been expanding its Westfield Direct click-and-collect service.

“My ambition would be that we have all stores in Westfield available on Westfield Direct,” Scentre Group boss Peter Allen told The Australian Financial Review this week. “You’d be able to have an aggregated click-and-collect point at each one of the centres to be able to facilitate that.”

Speaking at the AFR Property Summit in December, ESR Australia CEO Phil Pearce said land next to some shopping centres could make way for smaller warehouses or dark stores (warehouses for click-and-collect only) rather than be developed into additional retail space.

In the outer suburbs, where land values are lower, some bulky goods retail outlets would be converted to industrial use “over time”.

The Toys R Us retail warehouse is being built on a 6.4-hectare last-mile logistics site less than 20 kilometres from Melbourne, which ESR acquired for $35 million just over two years ago. A 10-year leasing deal was struck last year.

Close to all the major motorways, the Clayton Business Hub will also be home to an 18,000sq m logistics facility leased to ASX-listed beauty products maker and marketer BWX.

Toys R Us, which once had 44 stores across Australia before its global parent went into administration, was reborn as a digital-first retailer in Australia after Dr Mittoni’s Hobby Warehouse acquired the local brand licence in 2019. In late 2020, Hobby Warehouse merged with ASX-listed Funtastic and changed its name to Toys R Us ANZ.

Dr Mittoni said the company planned to roll out experiences centres across the country to complement its pure-play e-commerce strategy.

“There will be far fewer of these experience centres [than the previous physical retail network], but they will be larger, destinational centres where families can go and interact with toys in a unique and fun manner.

An added feature of the experience centre will be its “endless aisle” offering, meaning customers can order and receive products from an online catalogue of tens of thousands of items stored in the warehouse, not just the 2000 or so products displayed in the showroom.

The new warehouse – four times the size of its interim facility – will allow Toys R Us to consolidate its e-commerce and logistics operations under one roof and cater for its ambitious growth plans fuelled by the surge in online toys sales. The company reported a 74 per cent rise in online sales in September year-on-year.

“If you look at other markets, like the UK into which we are expanding, by 2025, one third of retail will be online,” Dr Mittoni said.

“That trend is absolutely apparent in Australia, if you look at the growth in Australia Post’s parcel delivery business. We are investing just to keep up.”

The next phase of the supply chain crisis will see retailers laden with too much stock in some categories, cycling retailer 99 Bikes predicts.

This inventory lumpiness is due to supply chain hold-ups being so prolonged that Brisbane-based Pedal Group, the company behind the 99 Bikes brand, is ordering stock 18 months to two years in advance

Before the COVID-19 pandemic, Pedal Group would order goods three months to six months ahead for its stores and wholesale division, which stocks gear from $4230 electric bicycles to $74 helmets.

The long lead time means some items will not sell as successfully as hoped while demand for other gear will exceed inventory.

“We’re having to place orders [up] to two years out – some categories – and you just can’t predict demand that far out,” Pedal Group chief executive Matt Turner told The Australian Financial Review.

“We’re going to have too much in this [one] category, and we’re going to have not enough in this [other] category.”

He expected other retailers to be affected. The prediction is another indication of pandemic fallout, with supply chains and logistics globally clogged up on deliveries of items from laboratory supplies to car parts.

Mr Turner said the business would compensate by being cautious with funding but also budgeting for higher inventory levels. “We’re going to have areas of overstock and that will just end up costing us money,” he said.

CEO to step down

He was speaking while discussing full-year accounts for Pedal Group, which showed profits had leapt in financial year 2021 to $38.05 million from $12.38 million. Mr Turner also revealed he will step down as chief executive next month after 15 years in the role, hoping to do something different.

“I actually want to get into the renewable energy sector,” he said. An internal candidate will replace him. Mr Turner planned to remain on Pedal Group’s board and retain shares.

Pedal Group is a venture partly owned by Mr Turner (15.44 per cent), his father Graham Turner (21.73 per cent), who is chief executive of travel company Flight Centre, and Flight Centre itself (46.6 per cent), with 15.82 per cent owned by people including staff, according to Flight Centre accounts. It has 800 staff and almost 60 stores in Australia and New Zealand.

The company’s massive profit followed a leap in interest in cycling during COVID-19 lockdowns. Mr Turner said the business had early on predicted a jump in demand, while some other sellers had not, so they struggled later in obtaining supply.

Selling stock straight away

Pedal Group had turned over far more stock than normal, leading to relative savings on storage and finance costs compared to sales revenue.

“Anything we got, we’ll just sell straight away,” he said. “That’s not going to last.”

The accounts showed a 61 per cent jump in sales revenues to $321 million, outpacing rises in other costs such as a 54 per cent lift in wages to $57.2 million.

Mr Turner said electric mountain bikes were among popular sale items. That was due to a trend of some people liking a “a bit of exercise but [not] a lot”, thrill-seekers enjoying doing jumps on the bicycles, and some fitness fanatics liking the idea of being able to “do the same amount of exercise [but going] twice as far”.

While Pedal Group did not take JobKeeper, it accepted $3.4 million in a new government “Boosting Apprenticeship Commencements” wage subsidy. That came as Pedal Group also declared a record $19 million dividend.

Mr Turner said the subsidy was used to help properly train staff, and Pedal Group now had 10 full-time trainers where it previously had none. “Because the government is generous, it has pushed us to invest in training [and make it] more relevant,” he said.

Related-party deals

Mr Turner said most of the dividend was reinvested as equity – Flight Centre and his father ploughing their take back into the business – and less than $4 million taken as cash. Mr Turner reinvested almost $2 million and took less than $1 million in cash, while some staff members also took cash.

The accounts also show more related-party dealings, part of the controversy that stemmed from the 99 Bikes venture given ASX-listed Flight Centre invested in a business with its chief executive Graham Turner and his family.

Pedal Group spent $208,000 on “other related parties”, which Mr Turner said included holding events at Spicers Retreats, an accommodation venture owned by his father Graham Turner and wife Judy.

Spicers’ Hidden Vale venue in south-east Queensland has 110 kilometres of well-reviewed biking trails. Mr Turner said “they’re the best place to hold the events”, with advantages such as being relatively close to Brisbane head office and the biking trails.

He also said the venue was hired at a fair price.

Flight Centre’s accounts showed it spent $35,000 last year on conferences at related-party entities, which the company said included Spicers locations. That was down from $94,000 a year earlier.

Flight Centre said transactions were conducted on normal business terms and there was no requirement to use Spicers.

New Zealand-based outdoor giant Kathmandu has hired a new general manager of international, Alexandre Gilbert, to drive overseas growth of the business.

According to a statement from the brand, Gilbert will be focusing on expansion across Europe, Asia and North America.

Kathmandu has also set up showrooms across Germany, France, UK and Canada and made several appointments across key global markets.

Mathieu Lefin was named president of Rip Curl and Kathmandu for Europe, while Etienne Lassus as European sales manager. Florian Ascher was named country manager for Rip Curl and Kathmandu for Germany, Austria, Switzerland, and Max Wallder is now the business’ UK sales manager.

In Canada, Nick Russell is now VP sales and marketing, while Eric Eichberger is sales manager for Kathmandu.

The announcements come after the business committed to a global rebrand earlier this year in an effort to become more inclusive, accessible and fun to a wider audience.

According to global chief executive Reuben Casey, the business wanted to distance itself from the traditional ‘elitist’, masculine-focused outdoor experience.

“When we look at our competitors around the world, they’re very serious, masculine and achievement-focused – you see people climbing up a mountain in the snow and rain. That’s not us. Kiwis and Aussies like to get out there and have fun with their mates, that’s the spirit and attitude that we want to foster with our customers,” Casey told Inside Retail.

“Our new purpose is to improve the wellbeing of the world through the outdoors.”

Australians are tipped to spend $4 billion on Boxing Day this year – a premium on last year’s expectations of $2.6 billion – according to predictions from Commonwealth Bank.

The main driver of the excess spending, according to CBA executive general manager of everyday banking Kate Crous, are shoppers not wanting to pay full price after two years of pandemic has left them wanting to make their money go further.

“As the nation bounces back, Australians are embracing shopping and are excited to hit the sales,” said Crous.

“This is welcome news for retailers, who are keen to see consumers return after a tough few months, and is also great for consumers hoping to get good value from their shopping.”

Overall, shoppers are expected to spend 22 per cent more this December relative to all other months of the year.

And, while Covid-19 cases continue rising across the country as Omicron spreads, 41 per cent of those surveyed said they plan on shopping predominantly in-store, while 28 per cent will shop physically and digitally.

Research from Citi also found that, as Australia has continued to move beyond large-scale lockdowns and toward the holiday period, spending has risen.

“With Christmas only four sleeps away, we continue to see strong card spend,” said Citi Australia’s head of cards and loans Choong Yu Lum said.

“However, it remains to be seen if new Covid-19 variants and the rise in case numbers will extend restrictions in some states, which may result in a decrease in spending.”

Prime Minister Scott Morrison has pushed back against taking a heavy hand in dealing with the spread of the Omicron variant, advising state leaders to keep their economies open despite calls from health organisations to re-enforce certain preventative measures – such as mandated indoor mask wearing and QR code check ins.

Morrison, echoing NSW leader Dominic Perrottet, said it was up to personal responsibility to stop the spread, and noting that it was time to treat Australians like adults.

“Australians know what is a common sense, responsible action to look after their own health and to look after the health of those around them,” Morrison said.

“We all have our own responsibility in our communities and for our own health.”

The Australian Retailers’ Association is expecting Aussies’ pent-up demand for shopping to continue beyond Christmas, divining that a record $21 billion will be spent in stores and online in the period between Boxing Day and January 15.

ARA chief executive Paul Zahra said Boxing Day sales are always a key part of the retail calendar, but that that momentum will continue into the new year.

“[In] our post-Christmas sales forecast… all retail categories have recorded an increase in spending on last year, apart from food which is down slightly – not surprising given more people will be out socialising this year,” Zahra said.

“Hospitality is set to thrive as a result – up 10.7 per cent on last year’s post-Christmas period when the Covid threat was more severe and vaccines were yet to be rolled out.”

Roy Morgan chief executive Michele Levine said high vaccination rates across most of the country would contribute to higher in-store spending, and that two years spent in relative isolation will have allowed many consumers to build up a savings chest – allowing retailers to target higher spending levels.

This comes after both the ARA and NRA predicted 2021’s Christmas period would bring in close to $60 billion, and urged Australians to ‘shop early, shop often’.

“A silver lining to lockdowns is that when restrictions are lifted it does result in strong consumer spending from pent up demand,” NRA boss Dominique Lamb said.

“As horrible as 2021 has been for retailers who have been in prolonged lockdown, at least they’ll be open in time to cash in on Christmas.”

The chief executives of companies including Wesfarmers, APA Group, Graincorp and BHP have urged leaders and the community not to forget the front-line employees for whom remote working is not an option, as Australia’s corporate sector prepares to adopt hybrid work en masse in 2022.

The Chanticleer CEO Poll of Australia’s top 60 business leaders found the vast majority of major companies will move next year to a hybrid model that will see most staff spend two or three days each week in the office.

Many will use so-called ‘anchor days’ – when everyone from a particular team will be required to attend the office on a particular day – to try and foster collaboration and ensure company culture is maintained.

“Our new policy is that people can work wherever they choose subject to being able to meet safety and technological requirements,” said NIB chief executive Mark FItzgibbon in an answer typical of those shifting to a hybrid model.

“They will, however, be required to attend local ‘hubs’ on a regular basis for specific purposes such as induction, training, team building, ‘scrums’ and celebrations. How many days a week that might mean will vary between teams.”

Australia Post has just hired its first ever executive general manager customer experience and digital. 

Former managing director of Google Melbourne and Government Leonie Valentine will be stepping into the new role in January next year and will lead key functions including customer services, digital channels, data science, payments and financial services, according to AusPost. Valentine previously worked at Google, CSL and Telstra with more than 25 years of experience in sales, marketing and operations.

“Leonie’s global experience at Google will help lead us into the next chapter as we continue to transform our business. Whether you transact with us online, in a Post Office or through your favourite retailer, the customer experience should be seamless each and every time,” said Australia Post Group Chief Executive & Managing Director Paul Graham in a statement.

“We continue to make significant investments in our app, tracking capabilities and other digital channels and with the support of the whole Australia Post team, I’m confident Leonie will sharpen our focus on how we leverage and expand our digital presence.” 

Australians are expected to drop $20.5 billion in the remaining 10 days to Christmas, according to the National Retail Association.

“[We’re] expecting the shopping frenzy to really ramp up as we kick-off the 10-day Christmas countdown,” NRA boss Dominique Lamb said.

“Although there is a growing trend that sees consumers knocking off Christmas shopping earlier than in previous years, the final 10 days is still a frantic time for retailers across the country.”

Lamb added that online delivery delays have pushed more customers in-store to get their hands on their preferred presents, providing a much needed boost to CBD retailers that have been adversely affected by the Covid-19 pandemic’s movement restrictions.

Despite that, the NRA is predicting online spend will grow 18 per cent over the next 10 days to $2 billion.

Alongside the growth in sales and customer numbers, however, has also come an increase in abusive customers.

“Please remember to be patient and polite towards retail staff. It’s the busiest time of year for retailers, with many working at capacity, so please keep the Christmas spirit in mind and treat them with patience,” said Lamb.

Last month, Victorian retailers saw a spike in customer abuse, leaving many retail staff fearful of returning to work, with Lamb noting threatening behaviour toward retail staff in the state had grown 85 per cent year on year.

Lamb’s comments come after a Dymocks employee was knocked unconscious and pushed down an escalator recently, and a Vinnies in Melbourne was defaced with human faeces after staff enforced the Government’s vaccine rules.

“Retail workers are not the police or trained security personnel. A 19-year-old part-time worker in a book shop or a grocery store doesn’t have it in their job description to deal with physical confrontation – and nor should they,” Lamb said.

Nike has solidified its frontrunner position in the race to dominate the metaverse with its acquisition of non-fungible token (NFT) studio RTFKT on Monday.

Following its recent trademark applications to sell virtual goods in online environments, the move places Nike on a trajectory to being the biggest brand in both real world and virtual environments. 

“This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture,” John Donahoe, Nike’s president and CEO, said in a statement. 

Nike has made several significant moves to ensure it is ready for Web 3.0 and the metaverse. In December 2019, the brand patented Cryptokicks, a blockchain-enabled system that assigns NFTs to physical sneakers to verify their authenticity and ownership. It also has collaborated with Fortnite and Roblox.

But Donahoe called the RTFKT acquisition “pivotal”, noting that it includes “a very talented team of creators with an authentic and connected brand. Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.”

What is RTFKT? 

Launched in 2020 by Benoit Pagotto, Chris Le and Steven Vasilev, RTFKT Studios creates virtual sneakers and streetwear collectibles for the metaverse. It has risen to the top faster than other NFT brands by uniquely leveraging cutting-edge game engines, blockchain technology and augmented reality. 

In the past year, RTFKT has released several major NFT drops, including collaborations with crypto artist FEWOCiOUS, designer Jeff Staple and old-school video game-maker Atari to create a futuristic digital sneaker. The most recent and noteworthy collaboration was with contemporary Japanese artist Takashi Murakami. Called CloneX, it involved a limited release of NFT avatars designed in Murakami’s internationally recognised artistic style. 

“This is a unique opportunity to build the RTFKT brand and we are excited to benefit from Nike’s foundational strength and expertise to build the communities we love,” Pagotto said in a statement. 

“Nike is the only brand in the world that shares the deep passion we all have for innovation, creativity and community, and we’re excited to grow our brand which was fully formed in the metaverse.”

By acquiring RTFKT, Nike has moved to the forefront of the nascent NFT industry. It’s an incredibly smart and efficient way to gain innovative knowledge and intellectual property at speed, particularly given the current pace of technological advancement. And it says a lot about Nike’s future products and how it imagines they’ll be used. 

When will the metaverse arrive?

The metaverse is not mainstream, yet. It could be years before digital platforms are fully interoperable and decentralised, and many aspects of existing technology and infrastructure will require major improvements, such as access to a stable internet connection, faster load time between applications and seamless integrations with digital wallets. 

However, as more companies of all sizes build businesses for this new digital economy, the transition to virtual worlds will happen organically. We’re already seeing greater transparency with fashion brands implementing systems for verifying authenticity and traceability across the supply chain, and interactive experiences are commonplace, bridging the gap between physical and digital via augmented reality filters. 

While it’s hard to imagine what the metaverse will look and feel like, the movement to build it is underway and worth its weight in virtual gold. According to digital currency investor Grayscale, it’s anticipated that the global market for goods and services in the metaverse will soon be worth $1 trillion. 

A boon for NFT start-ups

While the acquisition is a boon for RTFKT, especially since it is such a new business, it also highlights the importance of understanding digital products and NFTs more broadly as people look to invest in NFT fashion, art and experiences. 

The other movers and shakers in this space will be closely watched, and more brand collaborations with digital fashion houses are to be expected, as they develop a greater understanding of how to produce NFT goods. 

One of the first on the scene was Dutch digital fashion house The Fabricant. It has since become the go-to studio for international collaborations, such as the activation with Toni Maticevski at Afterpay Australian Fashion Week this year. Other partnerships include Under Armour, Puma, Tommy Hilfiger and Buffalo London. 

Digital Rags Studio in St Petersburg specialises in digital fashion for 3D modelling, digital design and augmented reality technologies. The Russian studio has worked with major companies such as Rebecca Minkoff and Vogue Italia. 

Closer to home, tech-luxe digital fashion house Myami Studio led by Brad Morris stands for the democratisation of fashion through blockchain technology and digital ownership. It creates digital fashion that can be used and traded in virtual realities.

As technology evolves and the quality of graphics advances, there will come a time when it’s hard to remember life before digital products, just as it’s hard to imagine life before smartphones and apps now.

Nike’s acquisition of RTFKT is proof again that our future will be lived in both physical and virtual environments.

Online pet supplies and services marketplace Pet Circle has cemented its place as Australia’s latest billion-dollar-valued “unicorn” company, after closing one of the biggest funding rounds of the year from Australian and international investors.

The journey from being a bootstrapped online dog food ordering service to a billion-dollar operation has taken a decade, and its sky-high valuation has been secured in a $125 million investment led by US-based Prysm Capital and Sydney-based TDM Growth Partners.

Other investors in the unicorn round, which was first flagged by Street Talk, include Australian venture capital firm AirTree Ventures, which has held a stake in the company since 2017, and UK-based investment firm Baillie Gifford.

Co-founded by former management consultant and investment banker Mike Frizell and data scientist James Edwards, the company has grown to offer a huge range of pet food and products, on an online platform that also provides video vet consultations and subscription-style ordering.

Mr Frizell told The Australian Financial Review Pet Circle had benefited from a boom in pet ownership during the COVID-19 pandemic, with its research showing pet owners spend more than $1000 a year on their furry friends. Over the past 18 months its website has seen a 50 per cent increase in puppy and kitten food sales across its specialty channel alone.

Having banked the huge funding round it plans to dramatically increase the range of products it stocks, while also expanding its number of warehouses across the country. It has established its own logistics operations after becoming disillusioned by those on offer from existing local providers.

“In Australia, you go into most of the pet businesses, and they have between 100 SKUs [stock keeping units] or maybe the biggest will have 5000 SKUs, our range will triple, so we’ll have 30,000 plus products,” Mr Frizell said.

“Right now you can’t get good products in Australia for animals. We will change that, and that means most of it will be sourced around the world.”

While Pet Circle has most obviously disrupted the likes of Pet Barn, by making regularly repeated purchases, like cans of dog food, simply arrive at a customer’s front door, Mr Frizell said investors were keen on the company because of the huge growth potential still left in a relatively immature market segment.

He said the US market for direct-to-consumer pet supplies was a few years ahead of Australia, and indicated there was a good chance Pet Circle could grow by 10 times over the next five years. At the time of the raise he said the company was cashflow positive and profitable, but would be investing for growth in the immediate future.

Like companies in other areas of the economy, one of Pet Circle’s biggest challenges is a groaning supply chain, with the boom in pet ownership globally and lengthy lockdowns meaning some product lines are unavailable.

The humanisation of pets is a significant macro tailwind impacting markets globally.

— Jay Park, co-founder and managing partner, Prysm Capital.

“We are in year 11 of the business and it is the worst supply chain issues we have seen in all that time,” Mr Frizell said.

“We are in a global pet boom, so factories can’t keep up making pet food. That’s just a fact. So the volatility of stock and lead times can be longer than we want. Toys, treats, accessories, anything that shares electronics components with other industries are hard to get. We are seeing very challenging stock levels and security of supply across almost every category.”

The funding round is the latest big-money deal involving Australian technology companies in 2021.

While fintech disrupter Athena Home Loans broke the record for the largest capital raise completed entirely from local backers, with a $90 million round in May, most of the larger rounds have comprised a mix of local and global funding.

A $221 million funding round in Brisbane-based Octopus Deploy in April was filled entirely by New York fund Insight Partners.

Former Adidas Australia colleagues Kevin Roberts and Tim Jackson are set to launch their own activewear label, No Timid Souls. 

Using their experience in the sporting world – Roberts was previously the 2XU and Cricket Australia CEO, while Jackson is a former Olympic sprinter and World Athletics Championship silver medallist – the pair have combined their technical sport knowledge with innovative fabric technology to create their own materials. 

Jackson said that No Timid Souls had to develop its own fabrics as there was nothing on the market that was at the level of performance that the brand wanted to offer. 

"The first two stages of our product development process focus on sports science and materials science, so all of our products respond to the biomechanical and physiological needs of the human body when running, training, or working out in the gym.

"The third stage is creative design. Our products look great thanks to our experienced designers and garment technicians who trained at the London College of Fashion.

"More than 75% of our first apparel range uses our own unique fabrics because existing options weren’t at the level we required. 

"What’s different about No Timid Souls is the combination of sports science and materials science that makes our products work better and feel better. 

"We’re also serious about sustainability, so 60% of the first No Timid Souls apparel range already includes recycled materials.

"We’re confident our line will take off quickly and attract endorsement from athletes in the arena, as well as everyday consumers who run, train or work out and want to get better," he said. 

The brand is also on a mission to support elite and developing Australian athletes, teaming up with crowd-sourcing platform Raise the Bar. 

The Raise the Bar point-of-purchase option invites consumers to ‘up’ their transaction to donate to an athlete of their choice in the program, even if they are sponsored by a rival brand.

Additionally, No Timid Souls will contribute a percentage of sales from various products to athletes in the program.

Sporting clubs can also benefit by receiving 7.5% of purchases that people in their extended communities make from No Timid Souls.

According to the Australian Sports Foundation, half of Australia’s top athletes earn less than $23,000 per year. 

Australian Olympian Tamsyn Manou praised the brand's support of emerging athletes. 

"I was lucky to have an incredible support network around me during my athletic career, but we know that many athletes don’t have the financial support or the guidance to help them deal with the ups and downs of elite sport and the transition to life after sport. 

"It’s really encouraging to see No Timid Souls taking up the challenge to facilitate financial support and other forms of support for athletes who need it most," she said. 

According to the brand, its name was inspired by the United States’ 26th President Theodore Roosevelt, whose 1910 Paris speech, 'The Man in the Arena,' gave credit to those who are in the arena, striving valiantly and spending themselves in a worthy cause.

"No Timid Souls is a brand that stands for inner strength and celebrating people who pursue physical endeavours," Roberts said. 

"We are ready to take on the global sportswear market with a premium product range that’s underpinned by deep expertise in sports science and materials science. 

"We have an international ecosystem of people and organisations contributing to the development of our business, including some leading international manufacturing partners. 

"Their support for our vision has been humbling. 

"Together, we are pursuing world-class product innovation and building a global community of elite, emerging and everyday athletes who share the No Timid Souls mindset," he said. 

The brand's first collection will be available in Australia in the second quarter of 2022 and in the US soon after. 

Target Australia is on a mission to up its eCommerce offering, introducing a new cloud provider to its platform.

The new platform updates Target's legacy on-premises systems that could not handle the up to four times increases in demand during sales and new product launches. 

The new service gives Target a faster, more resilient eCommerce platform that updates online store inventory in real time. 

In addition, the retailer was able to launch a new search function that makes it easier to find products on the site and provide additional relevant product recommendations that improve the consumer experience. 

Further, the new platform gives the retailer data and consumer insights, helping marketing teams to tailor product promotions and communications to personalise the shopping experience further. 

Target Australia MD Richard Pearson welcomed the launch of the new platform. 

"In eCommerce, every second counts for consumers who want to make purchases quickly. 

"With [our new platform], we have been able to significantly increase the speed and resilience of our online shopping platform, making our customers happier and driving sales in the lead up to the holidays," he said. 

To further enhance the skills of the teams using the new platform, Target rolled out a training program in partnership with its new cloud provider in 2019. 

Technical teams, executive assistants, store managers, finance teams, inventory staff, and executives took part in the training to lift their skills.

Since then, 100% of Target's technical employees have achieved a certification. 

This training approach allowed Target to build cloud fluency across the organisation and ensures that the company’s employees have the skills to create new retail experiences.

"Target is focused on simplifying online shopping, prioritising online growth, and improving our product offering," Pearson added. 

"[Our new platform] has been invaluable to Target as we grow our online presence, while equipping employees with skills to reimagine the retail experience through cloud, data analytics, and machine learning," he said. 

Kmart has opened a new store in Melbourne's west at Highpoint Shopping Centre. 

The major retailer is the latest in a string of brands that have opened in the Centre recently, including Under Armour, R.M. Williams, Seed Heritage, Glue Store and Stylerunner. 

Officially opening the new store today (December 1), Kmart will welcome customers in with a range of activities including floral styling sessions, kids' art and craft activities and cupcake giveaways. 

Kmart CEO John Gualtieri said the retailer was proud to end the year with the opening at Highpoint.

"We’re so incredibly excited to welcome Melbourne’s west into our new Kmart Highpoint store today. 

"It’s our 75th store opening for the year, bringing our store network to 326 stores - and what a way to end 2021.

"Highpoint is such an iconic shopping destination and we are thrilled to be officially opening our doors here, giving customers access to our great value, on trend products, right in time for Christmas. 

"Our Kmart Wishing Tree will be set up at the front of store, helping to support families in need, and we encourage our generous customers to get involved if they can," he said. 

The new and elevated store layout spans all three of Kmart’s ‘coloured product worlds’ including apparel, kids and home. 

Highlight store features include central-served check outs, wider aisles for wheelchair and pram access, as well as bolder graphics for easy navigation and a convenient shopping experience. 

"Our shoppers have a strong appetite for Kmart’s fashion, lifestyle, kids and homewares offer, where accessible and affordable products don’t compromise on value and quality," Highpoint regional GM Rachel Duggan commented. 

"We are beyond thrilled to finally welcome the retail giant in centre during an exciting time when Highpoint is expanding in its lifestyle and fashion categories – further cementing Highpoint as the most in-demand shopping centre in Melbourne’s west," she said. 

Doors opened to shoppers this morning at 8am, following a Welcome to Country and ribbon cutting ceremony. 

In a retail career spanning over 30 years, the global supply chain crisis caused by Covid-19 has been one of the most challenging situations Greenlit Brands boss Michael Ford has ever faced. 

“There is less freight available than there’s ever been, and demand has never been higher, so your working capital is enormously at risk because demand is exceeding supply,” Ford, Greenlit Brands’ executive chairman and group CEO, told Inside Retail.  

Part of Steinhoff International, Greenlit Brands owns the household goods brands Freedom, Fantastic Furniture, Snooze, and OMF. 

“I would say it’s the most challenging [situation] we’ve faced, and unlike apparel, which you can air freight, in the furniture industry, you’ve actually got to get it in containers and ship it because they’re bulky goods,” he said.  

The global shortage of containers and backlog of ships waiting to be unloaded at ports has resulted in lead times of up to six months for made-to-order furniture in the Freedom business, and while in-stock businesses, such as Fantastic Furniture, have been less affected by these delays, they have seen a significant increase in the cost of shipping.

“Freight rates have gone up over the last nine months by four to five times what they were historically,” Aaron Canning, Greenlit Brands’ chief operating officer, told Inside Retail.  

“We hedge our freight requirements. However, freight forwarders and the like aren’t adhering to those contracts, so that’s totally changed the global logistics market.”   

Another 12 months of disruption

The rising cost of shipping has flattened off recently, though it’s still well above what it was two years ago, and factory disruptions in Asia have abated, but Ford believes it could be another 12 months before the supply chain returns to normal. 

“When the pandemic arrived, the people manufacturing freight, whether it be ships or containers, reduced their manufacturing significantly, and as a result, we’ve suffered,” he said. 

“Our view and the view of our merchants is that 2023 is probably when we will see it stabilise.”

However, while the supply chain crisis has made managing inventory and customer expectations difficult, it has been good for Greenlit Brands’ balance sheet. 

“We have paid off all our debt, local and offshore, and made sure that our balance sheet and our cash position is strong, and one of the reasons [we’ve been able to do that] is because of the efficiency of working capital in the furniture industry,” Ford explained.

“There’s no local manufacturing, it all comes from offshore, so you have to sell into a lead time, and you have to take a deposit. If you manage that efficiently, it can be cash flow positive, and we’ve found ourselves in that situation.”

Group profit was up 39 per cent in FY21 on revenues with written sales of approximately $1.5 billion. All four brands are cash flow positive and profitable, Ford said.

‘We were on a knife’s edge’

It’s a rapid turnaround from December 2017 when a massive accounting scandal at Greenlit Brands’ parent Steinhoff International threw doubt on its very survival. Steinhoff, which had been funding the local operation (then called Steinhoff Asia Pacific), saw its share price tank from €3.50 to 30 cents in a matter of weeks.

“Immediately I was in front of what’s known as the ‘bad bank’. You have your relationship bankers, then you have the credit [bank], and then you have the bad bank. And it’s like walking into an ambush with those guys,” Ford said.

“They were going to pull our credit line on the 22nd of December, I remember it was a Friday, and we were faced with the dilemma of basically going into administration.”

The business initially received credit terms for just 30 days, then 60 days, before ultimately receiving commercial terms. 

“During that period, we were on a knife’s edge,” he said. 

Every cost in the business was scrutinised for potential savings and new senior leaders with operational expertise were brought in, including Canning, Freedom CEO Blaine Callard, Fantastic Furniture CEO Kieron Ritchard, and OMF CEO Ian Vann. 

At the same time, the general merchandise division, which included Debenhams, Best & Less, and Harris Scarfe in Australia, and Postie in New Zealand, was offloaded to private equity firm Allegro in 2019 to allow the group to focus on its core strength in furniture.  

“The number one priority is to enable these brands to perform better than they have historically, so that they appeal to acquirers who will be a great home for the colleagues in those stores,” Ford said. 

Investing in technology to continue to improve the brands’ digital offerings is key. E-commerce sales have increased from approximately $60 million in 2017 to $300 million today, and they now represent over 30 per cent of total sales at Fantastic Furniture. Across the group, this figure is over 20 per cent.

“The shareholders’ direction is to transact the businesses, but there’s no hurry. Build them, make them successful, and give us the best possible value. That’s our goal,” he said.

Last month, Greenlit Brands sold Plush to Nick Scali Group for $110 million. 

Bailey Nelson is continuing its bricks-and-mortar expansion across Australia, opening its 51st store on Melbourne's Glenferrie Road in Malvern. 

Following the opening of its 50th store in Sydney's Castle Towers shopping centre, Bailey Nelson has revealed its newest Melbourne store, marking its 93rd location globally. 

Bailey Nelson co-founder Peter Winkle said the brand aims to grow its presence across Melbourne's south and east, beginning with Malvern. 

"We are very excited to be opening our 51st Australian retail store in Malvern. 

"This is one of Melbourne’s loveliest shopping spots. 

"It’s a fashionable area with a very diverse mix of people and a great sense of community. 

"Our other stores in nearby Camberwell, Chadstone and South Yarra have been very successful. 

"We see excellent growth opportunities in Malvern and across the city’s south and east among people who value great eyecare and beautiful Australian designs at fair prices," he said. 

Similarly to its counterparts, the Malvern store offers customers a range of the brand's Australian-designed frames, which feature 86 styles and 72 colourways. 

The store also houses the new Atelier collection, which introduces 24 optical and sun frames into the Bailey Nelson range, made up of five shapes in 12 new colourways. 

The Malvern site offers eye tests at least five days a week and is equipped with an OPTOS machine, one of the most sophisticated imaging tools available - allowing the optometrist to view the back of the eye at a resolution four times greater than a traditional retinal camera, which can only examine around 20% of the retina. 

It is run by manager Thom Johnson and optometrist Mike Bradley. 

Harvey Norman has been hit by falling sales and depreciating exchange rates, with global sales falling 8.8 per cent during the period between July and November, and unaudited gross profit falling 35.5 per cent between July and October, compared to the same periods of last year.

According to the department store business, exchange rates across Europe, Singapore and Malaysia hurt the business’ aggregated sales, and were only partially offset by growth in the New Zealand dollar and the UK pound.

Preliminary profit before tax hit $217.4 million for the period, compared to $337.1 million for the same period of FY21, and $127.8 million in FY20 – a 70 per cent increase.

Sales were also up 16.9 per cent compared to FY20, showcasing that, despite Covid, FY21 was a particularly strong year for the chain.

In total, the business’ annual profit rose 75 per cent during FY21: hitting $841.4 million off the back of huge earnings growth of 54 per cent to $1.45 billion.

Moving into FY22, however, the retail industry was hit with lockdowns through most Australian states and territories, and Harvey Norman warned in August that early sales had already been “impacted”.

The group’s comparable performance in Australia fell 11.1 per cent compared to FY21, and 8.1 per cent in New Zealand, as rolling lockdowns across most states and territories of Australia, and parts of New Zealand, impacted sales.

Last week was a turbulent one for Lovisa shareholders.

The jewellery retailer’s share price reached a record high of $23.07 on November 19, fresh off a bullish upgrade from Macquarie which raved about its global store rollout under new CEO Victor Herrero. The broker lifted Lovisa’s price target by a whopping 47 per cent to $25, and upgraded it to “outperform”.

But the record valuation was short-lived, as a trading update released before the company’s AGM last Monday revealed it is facing inflationary pressures that are gripping many retailers heading into the peak trading period.

“Our store rollout progress for the year to date has been slower than we would like as a result of logistics delays and shortages of store build contractors in key growth markets,” the company said

Lovisa warned that this might extend rollout delays in the short term and increase its store building costs. It added that reduced global freight capacity was still affecting pricing.

However, Lovisa has still managed to open 31 new stores, and close five, so far this financial year, prompting Macquarie to increase its forecast store openings for the first half of the year to 33, from 25.

Lovisa also reported global same-store sales growth for the first 20 weeks of the financial year of 25.2 per cent, with total sales growth of 46.1 per cent.

“While we now bring forward some store openings from the second half of financial year 2022 to the first half, these are offset by adjustments to comparable sales growth,” Macquarie analysts said.

“We believe around 30 per cent of first-half sales growth is appropriate given tough second-quarter comparable sales, along with lockdown risks offshore.”

Since last Monday, the retailer’s share price has crumbled 10 per cent to $19.81, but Macquarie analysts were seemingly undeterred, noting that Lovisa’s trading update was in line with expectations.

The broker believes Lovisa is funded to deliver around 1000 new stores by the end of the 2024 financial year. It expressed particular excitement about the opportunity in China and India, which analysts said collectively represents a market which exceeds the US by about 15 per cent.

Robust performer

An equally bullish Bell Potter observed Lovisa’s update as an illustration that it is navigating the disruptive backdrop strongly.

“The update again demonstrates Lovisa’s ability to steer through significant macro challenges,” wrote analyst Sam Haddad.

“While the near-term outlook remains challenging [with] lockdown risks in the northern hemisphere and supply chain constraints, we believe Lovisa is strongly poised once these challenges ease.”

Bell Potter joined Macquarie in lifting its store rollout assumptions based on faster than expected progress. The broker raised its price target from $19.90 to $21.30.

“With net cash at hand, we believe Lovisa is well positioned to navigate the pandemic. We also believe tailwinds are emerging with respect to site availability and rent, which bodes well for Lovisa’s long-term growth prospects,” Mr Haddad said.

The broker said that based on valuation over a 12-month horizon and the near-term macro challenges, it retained its “hold” rating.

Clouds over Europe

Citi’s take was a bit gloomier, focusing on slowing sales growth with its rollout in key markets affected by supply chain issues and labour shortages.

The broker downgraded Lovisa’s earnings forecast for the 2022 financial year to the 2024 financial year due to lower than expected sales.

Citi maintained its “neutral” rating on Lovisa based on growing downside risks appearing across Europe – home to 30 per cent of its stores – from the latest COVID-19 wave.

Lovisa has three stores in Austria, which went into full lockdown on November 22, six stores in the Netherlands, which is in partial lockdown, and 38 stores in Germany, which is considering a full lockdown.

“[There are] increasing downside risks to Europe sales given rapidly growing COVID-19 cases in the region potentially impacting consumer sentiment and going-out activity ahead of the key Christmas trade period,” said Citi analyst Sam Teeger.

Analysts also noted that Lovisa’s store rollouts, which are its key growth driver, continue to face challenges as people increasingly shop online and consumer spend is redirected as international borders reopen.

Morgan Stanley kept its rating on Lovisa at “overweight”, but noted that momentum in comparable sales growth and store rollout appears to have slowed, which could put pressure on financial year 2022 earnings.

But the broker said that financial year 2023 earnings before interest and tax of $94 million still looks highly achievable given Lovisa’s new store pipeline is expanding.

“We are buyers on any pull-back given Lovisa continues to offer an early-stage global store rollout story,” said Morgan Stanley analyst Joseph Michael.

Morgan Stanley also referred to the growing pressure on Lovisa’s margins, saying it expects new store fit-out costs to increase and freight pricing to remain elevated.

The broker has a price target of $21 on Lovisa.

Aussies have spent up big during the Black Friday sales, new data from payments platform Klarna indicates. 

According to the platform, Black Friday sales volumes were up 298% compared to the same day last year. 

Aussie shoppers also began their bargain hunting early, with sale volumes in the first hour of Black Friday (midnight to 1am) up 399% compared to an average day, and 314% compared to the same time last year. 

Klarna's data also showed that Black Friday shopping peaked between 3pm and 4pm AEDT with sales volumes up 878% compared to the same hour on an average day. 

Additionally, the week leading into the big sale event also saw increased activity, with sales volumes lifting 353% from Monday to Thursday compared to 2020. 

According to the insights, the most popular shopping categories are clothing and shoes, jewellery and accessories, leisure, and sport and hobby. 

When it comes to shopper demographics, Millennials (25 to 40) made up more than half of the purchased (54%), followed by Gen X (45 to 55) accounting for 22%. 

Meanwhile, Baby Boomers were the age group with the highest increase in purchases compared to a regular day, lifting 57%. 

• Australian retail turnover grew 4.9% in October to $31.13 billion, according to the Australian Bureau of Statistics.
• The end of harsh lockdowns in NSW, Victoria, and the ACT saw pent-up demand flow into discretionary goods.
• Experts say the spending bodes well for a massive Christmas season, but travel expenditure may carve gains away in 2022.

Australia’s retail spending bounced back in October as pandemic restrictions eased in New South Wales, Victoria, and the Australian Capital Territory, but the gradual return of international travel may siphon spending away from the high street and department stores in 2022.

Fresh retail trade data from the Australian Bureau of Statistics (ABS) reveals shoppers responded with enthusiasm to the easing of COVID-19 restrictions which kept retailers closed in recent months.

Overall retail spending rose 4.9% over the month, the ABS said, primarily reflecting the easing of NSW restrictions on 11 October.

All told, retail spending hit $31.13 billion in October, just shy of May’s total of $31.15 billion, and short of the November 2020 peak of $31.57 billion.

Australia’s most populous state recorded an enormous 13.3% spike in retail turnover. With that spike, retail sales in NSW reached levels not seen since before the COVID-19 Delta variant wrought havoc on the state.

Over the border in Victoria, where lockdown restrictions eased October 22, turnover grew a more modest 4%.

The ACT experienced a retail turnover increase of 20.2%, reflective of the jurisdiction easing its own restrictions on October 15.

Turnover growth was far more modest across the rest of the country, as other states and territories, free of lockdowns, did not enjoy the benefits of pent-up retail demand.

Clothing, footwear, and personal accessories sales led the charge, rising by 27.7% on September levels. Shoppers with an eye to the Christmas period also dropped significant change at department stores, which reported a 22.4% bounce.

Cafés, restaurants, and takeaway venues notched a 12.3% increase in turnover, as diners could once again linger at their favourite dining establishments. Conversely, food retail dropped -0.5%, as many Australians reduced their lockdown grocery shopping habits.

The data bodes well for traders through to the new year, according to EY chief economist Jo Masters.

“Pent up demand, combined with dollars in the bank and the wealth effect of higher house prices, suggests this spending boom will continue through the festive period,” she said.

Paul Zahra, CEO of the Australian Retailers Association, said the NSW Government’s decision to wind back mask mandates and QR code requirements from mid-December, or when the state hits 95% double vaccination, will only fuel the fire.

“Christmas trading is critical for retailers – it’s a time when most discretionary stores make up to two thirds of their annual profits, so allowing business to throw the doors open fully at this time won’t be a day too soon,” he said.

The full force of Victoria’s reopening is likely to only become apparent in November’s data, potentially skewing turnover higher in the final months of the year.

Australia’s forceful adoption of Black Friday and Cyber Monday sales is also likely to boost retail trade in December quarter.

But the impact of Australia’s reopening could swing both ways for retail traders, according to Sean Langcake, senior economist at BIS Oxford Economics.

“Retail sales will be strong in Q4 as pent up demand from lockdowns is realised,” he said.

“However, momentum will fade in early 2022 as households rebalance their spending toward services as travel and trading restrictions ease further.”

The lingering impact of supply chain disruptions, and local delivery networks straining under the weight of online sales, may also shave away some of that retail excitement.

For now, the ABS data reveals a significant bounce-back, a leading indicator for Australia’s stop-start economic recovery from the COVID-19 pandemic.

• Australian Black Friday sales volumes were 298% higher in 2021 than in 2020, according to Klarna.
• The buy now, pay later platform has shared insights from the annual shopping extravaganza.
• The full scale of the Black Friday sales is yet to be revealed, but retailers and banks estimated Australians would spend around $5.5 billion.

Buy now, pay later platform Klarna says its Australian users spent 298% more this Black Friday than on the same day in 2020, after a shopping bacchanal tipped to cost consumers some $5.5 billion.

In an early indicator of the nation’s evolving shopping habits, Klarna on Monday said sales volumes on Friday peaked 399% higher between midnight and 1am compared to an average day.

Volumes peaked between 3pm and 4pm AEDT, with the platform claiming sales were 878% higher than at the same time on any regular Friday.

Millennials aged between 25 and 40 were most likely to use the BNPL outfit for their shopping needs, making 54% of Black Friday purchases made through the platform.

The most common spending categories were clothing and shoes, jewellery and accessories, and leisure equipment, the Commonwealth Bank-backed Klarna says.

That focus on new threads matches the spending habits outlined in new figures from the Australian Bureau of Statistics.

Retail trade data, released Friday, showed expenditure on clothing, footwear, and accessories grew 27.7% in October, as shoppers rushed to newly-reopened stores in New South Wales and Victoria.

Industry players last week predicted Australian shoppers would spend big this Black Friday, an American shopping tradition which local businesses have increasingly adopted over the past decade.

On Friday, the Australian Retailers Association projected local buyers would spend some $5.4 billion over the Friday-Monday period, culminating with today’s Cyber Monday online sales.

NAB went even bigger, suggesting Australians would spend some $5.5 billion through the shopping period — peaking at one million dollars spent a minute.

“One in six of all November retail sales happened during this four-day period last year and we’re anticipating similar trends this year as the economic bounce back continues,” Rachel Slade, NAB group executive of personal banking, said Thursday.

Nearly 35% of Australians said they planned to shop on Black Friday and Cyber Monday, according to a Finder survey.

The full scope of Australia’s Black Friday expenditure is likely to emerge in the coming days, with Klarna competitors like Afterpay, and more traditional payment systems like PayPal and credit card providers yet to detail the nation’s shopping habits.

Last year, Afterpay declared it had processed some $900 million in Australian sales through the Black Friday period, with that figure expected to be even larger in 2021.