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Significantly impacted trading conditions for the 18 weeks to October 31 have seen Accent Group miss its expectations by $86 million.

The footwear business’ gross margin fell by 700 basis points through the period, as it continued “targeted promotional activity” to ensure its inventory levels remained manageable, and focused on finding savings in “controllable” areas of its business: namely, marketing, wages, travel and administration.

The result was significantly affected by government mandated store closures across Australia and New Zealand, Accent Group chief executive Daniel Agostinelli said, with more than 400 of the business’ stores shuttered through the period.

“Since the re-opening of New South Wales and Victoria, the company has experienced a strong spike in sales and improved gross margins ahead of key Cyber, Christmas and Back-to-School trading periods,” Agostinelli said.

“We’re pleased with trade over the last several weeks and are optimistic about the coming months, assuming uninterrupted trade over this period.”

Since reopening, Accent Group’s like-for-like store sales have jumped 8.4 per cent in New South Wales, and 5.9 per cent in Victoria.

And, given the uncertainty the retail industry continues to face moving forward, Agostinelli said Accent Group won’t provide guidance moving forward.

“I’m pleased to say we’ve exited this period ‘Match Fit’, with out stores, team and inventory in great shape to take advantage of the key [holiday] trading periods,” Agostinelli said.

“Most pleasingly is the progress in new stores, with more than 120 new stores to open this year.”

• Originally an American tradition, Black Friday is a huge sale event that signifies the start of the Christmas shopping season. 
• For 2021, Black Friday will occur on November 26, while Cyber Monday kicks off on November 29.

What started out as one of the biggest shopping days in the United States, has since exploded into an international phenomenon. The term “Black Friday” has become synonymous with huge savings, with retailers and brands offering some of the biggest deals and bargains during this annual event. 

According to a survey run by Finder, 35% of Australians intend on taking advantage of the Black Friday and Cyber Monday sales (that’s roughly equivalent to 6.8 million Australians).

So what exactly are Black Friday and Cyber Monday, and what can we expect during the upcoming 2021 sales?

What is Black Friday?

Black Friday originally started in the United States as an event to signify the start of the Christmas shopping season. Over time it has evolved into one of the biggest shopping days of the year in the US. 

Traditionally, Black Friday occurs on the fourth Friday in November, the day after Thanksgiving in the United States. Over the past decade, more and more Australian retailers have been embracing this tradition, offering huge sales during Black Friday.

This year, the event is set to occur on Friday, November 26. However, if past Black Fridays are anything to go by, not all retailers will stick to this date. Some may kick off their sales a few days earlier, or have their sales run well into the following week. A long weekend of sales that start on Black Friday and end on Cyber Monday isn’t an uncommon practice for some retailers.

While a fair share of Black Friday deals were in-store only during previous years, due to the COVID pandemic, these sales could be more online-focused this year, much like they were last year.

What is Cyber Monday?

Cyber Monday is another huge sale event, taking place on the Monday following Black Friday. As its name suggests, Cyber Monday is more focused on online sales, so expect to see some big deals through online retailers and brands.

This year’s Cyber Monday is set for November 29. Over the years, the line differentiating Black Friday from Cyber Monday has blurred, with the former offering a fair share of online bargains. However, don’t be surprised if certain retailers and brands offer deals exclusive to Cyber Monday.

What deals are available during Black Friday and Cyber Monday?

Most retailers won’t release information about their Black Friday sales until the day of, so we can’t give you a full rundown of what will be available. However, it’s a safe bet that if a retailer or brand has an online store, there’s a very good chance they’ll have some kind of Black Friday and/or Cyber Monday sale going. 

Due to the time difference between Australia and the United States, there’s a good chance that we’ll be able to take advantage of the US’s Black Friday sales during Saturday, our time. The same can also be said for the US’s Cyber Monday sales. You may just have to wait a little bit longer for these international orders to arrive.

Are there any early Black Friday are currently available?

Retailers and brands like to play fast and loose with the event’s timings, and 2021 is now different.

The Australian head of delivery giant DHL has poured cold water on hopes that the restart of international travel could swiftly fix the country’s delivery crunch, with international supply chains unlikely to return to normal until 2023.

Gary Edstein, the chief executive of DHL Express Australia, told The Age and The Sydney Morning Herald he didn’t foresee the current extreme pressures on international logistics easing until at least mid-2022 and were unlikely to return to pre-COVID conditions until at least 2023.

This is despite national carrier Qantas on Monday commencing its first international commercial flight out of Melbourne in 20 months as part of a move to gradually recommence international travel. Passenger jets are important parts of global supply chains, as companies often use their extensive cargo space to ship goods in and out of countries.

However, Mr Edstein said it will be some time before the number of incoming international flights will notably reduce delivery times for consumer products. Global logistics chains are currently so stretched that DHL has been forced to charter its own fleet of passenger jets to keep retailers and shoppers stocked up as the Christmas rush gets underway.

“We’re just going into Christmas peak, it’s actually happening right now as we speak,” he said. “And based on our forecasts, we’ve had to put on an additional 102 passenger aircraft freighters.”

“All we do is use the belly of that aircraft ... the upper deck is not filled at all, even with passengers or cargo. We’re only using 20 tons of capacity of a 100-ton aircraft.”

This is an “incredibly expensive” endeavour and explains the current high cost of freight and some consumer goods, the chief executive said. However, DHL believes it will put the business in good stead for the Christmas rush, which is likely to test the country’s already strained supply chains

Both international and domestic logistics networks are under massive demand at the moment, with a perfect storm of both heightened spending and COVID-related delays at key ports causing a compounding crunch of supply lines, with freight costs skyrocketing over 300 per cent.

Mr Edstein says while DHL may be well-placed for the festive season, consumers should be doing their shopping as soon as possible, as he expects a “significant surge” of shopping activity, starting this week with the Black Friday shopping event.

Despite the shipping challenges, DHL’s 19th annual Export Barometer report, released on Tuesday, shows that nearly two-thirds of local traders are expecting exports to rebound in the new year, and 59 per cent are predicting export revenue will return to pre-pandemic levels by the end of 2022.

“We’re seeing a lot more confidence coming back,” Mr Edstein said. “And it’s great to see that we’ve got Australian exporters being so entrepreneurial and exporting to the world.”

Toll warehouse workers, including at Kmart’s largest distribution centre, are striking indefinitely citing cost of living pressures in a fight for pay rises of up to 8 per cent that threatens the supply chain of major consumer brands ahead of Christmas.

About 1000 workers who rejected pay rise offers of between 2.25 per cent and 2.5 per cent set up picket lines on Monday at seven Toll warehouses across NSW, Victoria and South Australia, prompting the major logistics provider to call in the police over claims of illegal blockades and intimidation.

Kmart is expected to be the worst hit as the strike stops work at its major Victorian supply centre just weeks before Christmas, followed by other major brands such as Nike, Optus, Treasury Wines and snacks giant Mondelez.

The pay dispute is the latest industrial action to disrupt the logistics sector, with delivery strikes over the past three months only recently ending in deals for all major operators except FedEx and long-running port stoppages suspended last week.

New wage growth figures, which the Reserve Bank of Australia wants heading to 3 per cent to maintain its inflation target, are due to be revealed on Wednesday. Wage growth was just 1.7 per cent in the June quarter.

United Workers Union national secretary Tim Kennedy said the Toll workers, whose wages were frozen last year, were not willing to accept what amounted to a real wage cut as the cost of essentials has skyrocketed.

“The cost of living keeps rising, but we have huge companies like Toll in the business of suppressing wages for its already low paid workforce,” Mr Kennedy said.

“This contracting out model has made big bucks for third-party logistics companies and the brands they service, but it has seen wages slashed for workers that have never recovered.”

Toll calls cops on picketers

But Toll blasted the workers for participating in what it said was an “illegal” picket line and accused the union of intimidating and blocking those who tried to come to work.

“Toll condemns, in the strongest possible terms, the illegal action and bullying of our employees by the UWU,” a spokeswoman said.

“It’s gotten so bad we have been forced to call the police to protect our workforce.”

The union is understood to be strongly denying Toll’s claims.

Toll is considering legal action to stop the “blockades” and is expected to make a final decision on Tuesday.

While supporting employees’ rights to take protected industrial action, the spokeswoman said the picket behaviour was “appalling” and the company was “taking this illegal action very seriously”.

”Unions should not be able to get away with breaking the law,” the spokeswoman said.

The UWU has made an ambit wage claim for 8 per cent a year, amounting to an extra $2 an hour, and says workers will strike for as long as it takes for a “reasonable” offer, with suggestions 3 per cent will not be enough.

Toll worker Narelle Young, 48, said she had worked directly for Kmart for $32.65 an hour in 2010 before the retailer outsourced its warehouse operations to Toll, which saw workers re-employed on $17 an hour.

Ten years on, wages have increased to $27 an hour, but that was still about $5 short of what directly employed Kmart warehouse workers were paid, she said.

“Toll have shown disrespect with their [pay] offer, which is basically just 50 cents [an hour increase],” Ms Young said.

“Even a 3 per cent wage rise on $27 still doesn’t really give you a cost of living when you start from a low base. They just don’t want to pay us for the profit they’re getting.”

The consumer price index rose 3 per cent a year in the September quarter while underlying inflation, which trims away extreme price changes, exceeded the RBA’s forecasts at 2.1 per cent.

A Toll spokeswoman defended its wage offer as “generous” and pointed out that the UWU had made agreements at competitor sites that provided “far less” than it was claiming at Toll.

Ms Young said Toll had seen online orders go through the roof during the pandemic and had taken on more than 400 casuals at the Kmart site to deal with demand.

“A lot of the casuals here are struggling to pay their rent, which is why we want secure jobs for them,” she said.

The UWU wants casuals made permanent and is also fighting to ensure that workers do not face what can be significant wage cuts once Toll’s contract with a client ends and starts with another or if workers are sent to another site.

Christmas under threat

“Workers are exhausted after working through the pandemic,” Mr Kennedy said. “If we don’t resolve this soon then this will have a big impact on Christmas.”

A spokeswoman for Kmart said the retailer’s Melbourne centre served Victoria, South Australia and Tasmania, but claimed the indefinite strike “should have minimal impact for our customers” and did not expect any delays or stock shortages.

“Our online orders are fulfilled direct from stores, and we have ample stock in the system given Victoria’s recent reopening from an extended lockdown.”

While the UWU has said its industrial action was “indefinite”, Toll noted that the union had only notified it of a five-day strike and that the company was working with customers on contingency measures.

“In the lead-up to Christmas, with supply chains already under threat from the global pandemic, it is appalling the UWU is organising illegal picket lines and blockades that will disrupt the lives of our employees, our valued customers and Australian working families who have purchased products from those customers.”

More than 50 Country Road warehouse workers, on between $22.52 and $24.34 an hour, have also been striking indefinitely at the fashion retailer’s Melbourne centre since last Thursday in support of a 4 per cent pay rise.

The country’s supply chain has been under massive strain since at least August because of record demand in the locked-down states, frequent workforce isolations because of COVID-19 and pandemic disruption and capacity constraints at ports.

The pressure has been exacerbated by truck drivers declaring 24-hour national strikes at major operators including Toll and FedEx and wharfies issuing more than 200 notices of industrial action against Patrick Terminals over the past 12 months.

The Maritime Union of Australia last week called a ceasefire on its Patrick industrial action until mid-December after the stevedore applied to terminate the action because it was a significant threat to the economy.

Luxury e-commerce platform Showroom-X has launched an equity crowdfund offer with Birchal, seeking to further expand its brand portfolio and, in turn, grow its international platform.

Showroom-X will also use the cash generated through the offer to create a bespoke online marketplace encouraging circular fashion: allowing customers to recycle, upcycle, and rent out their old garments.

“We want to be part of shaping a future in fashion – one that is intrinsically linked to an appreciation of the natural world and our local artisans,” said founder and chief executive Richard Poulson.

“With this raise, we aim to expand our sustainable brand portfolio and, in turn, grow our customer base across multiple countries [and] want to build our team and develop an integrated circular platform that has resale and rental capabilities.”

One of the business’ main targets is the Chinese market, with plans to grow Showroom-X’s live streaming capabilities aimed squarely at reaching the Chinese consumer.

Creative director Kelly Atkinson recently told Inside Retail that the demand for Australian fashion is “enormous” in China, and is mostly untapped.

For a start, the business has been wooing local Chinese customers, with the aim of selling directly to China once they understand the market.

“It’s really about proving the case in this market and oiling the wheels, because when you go to China, you have to operate at such a scale that if the foundations aren’t laid right, as you grow exponentially, the cracks become bigger and bigger,” Atkinson said.

The Birchal offer is open until the 2nd of December.

Plus-size fashion firm City Chic Collective saw earnings drop by $1 million a month due to store closures across its network, having lost 37 per cent of its trading days since its full-year results in August.

However, with all its stores now open and trading into the busiest time of the year, chief executive Phil Ryan is confident the business’ brands will perform well over the holidays.

“We have some of the biggest weeks of the year coming up with Black Friday, Cyber Monday and Christmas all in the next six weeks,” Ryan said.

“In our two biggest markets, the US and Australia, we have the inventory ready to drive the performance and there is strong momentum heading into the period.”

According to Ryan, the fashion group’s business is firmly centred on its digital offer, which now makes up 78 per cent of its business with over 1.2 million global active customers, and over 65 million visits per year.

And as stores have reopened, City Chic Collective’s online performance hasn’t waned. However, not all of the business’ markets are as prepared for the holidays as its Australia and US arms.

While City Chic Collective has been able to stockpile product in its two biggest markets, it is facing a more “volatile” situation: labour shortages and logistical issues across the EU and UK have meant the group’s Autumn/Winter products struggled to get to customers.

“This product had been planned and purchased, and was either in market or in a container and we were unable to handle it to be ready to send to customers,” Ryan said.

“The logistics challenges also delayed the growth potential with partners including Zalando and Debenhams as well as our Navabi site.”

The issue largely came about because, until August, City Chic Collective didn’t have a warehouse in the EU – all orders in that region were coming through the UK warehouse, leading to a set of logistic issues having a potentially outsized impact.

“This is a transient situation, and we are working with our logistics partner in the UK to find solutions so we can get back on track,” Ryan said.

• After the ACCC released a warning that supply chain disruptions would likely force Australian businesses to pass on costs to consumers, a raft of companies have been pressed on the issue.
• Many retailers are working hard to absorb these costs in the short-term however they will ultimately passed onto customers, experts say.
• “It’s a careful balancing act in terms of how retailers deal with these costs,” Paul Zahra, chief executive of the Australian Retail Association, told Business Insider Australia.

Amid unprecedented demand for consumer goods and services and supply chain chaos, businesses and retail industry leaders are warning consumers to prepare for price increases to persist over the next nine to 18 months.

In early November, a report from the ACCC outlined the impact to Australian businesses of supply chain disruptions and said costs now risked being passed on to consumers. 

Now, a number of Australian businesses are being pressed on how they will manage the inflation expected as soaring shipping costs lift the price of imports.

Furniture retailer Nick Scali’s chief executive Anthony Scali in late October told shareholders disruptions caused in part by lockdowns in its supply hub in Vietnam meant it would be forced to push through price rises of as much as 10%.

Sanjeev Gandhi, chief executive of mining and infrastructure corporation Orica said inflation would remain a key issue for businesses operating in Australia.

“Inflation is a massive challenge, and that’s something I expect will continue,” Gandhi said following the company’s recent financial results. 

“Inflation is all over the place… We see energy inflation, we see inflation in supply chain costs, we see inflation in our input costs, we see labour cost inflation,” he said. 

However many of Australia’s corporate giants are reluctant to publicly flag the supply chain crisis will force them to pass on costs to consumers. 

A spokesperson for Wesfarmers, which owns Target, Kmart and Bunnings, told Business Insider Australia it didn’t anticipate its customers would experience shortages or price increases in the final months of this year. 

“Although there have been some supply chain disruptions, we are well-placed with inventory in the lead up to the important Christmas trading period,” the spokesperson said.

However, they did admit that “risks remain” around “delays in ports and last mile deliveries.”

Nishad Alani, chief executive of hospitality and retail holding company Retail Zoo, said it was well-placed to rein in risks, but it expected that many other companies would see wages and costs go up as a result of inflation. 

Price rises are already being illustrated in government data. Recent ABS figures revealed that underlying inflation rose from 1.6% to 2.1%, making it the first time in five years that core inflation has been above 2%. 

Capital Economics economist Ben Udy said higher shipping and import costs would soon feed into higher inflation.

Udy also suggested this could lead to faster wage increases, which could potentially lead the RBA  to tighten monetary policy. 

Costs will ‘ultimately passed onto the consumer’

Paul Zahra, chief executive of the Australian Retail Association, said the supply chain continued to face “incredible pressure” that would inevitably impact the retail sector as it geared up for Christmas trading. 

With container fees up to seven times their usual rate, retailers are grappling with how to best manage additional costs. 

“It’s a careful balancing act in terms of how retailers deal with these costs,” Zahra told Business Insider Australia.

“Most retailers are working hard to absorb these costs in the short-term however, at some point these costs will be ultimately passed onto the consumer,” he said.

Zahra said the ARA is predicting it will take another nine to 18 months for conditions to return to normal for retailers and consumers. 

Taylor Blackburn, a finance expert at Finder, told Business Insider Australia many companies — particularly those with expanded e-commerce offerings — would be grappling with how to resist passing on costs to their customers. 

Finder research shows that long delivery times and high shipping costs ranked as the biggest issues for consumers. 

“While the pandemic introduced many to online shopping for the first time, it is likely that supply chain disruptions and huge demands on delivery services have forced consumers to grapple with extended delays,” Blackburn said. 

Accent Group is set to add another brand to its large portfolio, after being named as the new exclusive distributor in Australia and New Zealand (ANZ) for Reebok. 

Accent Group has been appointed by Reebok's new owners Authentic Brands Group (ABG) as the ANZ distributor for an initial 10-year term.  

The deal will come into effect once the ownership of Reebok moves from previous owner Adidas AG to ABG, which is expected to close in the first quarter of 2022. 

Accent Group will then commence distribution and delivery by the second quarter of 2022.

Accent Group CEO Daniel Agostinelli said the business will work with ABG to grow Reebok in the ANZ market. 

"Reebok is an iconic global brand that needs no introduction.

"We are delighted to be the new distributor in Australia and New Zealand.

"The Reebok distribution agreement further strengthens Accent Group’s competitive moat – a broad and deep portfolio of international and vertical brands that is digital first, customer obsessed, and delivers product differentiation and strong margins.

"Our plans are to grow the Reebok brand in ANZ through the brand’s existing wholesale accounts, direct to consumer online sales and through our multi-brand retail banners," he said. 

ABG CEO Corey Salter welcomed the new partnership with Accent Group. 

"We are excited to implement the new global strategy for Reebok.

"Accent Group is an industry leader and we are thrilled to partner with them in this important region," he said. 

Accent Group's retail banners including Glue Store, Stylerunner, Pivot, The Trybe, Platypus and Hype DC all stock Reebok already. 

Adidas agreed to sell Reebok to ABG for €2.1 billion (AUD$3.3 billion) in August 2021. 

Australia’s longest continuously running apparel brand, Sportscraft, is expanding into children’s wear with a permanent range of clothes for babies through to 10 year olds set to launch on November 30. 

The first drop will include smock dresses, rompers and dungarees for boys and girls in a variety of Liberty prints as part of the brand’s latest collaboration with the iconic British fashion house. 

A second drop in March will extend the range beyond the Liberty collaboration, and new collections will be delivered every two months thereafter. 

Sportscraft’s kids’ range will be available online and in-store, as well as on The Iconic and David Jones’ website.  

“It’s a very natural extension and makes complete sense for the brand,” Elisha Hopkinson, managing director of brands at APG & Co, the private company that owns Sportscraft, alongside Jag, Saba and Willow, told Inside Retail.

“We often have wanted to shoot family moments, but we didn’t want to put children in [campaign images] because we didn’t have children’s wear.”

Hopkinson said the brand’s move into kids’ clothing received strong support from The Iconic, which has offered children’s wear since 2018.

Children’s wear is considered a lucrative category in the overall apparel sector since kids are constantly outgrowing their clothes, which leads to more frequent purchasing, a fact not lost on Sportscraft.

“We recognise that people are having to buy for children more,” Hopkinson said.

“Sustainability and being ethically compliant is a really important part of our business. We make clothes that last forever, and if you look in anyone’s wardrobe, they’ve got enough of everything.”

Older consumers generally need to fall in love with a garment or have an upcoming event in order to justify purchasing a new item of clothing, she said. 

“Children’s wear is an opportunistic market and we’re really excited to see how our customers relate to our first range.”

Founded in 1914

Sportscraft was founded in Australia in 1914 by Russian immigrant Wolf Bardas. Astonished by the size and climate of his new country, which enabled people to lead their lives outdoors, he named the brand in reference to the active lifestyle of his customers, as well as the quality of his garments. 

“These two things are still relevant to us today,” Hopkinson said.

“Craftsmanship is really important, we constantly invest in our fabrication. We do a lot of testing to make sure it lasts, there’s no pilling, and that it doesn’t fade quickly when it’s got sunlight on it. And in terms of the sports element, the product is designed to move and do things in. It’s not [about] sport in the activewear sense, it’s [about] the old-school term sportswear. What you would wear to the sports club.”

The last few years at Sportscraft have been about communicating this brand story more clearly to customers. 

“We often photograph [models] outside enjoying Australian life. We’re not a wear-to-work brand that’s meant for indoors. You see people [in our campaigns] picking kids up from school, catching up with girlfriends and having a coffee, running errands. We’re developed for everyday living,” Hopkinson said. 

While Hopkinson said Sportscraft is not actively pursuing a younger demographic, it has started using more diverse models in terms of age, size, and background to reflect the broad appeal of its classic clothes, which never go out of style.

“People who are looking for beautiful white shirts, beautiful trenches, beautiful linen shirts, beautiful shirt dresses, beautifully fitting pants, we’re absolutely the go-to place,” she said. “We’re not trying to be in the fashion trend space.”

This timeless aesthetic is reflected in Sportscraft’s relationship with Liberty, which dates back to 1983. The brand is the biggest buyer of Liberty fabrics in the southern hemisphere, Hopkinson said. 

“Liberty is obviously renowned for their unique prints, but they’re also renowned for the beautiful fabrications that they use. When you buy their prints, you don’t just buy their prints, you actually buy their fabric. That’s how they control their quality. And quality of fabrication has always been a really strong brand pillar for Sportscraft, hence why the relationship really works for us,” she said. 

Sportscraft’s latest Liberty collection includes maxi dresses, skirts, tops, tees and suits for women and floral shirts for men, as well as a range of clothes for kids. The looks were created with the easing of Covid-19 restrictions in Australia in mind.

“We wanted to do something that was more exclusive and more designer-led to make some noise in the market,” Hopkinson said.

“We’re giving a nod to the fact that everybody wants to get back to the normal way of Australian life, which is the quintessential garden party.”

How can retailers ensure strong sales this holiday season amid continuing supply-chain problems? Two McKinsey experts share their insights.

The disruptions in the global supply chain are the result of a confluence of factors—which means that retailers have to take action on multiple fronts if they want their store shelves stocked and online orders fulfilled on time. In this episode of the McKinsey on Consumer and Retail podcast, retail supply-chain experts John Barbee and Sarah Touse offer advice to retailers ahead of what’s shaping up to be another unusual holiday season.

Monica Toriello: If you haven’t done your holiday shopping yet, it might already be too late. That seems to be one of the takeaways from all the recent headlines about disruptions in the global supply chain. As has been reported, there are many reasons for these disruptions, so there isn’t one magic solution for retailers. Today, our two guests will share their insights on the range of supply-chain issues and what retailers can do in advance of what’s sure to be a challenging holiday shopping season.

John Barbee is a partner based in McKinsey’s Atlanta office. He works with many retailers and consumer-goods companies on their omnichannel, supply-chain, and fulfillment strategies. He is one of the authors of a recent article titled “Retail’s need for speed: Unlocking value in omnichannel delivery.”

Sarah Touse is an associate partner in McKinsey’s Boston office. Sarah, like John, has advised a wide range of retailers and consumer-goods players on supply-chain topics. Sarah has coauthored a number of retail articles, including one most recently on how retailers can build supply-chain resilience. Thanks for joining us, John and Sarah.

There’s been a lot of press about the supply-chain crisis, and it’s been attributed to a host of factors: logjams at ports; huge, unanticipated spikes in consumer demand; labor shortages; and so on. From your perspective, is there one thing that’s the biggest problem? Or are they all equally big problems?

John Barbee: That’s a conundrum, Monica. There’s no single biggest problem. The good news is that some of the disruptions will pass, such as overseas vessel delays and container shortages. For these issues, the optimist would venture that they’d be resolved by the first half or early second half of next year. However, the pessimist might see this backlog last through 2023.

The other issues—such as labor shortages—have been a long time in the making. Hourly wage rates have escalated over 20 percent in the past 18 months, and investments in technology and automation in distribution centers have been elevated and are now at the forefront of most chief supply-chain officers’ agendas.

Sarah Touse: The numbers are just staggering. If you look at the resignation rate, it’s 13 percent higher than prepandemic levels. During the pandemic, 3.5 million people retired, which is two million more than usual. There are ten million job openings right now. There’s a whole host of factors underneath that, but for me one of the takeaways is just how fundamentally this pandemic has changed how Americans—and people around the world—think about their careers and their jobs and how they want to spend time.

Led by the Australian Retailers Association and the Business Council for Sustainable Development Australia, a number of retailers have joined a UN-backed campaign in a ‘Race to Zero’.

Ikea Australia, Kmart Group and Officeworks have each pledged to support the campaign, drive climate action in their own businesses, and encourage other retailers to set public net-zero emission goals.

“Climate change and the resulting impacts are among the greatest challenge we’ll face in our lifetime,” said Kmart Group MD Ian Bailey.

“I know we don’t have all the answers right now, however what I do know is that if we join forces together we can work our way through this very complicated challenge and make things right.”

And, following the pandemic, it seems customer sentiment is on their side: A recent report commissioned by Republic of Everyone and The Bravery found that 56 of Australians are now looking for ‘good’ brands and products, and, according to the campaign, 8 in 10 customers use sustainable metrics to decide how they will shop.

“Report after report has demonstrated that Australian consumers want this change. Having negotiated the global pandemic, Australian retailers are now moving on to the next big global disruption – climate change,” ARA chief executive Paul Zahra said.

“Unlike previous disruptions that have caught some retailers off guard, we’ve had plenty of notice about the need for climate action – the science is clear, the case for change is compelling and our members are acting.”

Sarah Hunter, managing director at Officeworks, said the retail industry, working together, can demonstrate the leadership and action necessary to limit the worst impacts of climate change.

“Collectively, the retail sector serves millions of Australians every day, so the choices that we make can have an enormous impact beyond what we can directly control,” said Hunter.

Ikea Australia’s sustainability manager Melissa Hamilton agreed, noting that they are on the journey but still have a long way to go.

“By 2030, our ambition is to be a circular business built on clean, renewable energy and regenerative resources, de-coupling material use from our growth,” Hamilton said.

“By working together and united under a common goal with this initiative, we want to share our knowledge and experience, and learn from others. Each of us can be a leader for change.”

Other retailers are encouraged to join the ‘Race to Zero’ campaign by setting targets based on the latest science, with the goal of halving greenhouse gas emissions by 2030 and achieving net-zero carbon emissions by 2050.

Falguni Nayar’s beauty startup has jolted her to the ranks of the world’s richest.

Nayar, who owns about half of Nykaa, is now worth almost $US7 billion ($9.6 billion) as shares of the firm nearly doubled on their trading debut on Wednesday in India. She’s become India’s wealthiest self-made female billionaire, according to the Bloomberg Billionaires Index.

FSN E-Commerce Ventures, Nykaa’s parent entity, is India’s first woman-led unicorn to hit the stock exchange. It priced its initial public offering at the top end of a marketed range, raising 53.5 billion rupees ($722 million). The stock was up 96 per cent in Mumbai.

“We have built the company for multi-year growth to address a very large beauty and fashion e-commerce market in India,” Nayar said in a conversation after markets closed on the day of Nykaa’s trading debut. “The size of the prize doesn’t really matter. Being rewarded for doing what I love doing is the key. Share prices are the bonus.”

Nayar, who formerly led a top Indian investment bank, founded Nykaa in 2012 just months before turning 50. Back then, most Indian women bought makeup and hair-care products at neighbourhood mum-and-dad stores where the selection was scanty and trials unheard of.

The startup has since grown into the country’s leading beauty retailer, buoying online sales with demo videos by glamorous Bollywood actors and celebrities and more than 70 brick-and-mortar stores. Nykaa, derived from the Sanskrit word for heroine, sells items including exfoliation creams, bridal make-up essentials and hundreds of shades of lipstick, foundation and nail colour to suit Indian skin tones, skin types and local weather.

“The size of the prize doesn’t really matter. Being rewarded for doing what I love doing is the key. Share prices are the bonus.”

Falguni Nayar

The firm is now a profitable company, a rarity among the internet startups making a debut in the public markets. Its sales surged 35 per cent to $US330 million in the year ended in March, according to a filing.

Nayar owns her company stake through two family trusts and and seven other promoter entities. Her Ivy League-educated daughter and son, who run different Nykaa units, are among the promoters.

“I hope more women like me dare to dream for themselves,” she said. “Women need to allow the spotlight of their lives to be on themselves.”

While Nayar is India’s richest self-made female billionaire, Savitri Jindal, who controls the OP Jindal Group conglomerate founded by her late husband, is the nation’s wealthiest woman. Her fortune is valued at $US12.9 billion, according to the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people.

Nykaa’s IPO is one of the many consumer Internet companies making its debut this year amid a soaring stock market. Paytm, India’s leading digital payments firm backed by Warren Buffett’s Berkshire Hathaway and Masayoshi Son’s SoftBank Group closes for subscription on Wednesday. One97 Communications, its operator, is vying for a $US2.5 billion listing, the nation’s biggest.

While Nykaa has changed Indians’ outlook from making do with just a lipstick and kajal eyeliner, “we have a long way to go,” Nayar told Bloomberg ahead of the IPO. Women –and men – in the country of 1.3 billion people are just beginning to open their wallets to splurge on make-up and grooming products.

The sharemarket is too conservative on Australia's leading retail stocks by underestimating their earnings power in an economy that is witnessing both sustained work-from-home behaviour, and a rise in shelf prices for pantry essentials.

Broker Citi finds that every 1 percentage point increase in food inflation is worth 2 to 3 percentage points of earnings to the supermarket operators, upgrading its recommendation on Coles shares to "buy" from "neutral" and hiking estimates for the supermarket giant by almost 4 per cent this year and next.

Looking ahead, analyst Adrian Lemme estimates that hybrid work will generate around 3 per cent additional demand for supermarkets, and 2 per cent for electrical retailers, as home office equipment heads into a natural replacement cycle. That is assuming only 0.4 days a week of incremental working from home against an average weekly grocery spend of around $90 for every Australian.

Further, there is still $60 billion of latent capital available to households and ready to be spent in financial 2022, according to the broker, from $136 billion in the previous year. However, in sequential terms, retail broadly faces a 3 per cent drag in the current financial year as Australians return to travelling and no longer count on the benefit of stimulus income.

"We expect higher inflation to ultimately result in higher EBIT for the supermarkets," Mr Lemme said. "Obviously, the degree of volume elasticity is a key assumption; lower levels of volume decline would yield improved EBIT in all scenarios."

Industry data suggests volume growth falls 0.88 of a percentage point for every 1 percentage point of inflation.

The broker also upgraded Harvey Norman’s financial 2022 and 2023 earnings by 10.5 per cent and 9.5 per cent respectively, sticking to its “buy” rating. “The electrical retailers in particular will probably welcome some level of inflation given some of their categories” – IT equipment and TVs – “are usually in deflation.”

The next wave of replacement spending is due in financial 2024, based on a three-to-five year upgrade cycle for personal computers, Citi finds. This alone is worth $430 million, or 2 per cent of electrical financial 2019 sales.

Across the sector, "we consider investors are getting a free option on the structural lift in demand given the current market estimates factor in fairly normal growth as is."

Global fashion brand Shein is set to host its first Australian runway show next week at Sydney's Overseas Passenger Terminal. 

Models will take to the runway to showcase Shein’s summer collections, with the event one of Sydney's first since the end of lockdown. 

The show will feature swim and resortwear, activewear, streetwear, partywear and designs from the Shein X collection, a collaboration between Shein and emerging and student designers from Australia. 

A Shein spokesperson welcomed the launch of the brand's first local runway show.

"We’re thrilled to be hosting our first ever Australian runway show at the iconic Overseas Passenger Terminal and showcasing our summer collections in front of one of the world’s most beautiful backdrops," the spokesperson said. 

The event will be attended by over 130 guests including media, celebrities, models and influencers including Love Island’s Amelia Marni, Josh Moss, Cassidy McGill, Millie Fuller and Cartier Surjan, The Bachelor’s Bella Varelis and boyfriend Will Stokoe and influencers Lily Macapinlac, Lily Bowman and twins Bianca and Yasmin Wilshin. 

Shein is a global eTailer that serves 220 countries, dropping new womenswear pieces on a daily basis.

The Shein runway will take place on November 17. 

• Since the start of the pandemic, e-commerce has exploded globally, radically transforming shipping and supply chains.
• It’s part of the avalanche of factors behind current supply chain chaos.
• “There’s a huge amount of money which consumers are reallocating to consumer goods,” said Leigh Williams, founder and managing director at eStore Logistics.

Australians started buying stuff at the start of the pandemic — and never stopped. 

The explosion of e-commerce globally as a result of lockdowns has led to a radical transformation in consumer behaviour. 

In Australia, online shopping surged 57% year-on-year in 2020, according to Australia Post’s Online Shopping report published in March of this year. 

Australians spent an astounding $50.46 billion online over that year, up from $32.1 billion in 2019.

And the number of companies taking business online each month more than doubled from pre-pandemic levels, peaking in July 2020, according to research conducted by Mastercard around its Australian activity.

As a result, the logistics sector is experiencing a level of demand unlike anything it’s seen before.

Jackson Meyer, CEO of Australian freight forwarding company Verus Global, said he’s never seen so much activity in his industry. 

“The demand has been immense,” he said.

Meyer said that while the sector saw a surge in activity during the first lockdowns in March of 2020, he didn’t expect it would continue into this year.

“Everyone sort of presumed that the demand would somewhat subside, because demand was so immense at the start,” he said. “But with [another] lockdown…people have got more money to spend.” 

Leigh Williams, founder and managing director at eStore Logistics, told Business Insider Australia its research showed around $60 billion worth of travel spending had been diverted into online shopping in the past 18 months. 

The company, a third-party logistics provider, offers warehousing and order fulfilment services to e-commerce and retail businesses.

“There’s a huge amount of money which consumers are reallocating to consumer goods,” Williams said of the explosion of online spending that had seen his company record a 94% year-on-year increase in orders on its platform in April of 2020. 

Since then, e-commerce acceleration has not slowed down; in April 2021 there was still an 80% increase in online orders compared to 2019.

“What we’ve seen is homewares, electronics… all of their volumes significantly increase because consumers are stuck at home with really not much else to do, other than furnish their home or buy stuff for their home offices or to buy things which entertain them,” Williams said.

Online shopping is contributing to supply chain chaos 

A glut of explainers and analysis have arisen to help people across the Western world reckon with a new reality that has disrupted the smooth conveyance of goods from a pixelated image to physical item on their doorstep.  

A brief rundown starts in China, where a bulk of consumer goods are manufactured — and where pandemic lockdowns first disrupted the supply chain by keeping workers at home and away from ports. From here, the cost of containers skyrocketed, pushed up by the difficulty of getting them filled and in and out of ports. Adding to this, ships began skipping stops at ports altogether because of congestion caused by delays in moving containers out. 

The flow-on effect has been that “we’re seeing Australia being impacted more than what Europe and the US is,” Meyer said. 

Australia has imported an immense amount of products in the past year, and it is part of the avalanche of factors behind current supply chain issues. 

According to ABS data, the country’s inventory to sales ratio plummeted in late 2020 and early 2021. 

This metric, which compares how much sellers have on hand to how much consumers are buying, points to significant shortages brought about by the pandemic. 

COVID-19 has exacerbated this, causing a global mismatch in the supply and demand of containers.

Australia is reporting a pile up of empty shipping containers at its ports, leading to “excessive truck queuing delays, and inefficient movement and handling processes,” according to Freight Australia.

Adding to this are rolling strikes in the past month in ports across Sydney and Melbourne that have massively reduced headcount.

The culmination of the demand for imports is congestion that is “creating a series of issues,” Meyer said, that are “getting even worse”.

“We’re having circumstances whereby shipping lines are actually suspending services; so the whole vessel itself is skipping ports,” he said. 

Some companies have stopped importing to Australia because of skyrocketing e-commerce costs

Because of the massive amount of volume coming out of Asia — and the backlog there — there’s a shortage in vessel availability for goods to be sent from China to Australia. This is causing delays for products to be put on ships and actually sent to Australia. 

Meyer said this “increased backlog” has meant his company’s clients “can’t get the stuff we expected to get”.

“We’re seeing cancelled bookings, cancelled slots, cancelled containers because of this,” Meyer said.

Another issue is an explosion in the cost of e-commerce imports, which has had the two-pronged effect of both pushing up prices locally, and leading importers to choose to delay bringing their goods into the country.

“Eighteen months ago, businesses would pay about $1,500 to ship a container from China to Sydney or Melbourne,” Williams said. “And now it’s like $10,000.

“So there’s very short supply, there’s huge demand, the costs are going up.”

Meyer said because the cost of containers is so high, often the commercial value of what’s inside is actually less than what the business is paying for shipping. 

“We’ve seen a series of customers, particularly the ones importing lower cost items like packaging and paper products, they’re opting for waiting it out,” Meyer said. 

Retailers risk passing on higher costs to consumers

Soaring shipping costs now risk being passed on to consumers, according to a report into the container crisis released on November 5 by the ACCC. 

Some retailers have already signalled this is the most likely outcome. 

ASX-listed furniture retailer Nick Scali’s chief executive Anthony Scali in late October said disruptions caused in part by lockdowns in its supply hub in Vietnam meant it would be forced to push through price rises of as much as 10%.

Williams said another possibility was that once lockdowns ended, while consumption would diminish, online consumption behaviours would continue. 

“I think we’ll find e-commerce penetration to be a lot further ahead of what it was pre-pandemic, and a lot further and where it was forecast to be by the start of 2022,” he said.

Major clothing and shoe companies are moving production to countries closer to their US and European stores, smarting from a resurgence in cases of the Delta variant of the coronavirus in Vietnam and China that slowed or shut down production for several weeks earlier this year.

The disclosures come amid a massive shipping logjam that is driving up costs and forcing companies to rethink their globe-spanning supply chains and low-cost manufacturing hubs in Asia.

The latest example is Spanish fashion retailer Mango, which told Reuters on Friday it has “accelerated” its process of increasing local production in countries such as Turkey, Morocco and Portugal. In 2019, the company largely sourced its products from China and Vietnam. Mango told Reuters that it would “considerably” expand the number of units manufactured locally in Europe in 2022.

Similarly, US shoe retailer Steve Madden on Wednesday said it had pulled back production in Vietnam and had shifted 50 per cent of its footwear production to Brazil and Mexico from China, while Rubber clogs maker Crocs said last month it was moving production to countries including Indonesia and Bosnia.

Bulgaria, Ukraine, Romania, the Czech Republic, Morocco and Turkey were some of the countries drawing new interest from clothing and shoe producers, though China continues to produce a large share of the apparel for US and European clothing chains.

“We are seeing a lot of growth in freight and trucking activity in the former Soviet Republics … a big rise in Hungary and Romania,” said Barry Conlon, chief executive of Overhaul, a supply chain risk management firm.

In Turkey, apparel exports are expected to reach US$20 billion this year, an all-time high, driven by a spike in orders from the European Union, Turkey’s Union of Chambers Clothing and Garment Council data showed. In 2020, exports totaled $17 billion.

In Bosnia & Herzegovina, exports of textiles, leather and footwear amounted to 739.56 million marka ($436.65 million) in the first half of 2021, which was higher than for all of 2020.

“Many companies from the European Union, which is our most important trading partner, are looking for new suppliers and new supply chains in the Balkan market,” said Professor Muris Pozderac, secretary of the association of textile, clothing, leather and footwear in Bosnia & Herzegovina.

In Guatemala, where Nordstrom significantly shifted its private-label volume production in 2020, clothing exports were a touch over $1 billion as of the end of August this year, up 34.2 per cent from 2020 and even 8.8 per cent higher than in 2019.

To be sure, many companies are also still heavily reliant on Vietnam, where recent production stoppages have caused significant disruptions. Vietnam’s government said in October that it will fall short of its garment exports target this year, by $5 billion in a worst-case scenario, due to the impacts of coronavirus restrictions and a shortage of workers.

Factory inspections in Vietnam – a proxy for retailer manufacturing orders – fell 40 per cent in the third quarter versus the second quarter, with production during those months quickly moving to Bangladesh, India and Cambodia. Inspection rates in Vietnam were still hovering at lower levels in the fourth quarter, with a small uptick seen in late October, said Mathieu Labasse, vice president of QIMA, a supply-chain quality control and auditing firm that represents more than 15,000 brands.

Apparel maker VF Corp and outdoor gear maker Columbia Sportswear were among companies that warned that there would be delays in fall and spring collections and in some cases insufficient size assortments.

Michael Kors handbags maker Capri Holdings said on Wednesday that it would not have the inventories it wanted for the holiday season, while athletic gear maker Under Armour said on last Tuesday it was canceling purchase orders from Vietnam just to help get “the factories get back up and caught up.”

Department store Myer failed to avoid a second strike after its Remuneration Report received only ~65 per cent of shareholder votes, triggering a board spill that was ultimately avoided.

The business put the motion of a board spill to its shareholders, which if approved would require the business to hold a ‘spill meeting’ within 90 days that could see its board scattered if not re-elected. The motion was voted down, however, with 62 per cent of shareholders supporting the current board and management team.

Myer’s proposed board changes also went through shareholder approval undeterred by Solomon Lew’s campaign to create a more ‘independent’ board, with each election or re-election passing by a majority of proxy votes before the department store’s AGM even started.

The business wished to have Ari Mervis and Jacquie Naylor elected to the board, as well as David Whittle re-elected: each of which received more than 60 per cent of shareholder votes in approval.

Chairman JoAnne Stephenson said that the business had received many questions from shareholders regarding its interactions with Premier Investments, and that it had unfortunately not yet been able to reach an agreement with the Solomon Lew-headed fashion group.

Scentre, the country’s largest retail landlord, says shoppers are returning with gusto to its malls as COVID-19 restrictions ease, giving the tenants cause for optimism of a busy upcoming festive season.

During the 10 months to the end of October, more than 98.5 per cent of its stores were occupied and rent collections have to $1.8 billion, a rise of $607 million since the end of June.

Scentre Group chief executive Peter Allen said all its Westfield malls, called “living centres”, had remained open during the lockdown period, operating with COVID-19 Safe protocols.

“Customers are again rapidly returning to our Westfield Living Centres in NSW, Victoria and the Australian Capital Territory now that restrictions have eased. We are also looking forward to welcoming back more businesses and customers to our Auckland centres,” he said.

The ASX-listed Scentre with a market value of $16.45 billion, owns and operates 42 malls under the Westfield banner across Australia and New Zealand, encompassing more than 12,000 outlets.

Due to the lockdowns and restrictions in the past year, total majors, predominately department stores and supermarkets, and specialty in-store sales were 7.2 per cent lower for the year compared to 2019.

For specialty in-store tenants, which are more non-discretionary items including cinemas, sales were 9 per cent lower for the year, while the majors in-store sales were 4.4 per cent lower for the year.

Despite COVID-19 uncertainty, it inked 2010 lease deals in the nine months ending September, with 868 new merchants and 191 new brands to the portfolio.

Of the new tenants, there will be the first Australian location for the new technology-enabled fitness craze, Peloton, at the Westfield Bondi Junction centre in Sydney’s eastern suburbs. It will be a showroom with some unique offerings for customers to experience the products and live demonstrations.

During the period, Scentre also launched Westfield Direct, its aggregated “click and collect” service, as an extension of the in-centre experience.

To boost its long-term growth, Scentre has kicked off the $355 million, of which its share is worth $178 million, redevelopment of Westfield Knox, in the eastern suburbs of metropolitan Melbourne, Victoria.

Upon completion, the mall will have a gross lettable area of 144,810 square metres and will see the replacement of Myer with a range of new retailers, including Woolworths and Aldi, as well as a new fresh food market, a new library and other community uses. It will open in stages between the end of 2022 and 2023.

Mr Allen said development activity was progressing well with the $55 million rooftop entertainment, leisure and dining precinct at Westfield Mt Druitt, Sydney.

“Despite the impact of lockdowns, all tenancies are fully leased and on track to open in early 2022,” he said.

Works on behalf of Cbus Property to design and construct 101 Castlereagh Street on the corner of Market and Castlereagh streets in Sydney’s CBD, to create a luxury store with offices and apartments above, is continuing with completion expected in 2023.

There is also market speculation that Scentre and Vicinity may look at the minority interests in the Macquarie Centre and Pacific Fair malls currently being sold by the Dexus-managed wholesale fund.

Scentre has maintained its full-year distribution guidance of 14¢ per security.

Marina Go, the new chairman of online make-up and skincare products group Adore Beauty, says the strategy will not change after a boardroom reshuffle and the company thinks the structural shift to online shopping will continue as economies fully reopen.

She acknowledges that investors in the public float in October last year are still substantially underwater and the company will need to deliver over an extended period to restore the faith, with better signs having emerged in July and August.

“We have to continue to perform, and we will,” she said.

The share price is languishing about 26 per cent below the issue price of $6.75 in last year’s float of the company, even though it gained 2.2 per cent to close at $5.01 on Tuesday.

Ms Go has been appointed chairman after Justin Ryan, a former dealmaker at Quadrant Private Equity, relinquished the position and resigned from the board.

Mr Ryan, who in late September set up a new private equity firm called Glow Partners with one of Adore Beauty’s founders, Kate Morris, said he would retain his personal stake and believed Adore Beauty had a strong growth outlook.

He holds 39,000 shares in Adore Beauty.

Quadrant is still the major shareholder in Adore Beauty with a 32.5 per cent stake, having sold down from 60 per cent in the 2020 float onto the ASX.

Mr Ryan and Ms Morris first met when Quadrant took a 60 per cent stake in Adore Beauty in 2019. Mr Ryan left Quadrant earlier this year.

“I will retain my shareholding in Adore Beauty, and remain very optimistic about the company’s growth prospects,” he said on Tuesday.

Ms Go has been a director of Adore since October 2020. She is a non-executive director of Energy Australia, car retailer AutoSports Group, 7-Eleven and toll roads group Transurban.

She said the boardroom changes will not lead to a shift in strategy at Adore. “I’m really committed to the strategy of the organisation. The course won’t change,” she said.

Ms Go said there was no sign of customers dropping off as economies reopened. “We don’t see any sign of that reversing”. She is looking ahead, not behind.

“The share price did what the share price did,” she said.

The company plans to add an additional independent non-executive director, resulting in the ranks of independent directors being in the majority around the boardroom table.

Lockdowns in Sydney and Melbourne from July to September helped reignite some sales growth. The company’s sales rose 26 per cent in July and August, after slowing to just 3 per cent in the June quarter, when Australia’s largest pure-play online beauty retailer group worked overtime to match a surge in demand during the initial phase of the pandemic in 2020.

Adore, which is headed by chief executive Tennealle O’Shannessy, said on August 30 it planned to invest heavily in marketing, content, technology and new products to increase brand awareness and customers.

The aim is to lift Adore’s 13 per cent share of the online beauty market as e-commerce penetration moves closer to levels in the US, UK and China.

The number of active customers rose 39 per cent to 818,000 in the year ended June 30, but growth slowed to about 5 per cent in the June half. Returning customers increased 64 per cent to 360,000.

The shares traded above their $6.75 issue price on the first day of listing last October and reached as high as $7.42. But the stock slipped to a low of $3.31 in May after a weaker-than-expected trading update, although it has stabilised over the past three months around the $5 mark.

Adore Beauty is scheduled to hold its annual meeting on November 12. Ms Morris started Adore from her garage in 2000 and remains the company’s chief innovation officer.

Co-founders Ms Morris and James Height had a $92 million payday from the float, selling down 40 per cent of their shares and retaining 10.8 per cent each. Mr Ryan has been a director of Adore since 2019.

A wave of recent transactions and a shopping frenzy as malls reopen augurs well for Australia’s large shopping centre landlords, whose shares are still trading on the stock exchange at pandemic-induced discounts.

Trade in big retail assets is resuming and that shift is starting to provide evidence that mall owners’ assets may be undervalued, giving investors hope their shares will gain ground.

Between them, heavyweight mall owners Scentre Group and Vicinity Centres dominate Australia’s retail landscape, controlling or managing high-profile shopping emporiums like the country’s largest mall, Chadstone in Melbourne, and the nationwide network of Westfield-branded centres.

Early this week, Vicinity shares were at a net tangible asset discount to pre-pandemic levels of 20.7 per cent and Scentre’s at 16.4 per cent.

Two weeks ago, Vicinity Centres swooped on a $358 million half-share of the Gold Coast factory outlet-style mall, Harbour Town – it’s first large deal since the pandemic cruelled asset sales in the sector.

Marking the occasion, Vicinity boss Grant Kelley said Harbour Town’s moving annual turnover was more than double the average of the group’s current outlet-style portfolio and “expected to grow at more than 3 per cent per annum to 2031.”

In another deal, Perron Investments, a co-investor in another Vicinity owned centre – the Runaway Bay Shopping Centre in Queensland, sold its half-stake for $120 million at a 20 per cent markup on what Vicinity lists as its $107 million book value for its share.

And after 18 months of retail upheaval, another big acquisition supports the resurgence theory.

The sale of the Roselands shopping centre in south-west Sydney to Hong Kong-based JY Group for $167 million was struck at a suggested cap rate of 5.2 per cent.

Vicinity, which owns the other half of Roselands, has a book value on the asset that also implies the deal was done at a 20 per cent premium.

“In our view, this is more evidence that demand for larger retail is coming back and that negative revaluations during the COVID pandemic may have been overdone,” Jardine investment bank analysts Lou Pirenc and Andy MacFarlane said.

“Given most mall REITs are still trading at significant discounts to net tangible assets, we see this as a positive catalyst,” they said.

Another factor working in the malls’ favour is an expected surge in rental income as the deferrals and waivers that landlords were mandated to give to tenants during the pandemic fall away.

“If we assume that we go back to an environment where there are no waivers and everyone is paying rent, we would see a swing to Scentre Group of 24 per cent,” Mr Pirenc said.

Mr Pirenc said retail malls could also benefit by increasingly playing a bigger role in the last mile delivery of goods to consumers.

“We take a slightly anti-consensus view to the popular belief that online sales will kill the malls. As retailers increasingly struggle to get products to their consumers quickly, having locations close to where consumers live will benefit the malls.”

But he stressed it was “not a rising tide for all ships” as he expects stronger malls in better locations to gain share, with weaker malls in competitive markets to struggle.