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Higher interest rates and cost-of-living pressures are forcing households to ease up on non-essential spending, with new data showing retail sales have not grown at all in five months, despite modest gains in February.

Retail sales increased 0.2 per cent last month, according to data released by the Australian Bureau of Statistics on Tuesday.

But at $35.1 billion, the value of monthly sales was the same in February as it was in September, showing the pandemic-era period of rapid growth in retail spending has come to an end.

Given both the population and the price of retail products increased between February and September, the fact that the total value of sales has not grown implies households are buying fewer things.

ABS head of retail statistics Ben Dorber said sales had levelled out after a period of heightened volatility, caused by shifting seasonal spending patterns, including the emergence of Black Friday sales in November.

“On average, retail spending has been flat through the end of 2022 and to begin the new year,” Mr Dorber said.

“Spending in food-related industries continued to grow steadily in February, with cafes, restaurants and takeaway food services up 0.5 per cent, while food retailing rose 0.2 per cent.

“Non-food industry results were mixed as consumers continue to pull back on discretionary spending in response to high cost of living pressures.”

Hospitality still strong

Commonwealth Bank chief executive Matt Comyn said internal bank data showed spending remained strong in areas such as hospitality, while parts of the retail sector were experiencing weaker conditions.

“We don’t see a rapid deterioration in conditions coming,” he told The Australian Financial Review Banking Summit on Tuesday.

The retail trade figures were one of four major data points that RBA governor Philip Lowe said would be pivotal to next month’s rates decision.

The first two data points were stronger than expected: the unemployment rate fell back to a near 50-year low of 3.5 per cent in February and surveyed business conditions remained close to historic highs.

While markets expect the RBA board to keep the cash rate on hold at its April 4 meeting, most economists expect the central bank to deliver an 11th consecutive rate rise, amid persistent inflationary pressures.

BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said the slowdown in retail spending had been expected for some time, due in part to consumers shifting spending towards services, which are not fully captured in the retail trade figures.

“Moreover, higher interest rates are working to dampen consumer spending,” he said.

Mr Langcake said future RBA interest rate decisions were “lineball”, meaning each data point was being increasingly scrutinised for signs that higher interest rates were having their intended effect.

“There is nothing too surprising in these data about how the anticipated slowdown in consumer spending is unfolding,” he said.

“There are signs that goods price inflation is cooling, as is consumer spending more broadly. But the ongoing pickup in hospitality spending is a sign of persistence in services demand and inflation.”

JPMorgan economist Tom Kennedy said the pullback in retail spending was pronounced, and was reflective of the broader slowdown in economic activity caused by higher interest rates.

“Today’s outcome is particularly underwhelming relative to the prior inflation backdrop which has offered nominal supports to the retail sector,” Mr Kennedy said.

Commonwealth Bank economist Belinda Allen said she expected consumer spending to moderate further over coming months.

“The impact of higher interest rates will continue to intensify. Together with negative real wages growth, this will impact households’ available cash flows,” she said.

Scotch & Soda has been acquired by New York-based brand management firm Bluestar Alliance after filing for bankruptcy for its Dutch operations last week. 

The value of the deal has not yet been disclosed, but the closing of the transaction is expected to take place within weeks. 

Despite recording €342.5 million (US$369.42 million) in revenue last year, the fashion brand was unable to keep its operations afloat due to “severe cash flow issues” caused by the pandemic, along with the impact of the war in Ukraine and inflation.

Bluestar Alliance said the acquisition will allow Scotch & Soda to continue its operations and products across key markets, including the Netherlands. The brand’s products are distributed by 7000 retailers globally and it operates 252 of its own stores outside its home market.

“Bluestar continues to strategically build its portfolio and we see Scotch & Soda as a unique fit,” said Joseph Gabbay, CEO of Bluestar Alliance. 

Founded by Gabbay and Ralph Gindi in 2006, Bluestar Alliance’s portfolio of brands includes Hurley, Bebe, and Tahari. The company manages a current portfolio of more than 300 licensees.

“Our goal is to continue Scotch & Soda’s luxury retail distribution strategy, while also introducing the brand to more trendsetters, especially those looking to express their personality through their clothing,” said Gindi, who is also the COO of Bluestar Alliance. 

The retailer group representing Coles and Woolworths has called for a 3.8 per cent increase in minimum and award wages, the highest of all the employer groups.

A submission by the Australian Retailers’ Association (ARA) to the annual wage review argues a 3.8 per cent increase would account for a forecast drop in inflation by June 2024, as well as the 0.5 per cent rise in superannuation.

The wage increase would flow on to 2.6 million award workers as well as hundreds of thousands under retail and fast-food agreements, which tie their annual wage rises to the minimum wage decision.

But the Shop Distributive and Allied Employees Association is supporting the ACTU’s call for 7 per cent, arguing its members are experiencing hardship that has surpassed the global financial crisis, and retail profits mean they can afford a real wage rise.

The ARA submission, spearheaded by chief executive Paul Zahra based on membership consultation, said it supported a “sustainable increase” that helped retail workers keep pace with rising cost of living and that it should be “based on the underlying inflation rate”.

“The ARA therefore recommends an increase of 3.8 per cent in the minimum wage to take effect from July 1, 2023 based on the current rate of trimmed mean inflation at 6.9 per cent less the 0.5 per cent increase in superannuation and less the projected 3.1 per cent decline in inflation through 2023-24,” it said.

“We believe an increase of this magnitude strikes the balance between an employer’s ability to keep pace with the rising costs of doing business, against an employee’s expectation that wages grow in line with prices.”

It follows Australian Chamber of Commerce and Industry calling for a 3.5 per cent increase – its highest in decades – and the Australian Council of Trade Union pushing for a record 7 per cent increase.

The Consumer Price Index as of the December quarter was 7.8 per cent, with underlying inflation at 6.9 per cent. But monthly CPI indicators suggest headline inflation fell to 6.8 per cent in February.

The ARA said it would update its claim when the March figures are released but it argues the Fair Work Commission should not base its decision just on past inflation rates but also the year ahead.

It cited Reserve Bank forecasts that underlying inflation will fall to 4.3 per cent by the end of the year and 3.3 per cent by June 2024.

Worker ‘despair’ worse than GFC

However, the SDA said that a study by University of Wollongong Associate Professor Martin O’Brien found the proportion of retail employee households assessing themselves as “just getting along” and “poor” had increased from 26 per cent to 30 per cent in 2022.

“The SDA has not seen in any recent past decades, this level of hardship among its members,” the union’s submission said.

“Not even the GFC caused such significant distress or despair from members.”

A female assistant department manager described herself to the union as “working poor” and said mortgage, car and phone bills took up her entire pay.

Another 55-year-old female retail worker quoted in the submission said she was now paying bills in instalments and her situation was “desperate”.

The SDA points out that the top 10 retailers’ earnings before interest and taxes grew by 51 per cent since 2019 and sales grew for eight of them last year.

However, the ARA warns anything higher than 3.8 per cent should be offset by productivity gains to reduce inflation risks and avoid “over-stretching smaller retailers who have limited reserves to incur higher labour costs, in addition to higher costs of doing business”.

The ARA said there were early indications that economic growth was slowing, with retail reporting the first month-on-month declines in trade for more than a year in December 2022.

“Analysts report that retail sales volumes are flat and that growth in retail trade is being driven by increases in prices, not volumes,” it said.

According to an ARA survey of 141 members, nearly 75 per cent had passed on higher costs to consumers as higher prices but more than 50 per cent said they had suffered higher prices by reducing margins.

When Tania Austin walked away from Cotton On, a company she grew from just a handful of stores to a retail powerhouse alongside former husband Nigel Austin, she had three children under the age of four. She could be forgiven for taking time out to regroup.

Instead, she bought five women’s fashion stores under the Decjuba (pronounced De-Cuba) banner, throwing herself into the business that 15 years later is one of the country’s most successful retailers.

Boasting 140 stores across Australia and New Zealand, it’s turning over more than $170 million a year. Her success has made her a fixture on the Financial Review Rich List.

Austin, who’s held a job ever since she was 12 years old when she’d lick stamps and send envelopes with concert tickets at Perth’s former Entertainment Centre, tells The Australian Financial Review’s Female Founders podcast that she was given a rare moment to figure out what she wanted to do with her life. And working was critical.

“I thought, ‘what sort of role model do I want to be for my children?’ And what are the role models I’ve had around me, and particularly female ones? I’m going to be a single mum for the foreseeable future. What do I want that to look like?” she says on the podcast.

“And I think that, for me, working was really a big part of that puzzle. I wanted my children to know that I am many things, a mother being one of them, and that it’s important that they could see that I had other aspects to me and that they know growing up that that’s the life they can choose as well. They can bring to the surface whatever they want to be as well.”

She jokes that at first she thought she could get away with working one day a week, a Monday, after buying Decjuba. Afterall, it was just five stores and when she’d left Cotton On it had 400.

But in reality, it was never a one-day a week gig. “It became all consuming because the passion is no different regardless of if there’s one store or 400 stores. The passion, the energy, the ideas and what you want to do is still the same.”

Austin grew up in the working-class Perth suburb, Warwick. She studied psychology at The University of Western Australia, before moving to Melbourne to build Cotton On. In the early days, it was all hands on deck – she was sweeping floors, buying and unpacking stock and driving it to stores.

These days, Austin is pushing the limits, challenging her 165-strong head office team (plus more than 2,000 people employed across the store network) in the pursuit of growth. Businesses need clarity of vision, she says.

For her, it took four to five years to nail down a simple strategy. “Make our customers look and feel amazing.”

“Once we had settled on that everything else became so much easier. I want our customer to look and feel amazing, so now how do we do that? So, how do you stay focused, how do you make sure Plan A is right? It is having something like that, that is so crystal clear, that you can continually come back to it.”

Growth has come with a razor sharp focus on the company’s bottom-line and operating with a small business mindset.

“We have never grown at a rate faster than we can finance,” she says.

“There’s been a huge discipline about that. But what it has meant is that when we’re doing those leasing deals, there is not an extra cent to give, there just isn’t.

“In many ways, we have quite a small business mindset in the way we operate. We don’t look for the flashy option. We’ve never spent on marketing along the way. I’m a big believer in that the brand, and the product need to stand on its own two feet. We’ve never spent money that we’ve never had.”

‘Do you. You’re going to be judged anyway’

That doesn’t mean the 51-year-old isn’t a risk-taker. During the depths of the pandemic, when her fellow retailers were riddled with fear and pulling back, she doubled-down.

“Lots of retailers were closing down and I saw that as an opportunity to go and open stores and double the footprint of our stores. The team were really nervous about that. I had to push them on that and challenge them and explain the ‘why’ behind it.

“I often consider the business as a three P business. We’ve got product, which is obviously what we produce, we’ve got our people, which is incredibly important. And then we have our property. There was just a huge opportunity through that time, while everyone was sort of thinking they needed to shut stores. It was going to go one of two ways. The world was imploding, or there was going to be a recovery at some point. And life was going to emerge in a different way, but it was going to happen.”

A retail career spanning three decades has given Austin plenty of perspective. She tells the Female Founders podcast if she could go back 15 years to when she started she would tell herself, “do you”.

“You’re going to be judged anyway, whether you’re divorced or single, have three children or no children, have a business or not have a business,” she says.

“Who I am, how I show up, what I do and what’s important to me, is what I would tell myself to focus on because you’re going to be judged whatever you do.”

The other thing she’d tell herself is something she thinks gets easier to do as you get older, so it would have be good to hear it when she was younger: “Embrace change.

“I see it time and time again that people just get caught in doing things because they’ve done them and not challenging it.

“Some of the greatest things that have happened in my life wouldn’t have happened if I kept doing things the same way.“

Scentre Group has reported 125 million customer visits in the first 13 weeks to April 2, 2023.

This is 17 million more visits compared to the same period last year, according to the shopping centre operator. 

Scentre Group CEO Elliott Rusanow credited the result to a strategy of driving customer visitations through activating Westfield destinations. This includes a recent collaboration with Disney, celebrating its 100th anniversary through special events across its portfolio.

“Our Westfield destinations continue to be the most efficient platform for our business partners to connect with customers," Rusanow said. "Seven of our Westfield destinations generate more than $1 billion in annual sales including Chermside, Bondi Junction, Fountain Gate, Sydney, Miranda, Carindale and most recently Doncaster.

“We remain focused on activating our destinations and creating reasons for customers to visit us. So far this year, we have hosted more than 2,500 events and improved the experience for our customers."

Total business partner sales for January and February 2023 are 17% higher compared to the same period in 2022 and 10% higher than 2019, according to Scentre Group. 

“Progress continues to be made on the Group’s strategic customer initiatives including our membership program which now has 3.4 million members, an increase of 1.2 million since the start of 2022," Rusanow said. 

In a separate update, Scentre Group also announced the impending retirement of chair Brian Schwartz on September 30. Schwartz has been the Group’s chair since 2016.

The Board has endorsed Ilana Atlas AO as chair-elect. Atlas was appointed to the Scentre Group Board in 2021.

Schwartz said it was the right time to step down.

“I am delighted Ilana will succeed me as chair. Her leadership will add greatly to the future success and growth of our company. I look forward to working closely with Ilana, board directors, and our CEO Elliott Rusanow over the coming months to complete a seamless transition.”

Atlas said Schwartz had guided the business through a critical time. 

“I would like to thank Brian on behalf of the directors and securityholders for his outstanding contribution to the Group since its inception nine years ago and his leadership of the board for the past seven years.

"In particular, I would like to acknowledge his leadership of the board through the successful CEO and CFO succession." 

US-headquartered brand management company Authentic Brands Group has made a binding offer to acquire sports and lifestyle company Boardriders – including Australia’s 80-strong Surf Dive ‘n Ski chain of stores.

Boardriders designs produces and distributes branded apparel, accessories and footwear for boardriders globally and its portfolio includes Quiksilver, Billabong, Roxy, DC Shoes, RVCA, Element, VonZipper and Honolua.

Jamie Salter, the founder, chairman and CEO of Authentic Brands Group, said the acquisition would help “accelerate and expand” Boardriders’ branded retail stores, wholesale and e-commerce network worldwide.

“Along with the great brands and impressive global reach that will come with this acquisition, we see Boardriders’ potential as a thriving online marketplace under Authentic’s ownership.”

Arne Arens, CEO of Boardriders, said under Authentic’s ownership, the brand is “uniquely positioned” to expand and reach more consumers.

The deal is subject to the consultation of certain Boardriders employee representatives and is expected to be finalised in the third quarter of this year.

Salter said that as an early believer in the global and commercial appeal of action sports, the acquisition takes him back to the roots of his early career.

Few items fit the definition of “essential spending” better than prams, cots and baby clothes.

These infant goods are ASX-listed retailer Baby Bunting’s bread and butter, and the business has become a major force in selling the basics – and extra bells and whistles – to Australians for their little ones.

But while the company’s core products are some of the least likely victims of a spending slowdown, Baby Bunting has been flagging tough conditions. Profits for the first half of this year collapsed by 67 per cent and its share price is down by more than 57 per cent over the past 12 months.

Sales grew strongly during the lockdown era when Baby Bunting stores were allowed to remain open when many other retailers shuttered. Now the business has to adjust to the post-pandemic trading environment, where families are being increasingly savvy when it comes to kitting out their nurseries.

The company is also on the search for a new boss, confirming when it delivered its half-year results that long-serving managing director Matt Spencer will leave his post later this year.

After a turbulent few months, stock watchers are trying to work out whether the market has been too tough on the company, which still has national growth plans in the works.

Industry: Baby and nursery goods retail.

Main products: Prams, car seats, baby clothes and accessories.

Key figures: Chief executive Matt Spencer (who will exit the company this year), chair Melanie Wilson.

How it started: The business was founded when the Nadelman family opened a single baby goods store in the Melbourne suburb of Balwyn in 1979. The company had grown to more than 20 stores before its share market float in 2015.

How it’s going: The business listed on the ASX in 2015 with an offer price of $1.40. Shares closed at $2.06 before Easter but went as high as $6.58 in April 2021 thanks to the company’s COVID lockdown boost.

The bull case: Optimistic observers are looking through Baby Bunting’s short-term challenges and towards its future aspirations.

The company told investors at its February update that shoppers were spending less on consumer staples like clothing and toys, and directing more of their spending towards discount department stores like Kmart for these purchases.

Wilsons analysts still see the company as a dominating force in the baby goods market, though, and say the business can reach $1 billion in annual sales once it completes plans to open another 50 stores in the coming years.

“We believe Baby Bunting has been oversold, and provides attractive value for investors able to look through near-term headwinds and recognise the opportunity with strong revenue growth, gross margin expansion and earnings growth medium-term,” analyst Tom Camilleri said when initiating coverage of the stock at the end of last month. Wilsons has an overweight rating on the company and a price target of $2.70.

Citi’s analyst team says the outlook for the company is uncertain, particularly because the macroeconomic environment is continuing to weaken, but also sees long-term potential in the business.

“Baby Bunting still has a number of long-duration growth strategies, which appear intact,” Citi’s equities team said after the company reported its half-year numbers.

The bear case: More cautious stock watchers have their eye on same-store sales growth at Baby Bunting, and are trying to predict how the business will perform if shoppers direct a larger portion of their spending on infant goods to other retailers, like discount department stores.

Back in February, the company told investors that comparable store sales were down by 2.1 per cent year-to-date. The business reaffirmed its profit guidance, saying it expects net profit after tax for the full year to come in at between $21.5 million and $24 million.

Macquarie’s analysts said the retailer’s run rate was below their forecasts, and noted that the numbers suggest the company is relying on a strong second half to meet their targets. “We remain cautious given the significant 2H23 earnings skew required to meet guidance,” they said.

The composition of sales was also a concern, with click-and-collect orders dropping by 30.2 per cent in the first half. The Macquarie team also noted the drop in “consumer staples” sales, like clothes and nappies, and softening demand for toys and “play time” goods.

“This category includes Playgear, which is high margin, with management noting this category is further normalising post-COVID,” Macquarie’s retail team said.

Globetrotting holidaymakers are fuelling strong sales momentum at Rip Curl and Kathmandu operator KMD Brands, with the group’s boss bullish on expansion plans in Australia and overseas despite economic uncertainty.

The ASX-listed outdoor lifestyle outfit recorded a $NZ14 million ($13 million) profit for the six months to the end of January – a 352 per cent improvement on the same time last year, when pandemic interruptions led to the company recording a $NZ5.1 million loss.

Sales at outdoor clothing maker Kathmandu were up by 51.2 per cent to $NZ194 million, while wetsuit and surfwear brand Rip Curl grew by 18.8 per cent to $306.4 million.

Chief executive Michael Daly said that sales had continued to surge in February, and were up by 31.9 per cent across the group compared with last year.

The return of international travel and tourism is helping to lift the retailer, as holidaymakers in places like Hawaii and Queensland drop in to buy travel supplies, clothing and T-shirts and make last-minute purchases before they jump on a plane.

Daly said that while it was hard to predict what would happen to spending confidence across the globe for the rest of this year, the company was well positioned because it sold ″⁣products for a purpose″⁣ and catered to shoppers who were still on a strong financial footing.

Rip Curl stores outside of Australia would continue to see strong demand, he said.

“With our stores being in places like Hawaii, Auckland CBD and the west coast of France, I’m not sure we’re selling necessarily to those that are going to really feel mortgage stress.”

Daly is optimistic about expanding Kathmandu’s bricks-and-mortar reach further across Australia and around the world.

Three years on from pandemic disruptions, he says there’s more than enough room for the brand to open between 40 and 50 new stores in Australia in coming years.

“If you look at our penetration in New Zealand, [we have] nearly 50 stores for 4.5 million people. And we’ve only got just over 100 stores in Australia for 25 million people. So we think we are underrepresented relative to population and relative to other retailers,” he said.

And the iconic Kathmandu puffer jacket has set sail across the globe, after the brand made its first deliveries of stock to wholesale partners in Europe and Canada at the end of last year.

The business has a goal of reaching $NZ100 million in annual sales in international markets – a big jump on the $NZ1.7 million it has today.

Daly says the company is keen to open physical Kathmandu-branded stores overseas, but is still crunching the numbers before it decides where is the best place to set up shop.

“We’ll be very targeted. And when we have that data, we can make that decision. We can be a little more aggressive then and have a go,” he said.

KMD Brands declared an interim dividend of NZ3 cents per share, to be paid June 30.

Shares are up 1.1 per cent to 95 cents in afternoon trade.

Peter Alexander is finalising a cross border eCommerce partnership, which will grow the sleepwear brand internationally across 35 countries.

Peter Alexander has more than doubled its sales over the past four years, with another record result in the first half of the 2023 financial year. The brand delivered $261.7 million in sales for the period, up 15.1% on 1H22 and up 80.7% on 1H20.

Parent company Premier Retail is now finalising the cross-border agreement to allow fast and simple online shopping for international customers. The launch in 1H24 will be supported by digital marketing programs in select countries.

Peter Alexander has also identified 20 - 30 opportunities for both new or larger format stores in the near term to showcase an expanded product offering. 

"Today, Premier Retail is uniquely positioned to continue to deliver with our brands identifying key growth paths for the future, whilst leveraging synergies within the Group’s global operations.”

Premier Investments has delivered $174.3 million in first half profit, with Jacqui E securing its highest ever sales result in over a decade.

Premier Retail reported global sales of $905.2 million for the first half of the 2023 financial year, up 17.6% on the same period last year. Earnings before interest and tax (EBIT) grew 12.2% to $221.8 million.

Premier Retail is the parent company to Australian fashion retailers Peter Alexander, Jay Jays, Dotti, Jacqui E, Just Jeans and Portmans.

Premier Retail CEO Mr Richard Murray confirmed a strong start to the second half, with total sales for the first six weeks through February and into March up 7.7% on 2H22. 

“We have opened the second half strongly and are well-positioned to drive growth from our powerful retail model. We remain focused on continuing to deliver relevant and quality products, enhancing our digital offering, optimising our store portfolio and identifying new store opportunities to support growth."

Across its portfolio, Peter Alexander reported the largest percentage growth in sales for the half against pre-pandemic, up 80.7% to $261.7 million. Against 1H FY22, its overall sales increased 15.1%.

Peter Alexander has identified 20 - 30 opportunities for both new or larger format stores in the near term to better showcase a wider product offering that has been developed in recent years.

The brand is also planning for future offshore market opportunities, including a partnership agreement with a global cross border e-Commerce platform provider to grow Peter Alexander internationally across 35 countries.

The launch in 1H24 will be supported by digital marketing programs in select countries.

Premier Investments' other apparel brands collectively delivered $452.8 million in sales for 1H FY23, up 14.3% on 1H FY22 and up 15.1% on 1H FY20.

Just Jeans, Portmans and Dotti all delivered record sales in the first half of $162.6 million, $87.6 million, and $59.5 million respectively.

Jacqui E delivered its highest first half sales result in over a decade of $43.5 million, while Jay Jays delivered its second best first half sales result in the past decade of $99.6 million.

Online sales across the group hit $170.9 million, down 12.5% on 1H22 but up 75.8% on ‘pre-COVID’ 1H20.

Australia's economy is still holding up on the back of household spending, but there are warning signs that a severe downturn may be nigh, with business confidence falling and consumer confidence at sustained lows not seen since the 1990s recession.

Melbourne butcher Madina Halal Meats has already seen a shift in behaviour.

Customers are trading in prime steaks and poultry in favour of "mince, cheaper cuts of steak [and] casserole dishes".

"That's mainly due to the higher cost of living," manager Amoon Dennaoui said.

She said the shop's customers were spending about 10 per cent less per order, and she had noticed the downturn take hold since the middle of last year when the Reserve Bank of Australia started raising interest rates to tackle soaring inflation.

It is an early manifestation of the plunge in consumer confidence since rates started rising in May last year.

The widely watched Westpac-Melbourne Institute survey of sentiment came in below 80 for the second month in a row — 100 is the level where optimists equal pessimists.

"Runs of sub-80 reads have only been seen during the late 1980s/early 1990s recession and in the 'banana republic' period of concern in 1986, when the Australian dollar was in freefall after the federal government lost its triple-A rating," noted Westpac's veteran chief economist Bill Evans.

Delaying major purchases

Things are shaping up to be even tougher for businesses that sell big-ticket items.

Tony Dagher works in a furniture and home appliance shop on Sydney Road, the same street as Ms Dennaoui's butchery, and has sold fewer beds, couches and electrical goods than this time last year.

"Last year, I was working full-time hours. Now I'm working far less," Mr Dagher said.

But it is not just in Melbourne's north where consumers are holding off on big purchases, according to Westpac's survey, which found most people thought now was a bad time to buy a major household item.

"Apart from two brief tumbles during the global financial crisis — both monthly falls that were quickly reversed — this is the lowest read on this component in the history of the survey going back to 1974 — weaker than the poorest reads during the recessions of the mid-1970s, the early 1980s and the early 1990s," Mr Evans said.

Data released by the Commonwealth Bank also saw a marginal decline in the spending intentions of households by 0.1 per cent, led by a drop in spending on entertainment, retail and travel — categories that saw a major increase post-pandemic.

CBA noted, however, that while people were spending about the same amount of money, there were telltale signs "consumption is beginning to slow" due to higher prices and interest rates.

This emerging change in spending habits also helps explains results from NAB's business survey, which found business confidence entered negative territory in February, falling to -4 index points despite "solid" business conditions for retail and personal service businesses.

"Confidence has been volatile over recent months," NAB chief economist Alan Oster said.

"Confidence fell late in 2022 as concerns about the global economic outlook increased. There was a respite in January as those concerns appeared to ease, but the decline in February suggests the outlook remains clouded."

Even in the current economic climate, people are still looking to enjoy themselves — but many are turning towards cheaper alternatives.

Centrestage Costumes owner Mary Gurry has seen several recessions during her 40 years of running the shop. She remembers the downturn in the 1990s as the worst for her business.

"I have weathered every storm since 1980," she said.

While she believes costume shops are somewhat recession-proof because "people love to party" especially when times are gloomy, she expects another downturn to hit her business later this year.

"We will see a downturn in the next 18 months … there's no doubt because there's mortgage stress out there already," she said.

But Ms Gurry's suspicions of a business downturn are not just a hunch. Mr Oster said they were likely to become a reality.

"We continue to expect a more material slowdown in demand later in the year when the full effect of rate rises has passed through," he warned.

Signs of tougher times ahead

ANZ senior economist Adelaide Timbrell, who has been tracking consumer confidence and spending, said Australians had weathered the RBA's interest rate hikes well so far.

But she warned tougher times were ahead, with mortgages set to come off ultra-low fixed rates onto much higher variable ones later this year.

She said initial signs of a downturn had been patchy until now, and people with savings had been spending on things they were unable to enjoy during years of rolling lockdowns and closed borders.

"If people want to shop on a luxury right now, they're making it travel post-pandemic, rather than an expensive dress or TV," Ms Timbrell said.

The data backs this up. ANZ figures show people are spending 87 per cent more at travel agents than a year ago. This suggests forward spending too, as people book these trips in advance.

But Ms Timbrell said the downturn hitting specific sectors, such as furniture, could also be linked to the housing-market decline, which was seeing fewer people buy new homes and therefore fewer new products for them.

ANZ data suggests people are switching to buying second-hand items to reduce the amount of money they are spending.

"We're seeing a bigger focus on the part of consumers to the cheapest products, and that generally means larger businesses," she said.

"Small businesses are going to be a little bit more impacted by an economic downturn because they don't have the scale to fall back on."

Consumer finance provider Latitude Financial has been forced to stop adding new customers from clients such as Apple, Harvey Norman and JB Hi-Fi as it tries to contain the damage from hackers that are still active in its computer systems.

The attack is now the subject of an Australian Federal Police investigation.

In an update to the ASX on Monday, Latitude confirmed the hackers had stolen the personal details of at least 330,000 finance customers, with 96 per cent of the theft relating to copies of driver’s licences or licence numbers, and 4 per cent relating to passports. The company expected the number of victims to grow.

Latitude said the AFP was now investigating the attack. The company said it was working to contain the attackers and take some of its systems offline, which meant it would be unable to add new customers.

Latitude’s finance services include the no-deposit, interest-free payment option offered by Harvey Norman stores.

“I sincerely apologise to our customers and partners for the distress and inconvenience this criminal act has caused. I understand fully the wider concern that this cyberattack has created within the community,” said Latitude chief executive Ahmed Fahour, who retires at the end of this month.

He said the company’s focus was on protecting the ongoing security of its customers, partners and employees’ information, and supporting those who had their data stolen. He also acknowledged the disruption to its new customer business.

“While we continue to deliver transaction services, some functionality has been affected resulting in disruption. We are working extremely hard to restore full services to our customers and merchant partners and thank them for their patience and support. We understand the frustration,” Fahour said.

Latitude said it would begin contacting affected customers on Monday, and has engaged services to help them, including a dedicated contact centre.

Last Thursday, Latitude revealed it had been the victim of a hacking incident and that 328,000 customers had identification documents stolen.

The company said the details were stolen from its service providers. The company did not clarify further, but this is believed to refer to companies that provide corporate services to Latitude.

Latitude said described the hack as “a malicious and sophisticated cyberattack” and said it had removed access to some customer-facing and internal systems.

Unusual activity was noticed on its network earlier last week, originating from a major vendor it uses, it said.

“While Latitude took immediate action, the attacker was able to obtain Latitude employee login credentials before the incident was isolated,” the company said last week.

Latitude is working with the Australian Cyber Security Centre and said it had alerted relevant law enforcement agencies.

Latitude provides consumer finance services to Harvey Norman, JB Hi-Fi, The Good Guys, Apple and recently signed David Jones.

“No David Jones customer data have been compromised in the course of this incident because we have not yet transitioned our card program to Latitude. That will happen in 2024,” a spokesman for David Jones said.

Latitude was placed into a trading halt last Thursday and will remain suspended until Wednesday while further updates are made about the hack. Its stock last traded at $1.20. Investors paid $2.60 for shares when it listed on the ASX less than two years ago.

The attack follows recent major cyberattacks at Optus and Medibank.

Optus was the victim of a major breach in September, when hackers obtained the data of 10 million of its customers.

The Medibank attack in October was more serious, as criminals accessed basic account details of 9.7 million current and former customers as well as health claims data for about 160,000 Medibank customers, 300,000 customers of its budget arm, ahm, and 20,000 international customers.

The hackers began leaking some stolen data onto the dark web. Medibank still faces lawsuits and an investigation by the Office of the Australian Information Commissioner over its handling of the incident.

The days of lockdown-induced drinking at home are firmly in the rearview mirror, and Dan Murphy’s is back in the events game.

From champagne and rosé tastings to extravagant celebrations for Lunar New Year, the drinks giant is mingling with its consumers again. Over the past six months, the business has been involved with about 500 interactive experiences across the country.

“I’ve come to realise more and more that drinks is not just a product for a lot of people, it’s actually a hobby. It’s this element of really wanting to engage, wanting to learn and find out more,” Dan Murphy’s managing director Agi Pfeiffer-Smith said.

Pfeiffer-Smith had a bird’s-eye view of Australians’ relationship with alcohol during the pandemic. Having previously held senior roles at retail giants, including Wesfarmers and David Jones, she joined Dan Murphy’s parent company, the ASX-list Endeavour Group in May 2020, just as the country was coming to terms with COVID-19. She was promoted to managing director last July, giving her oversight of the more than 260 stores and the group’s growing e-commerce business, right at the time of an anticipated consumer slowdown.

The country is now facing a cost of living crunch brought on by inflationary pressures and rate rises, but Pfeiffer-Smith is unfazed by the tough economic climate and continued slowdown in discretionary spending.

When asked how shoppers are changing their buying habits in response to ten consecutive interest rate rises and soaring inflation, she says the only really noticeable trend is that people are taking fewer risks with their drinks purchases, and instead sticking to tipples they already know and like.

“This is one of life’s small luxuries still, and I think the business continues to benefit from that,” she said.

Founded in 1952 by winemaker (and former Age columnist) Daniel Francis Murphy, Dan Murphy’s has seen more than a few changes since its first store opened on Prahran’s Chapel Street.

This year marks two decades since the company opened stores outside Victoria, starting with Strathfield and Hurstville in New South Wales. Over the past 20 years the business has grown from a network of 15 stores to more than 260, plus a pumping online business and 5 million active members in its membership program.

After a $12 billion spin-out from Woolworths in 2021, Dan Murphy’s and its sibling brand BWS form the retail arm of Endeavour Group, which also owns the ALH pubs business. In the first half of 2023, Endeavour’s drinks retail sales hit $5.4 billion - a slight decline on the previous year when COVID restrictions drove demand. Still, it remains 14 per cent higher than three years ago.

The scale and ownership of Dan’s may have changed over the decades, but Pfeiffer-Smith remains focused on building the basic pillars of the stores: price, service, and a wide range of products.

“It’s that breadth of range, the breadth of discovery of something new, something exciting. It’s been compared to like, either a library you wander through, or like a lolly shop for adults,” she said.

As she discusses the brand’s future, it’s clear she sees the company as more than just a drinks operator. It’s a data cruncher, an events operator and a content maker that wants insights and conversations with its customers.

Many of those consumer insights are garnered from the company’s loyalty program, My Dan’s, which has notched up 5 million members over the past few years. The draw card for these members is price.

Each day, a group of staff log on to track the cost of hundreds of popular beverages and beat the market.

As its millions of consumers interact with the business, Dan Murphy’s learns more and more about what they like. The anonymised pool of data helps the business see the interests and shopping behaviours across a range of demographics. “We can see what premium customers are doing, and younger versus older, and how that plays out across different customers,” Pfeiffer-Smith said.

It helps shape the group’s content business, including its digital platform Dan’s Daily, where lists of the top Margaret River cellar doors sit alongside tutorials on how to start drinking mezcal.

It would be unwise to suggest that the business of flouncing feminine dresses, floral prints and itsy-bitsy bikinis is anything other than awfully serious.

Sisters Nicky and Simone Zimmermann, co-founders and, respectively, creative director and chief operating officer of arguably Australia’s most successful fashion brand, have made it so.

Making their debut on The List – Australia’s Richest 250 this year, some 32 years and 53 boutiques – from Paddington to Paris – after starting out, the sisters have successfully sold a breezily elegant take on Australian style to the world.

It is enough for their wealth to be estimated at $600m.

The Zimmermann brand, which according to recent reporting turned over a consolidated revenue of almost $400m remains a family business. Nicky runs the creative and design side, Simone handles the logistics as COO, and Nicky’s husband Chris Olliver is chief executive.

“We have never had anyone to follow, so we have always had to forge our own path, and that has been good for us,” Nicky Zimmermann told WISH magazine in a December 2020 interview commemorating the brand’s 30th anniversary. That same year, the Milan-based company Style Capital bought a 70 per cent stake in the business, reported to be worth around $446m at the time.

“We have always relied on our gut decisions, what feels right for us and for our families, because this is a family business,” Zimmermann continued. “We also never strayed from what we wanted to do as a brand, and we haven’t been distracted by this or that, or moved in another direction.”

The label’s feminine aesthetic – prints and ruffles abound – has found favour with everyone from Catherine, Princess of Wales, to Beyoncé. CEO Chris Olliver told the UK-based Financial Times last year that top-line sales have increased by 30 per cent each year for five years. The brand has 21 stores in Australia and one in China, 19 boutiques across America and 12 in Europe, including London, France and Italy, with the most recent door opening in Florence.

In 2022, after years of showing their collections during New York Fashion Week, Zimmermann joined the official Paris Fashion Week schedule. “I think what they understand is our freshness, our sense of fun and optimism,” Nicky Zimmermann told The Australian in 2022, speaking about the European market.

Bridget Veals, David Jones general manager of womenswear, footwear and accessories, says that in the past Australia’s unique take on fashion had not had a presence on the global stage, thanks to plain old geography. In a changed, technologically connected world, this obstacle has proved to be easily surmountable, and also an advantage.

“I think the Australian fashion industry simply lacked visibility due to our distance from the world’s fashion capitals – Paris, New York, London and Milan,” she says. “The seasonal divide now plays into the buy now, wear now mindset of customers, and with our enviable climate we master the art of the trans-seasonal wardrobe.

“Being a little bit further removed from the influences of the major fashion scenes has now given a competitive edge for us to realise true creativity, design and manufacturing skill. We’ve become an incubator for cutting-edge brands with a fresh design perspective who also know and understand our customers.” Veals singles out Zimmermann’s success, saying the brand’s prominence “not only internationally, but as a key player in the luxury sector, deserves high praise”.

Zimmermann isn’t the only female-led fashion business debuting on The List this year. Decjuba, founded in 2008 by Tania Austin, which has now grown to more than 140 stores across Australia and New Zealand, also makes the cut. According to its most recent round of reporting, the business turned over a consolidated revenue of about $180m.

Meanwhile, Mecca Brands, founded in Melbourne by Jo Horgan in 1997, makes a return to The List after debuting in 2022. Later this year, it will open its largest ever store, taking over the former David Jones menswear building in Melbourne’s Bourke Street Mall.

Sprawling across 3000sq m and over two levels, the Melbourne store is more than 1000sq m bigger than the Sydney flagship on George Street that opened in November 2020. Mecca has said that it will be an “unprecedented” beauty and retail experience.

Another example of the appetite for Australian fashion is the investment by Tattarang, the private investment group of Andrew and Nicola Forrest, in Camilla Franks’ resort wear brand Camilla. (An aside: the brand is a favourite of Jennifer Coolidge’s character in the much-discussed TV series The White Lotus.)

Tattarang director Nicola Forrest said of the investment in January: “We are delighted to back Camilla Franks, an extraordinary entrepreneur leading a cutting-edge fashion brand doing amazing things in the creative space.”

Paul Zahra, CEO of the Australian Retail Association, says following the devastation wreaked on the retail industry during the worst of the pandemic and lockdowns, there has been a reimagining of “omnichannel” retail, some of it led by female-founded companies.

“Many of the best-performing brands this year offered the best of both worlds – an omnichannel shopping experience, leaning heavily on in-store shopping but also complementing it with online, social and other channels,” he says. “The most successful brands have embraced both – using technology to bridge the digital world and the physical world with the purpose of providing a unique interactive experience for the consumer.”

Zahra isn’t surprised to see female-led brands, catering to a female-heavy customer profile, performing well.

“It is estimated that up to 75 per cent of discretionary shopping is done by women, so it’s no surprise that female-led businesses have excelled this year, which is a welcome barometer of societal change,” he says.

Roy Morgan Business Confidence was 95.8 across Australian businesses in February 2023 (down 10.6pts since January), with the retail sector among the bottom five.

Retail business confidence was at 94.0 in February, joining construction (87.9), agriculture (86.9), electricity, gas and water (83.3), and finance and insurance (71.5).

In comparison, the top five sectors are education and training (122.1), public admin and defence (121.1), accommodation and food services (119.0), manufacturing (117.4), and recreation and personal (117.1).

Roy Morgan cited the RBA’s ongoing interest rate hikes as a major factor in the decline of business confidence.

The research firm said the RBA’s decision to increase interest rates in February and March followed the highest Australian inflation figures for 32 years for the December quarter 2022 at an annual rate of 7.8%. Official interest rates are now at their highest for over a decade since early June 2012 (3.75%).

The fall in business confidence in February reversed the increase of 10.4pts in January 2023, and was reportedly driven by rising pessimism about prospects for the next 12 months both for the performance of the Australian economy and the personal prospects of the business.

Looking forward, businesses’ views on the performance of the Australian economy over the next year worsened with 59.3% (up 11.1ppts) of businesses expecting ‘bad times’, while only 39.1% (down 10.2ppts) expect ‘good times’.

Businesses are also less confident about their own circumstances over the next 12 months with 41.2% (down 5.5ppts) expecting to be ‘better off’ financially this time next year compared to 28.1% (up 7.3ppts) expecting to be ‘worse off’.

Business confidence is now 16.8pts below the long-term average of 112.6 but still 15.9pts higher than the latest ANZ-Roy Morgan Consumer Confidence of 77.0 for March 6 March 12, 2023.

The decline in confidence is more noted in micro and small businesses with under 20 employees, with medium and large businesses above the neutral level of 100 in comparison.

Large businesses now have a business confidence of 117.3, down 15pts, and medium businesses with between 20-199 employees have dropped 22.2pts to 112.2.

Small businesses of 5-19 employees saw the largest drop of 32pts to 98.4, while micro businesses of under five employees dropped 24pts to 95.1.

“The vastly different levels of confidence for businesses of a variety of sizes shows that the current economic conditions, including high inflation and rapid interest rate increases, are having a considerably different impact on businesses depending on several factors – including size,” Roy Morgan CEO Michele Levine said.

Levine added that there was negative movement across the index, but the largest contribution was a lack of confidence about the performance of the Australian economy.

“On a state level, business confidence is soaring in Western Australia at 134.2 and marginally in positive territory in Tasmania at 101.1 – but below the neutral level of 100 in all other States.

“Business Confidence is just below neutral at 98.1 in New South Wales and well below neutral in Queensland (92.0), South Australia (90.1) and lowest of all in Victoria (81.2).”

Electronics and furniture retailer Harvey Norman Holdings has reported a 15 per cent fall in profits in its December half.

The company owns and operates Harvey Norman, Domayne and Joyce Mayne brands.

Total system sales revenue for the year was $4.98 billion while company-operated revenue reached $1.47 billion.

EBITDA fell 8 per cent to $694 million while tax-paid profit slumped 15.1 per cent to $365.9 million.

The group’s overseas retail profitability declined 22.5 per cent to $28.9 million primarily due to difficult trading conditions in New Zealand while its total assets increased to $7.81 billion, up 7.8 per cent during the half.

Harvey Norman chairman Gerry Harvey said the business will continue to assist each franchisee with the necessary tools and digital structure to invest in their customers.

“Amid the macroeconomic headwinds of the past year, we have grown our integrated retail, franchise, property and digital business across eight countries to nearly $5 billion in system sales for the current half-year period.”

The company plans to recommence its offshore expansion plans, growing its store footprint in Malaysia to 80 stores by the end of 2028.

Listed property group Mirvac has taken a stake in online discount fashion retailer The DOM as a part of a strategic partnership.

The DOM, which pitches itself as an Australian version of The Outnet, inked the partnership earlier in the year.

It would allow Mirvac centres to offer their retail partners the ability to list their stock on The DOM, in a bid to expand their customer reach and add a new revenue stream via the digital extension.

In turn, new brands that are listed on The DOM but don’t have a physical presence yet could be introduced via Mirvac centres.

The investment and strategic partnership for The DOM comes less than three years into its life. The business’s co-founders include Hilton and Justin Seskin, who were investors in Rebel Sport and later brought Topshop to Australia.

The DOM kicked off with 150 brands, and has grown to more than 250 brands since. It stocks brands like Alice McCall, Manning Cartell and Superdry.

The boss of pizza giant Domino’s has admitted the company failed to get the balance right when it upped delivery prices to counter inflation after the business reported first-half profits dropped by more than 20 per cent.

The company said its plans to fight inflation “had not been optimal” in the first half, with decisions to increase product prices and delivery and surcharge fees impacting how often customers ordered, particularly in overseas markets such as Japan and Germany.

“First and foremost, we actually got delivery pricing wrong, not carry-out pricing,” chief executive Don Meij said.

He said while shoppers had increasingly returned in-store to pick up their takeaway orders, price increases for delivery had hurt how often customers ordered pizza.

In Europe, the company put in place price increases for “bundled menu” items, some which represented a jump in price of more than 10 per cent, while in Australia and New Zealand Domino’s introduced a 7 per cent delivery service fee on orders.

The ASX-listed fast food business revealed on Wednesday that its sales had slipped by 4 per cent for the six months to December, and net profits had declined by $19.6 million to $71.7 million.

But Meij said the business had plans to help steady the ship, including a move to “flexible vouchers” that give customers more choice in what is included in a meal deal.

“Consumer sentiment is lower, but the fast food industry is buoyant,” he said.

Domino’s has been contending with rising costs for ingredients and business operations over the past several months, but Meij said he believed conditions were moderating.

“We still see inflation but it is nowhere near what we saw [last year],” he said.

Despite these assurances, investors sold the stock off heavily on Wednesday morning, sending it plummeting 20 per cent to $57 by 11.20am.

Analysts were wary after the business confirmed sales growth across the second half had been less than anticipated, and growth would be below its medium-term outlook of between 3 and 6 per cent.

The company confirmed that operations in Europe had been hit particularly hard during the half, with inflation impacting consumers and Domino’s delivery price increases resulting in fewer customer orders in France and Germany.

“Domino’s has a challenging six months ahead. Any franchising system needs to balance the health of franchisees and shareholders. In the near-term, franchisees will need more support,” MST Marquee analyst Craig Woolford said in a note to clients.

UBS analysts said there were risks ahead.

“Given [second half] sales headwinds and weaker [first half] net profit after tax, we see downside risk to FY23 net profit guidance,” Shaun Cousins said on Wednesday morning.

The company declared an interim dividend of 67.4 cents, down from 88.4 cents during the same time last year.

Australian retail sales in January surged 7.5 per cent year on year – and 1.9 per cent over December, reflecting a strong post-Christmas sale season. 

Ben Dorber, head of retail statistics with the Australian Bureau of Statistics (ABS), said January’s rise followed a 4 per cent month-on-month fall in December and 1.7 per cent rise in November. 

“Looking through this volatility shows that turnover is at a similar level to September 2022, and on average, growth has been flat over the past few months,” he said.

“November, December and January are the most seasonal months of the year, with retail activity heavily affected by the Christmas period and January holidays. This has been heightened by an increase in the popularity of Black Friday sales and growing cost of living pressures combining to drive a change in usual consumer spending patterns.”

Australian Retailers Association CEO Paul Zahra described the figures as “a strong result” – especially for apparel retailers and department stores, who had worked hard to clear their summer inventory.  

“There’s no doubt that an impressive Boxing Day trade certainly bolstered these sales, with the shoppathon a fixture on the January calendar.”

However, he cautioned that while the results were impressive, the cost of doing business and gross margins for many retailers remains a serious concern.  

Significant year-on-year sales increases were recorded by cafes, restaurants and takeaway businesses – up by 26.3 per cent – clothing and footwear – up by 17.5 per cent – and department stores (up 16.6 per cent).  

“The sales recorded by restaurants and cafes are particularly strong,” said Zahra. “It is clear the appetite for dining out has been boosted after the challenges of the pandemic.” 

The only retail category to show a decline in year-on-year sales was household goods, down by 1.1 per cent, reflecting record sales during the pandemic when all things at home were in hot demand, said Dorber.  

Footwear conglomerate Accent Group has reported a 160% increase in its digital sales in the first half of FY23 compared to the same time in FY20. This is despite a drop from the first half of FY22.

The drop in online sales has been noted in other recent trading updates, including Universal Store and Best & Less, matched with a rise in bricks-and-mortar sales.

In the first half of FY22, the Group accrued a record online sales of $159.9 million, triple the size of 1H FY20 results of $51.6 million. In 1H FY23, the Group’s online sales dropped to $134 million, which is still above the results in both the first half of FY21 and FY20.

Its digital sales contributed to 18.9% of the Group’s total sales in 1H FY23, with total sales up 39% on the same period last year to $825 million.

Compared to pre-pandemic (1H FY20), Accent Group’s fulfilled 106.4% more online orders in 1H FY23, with a conversion rate increase of 8.7% in the same period, and an average order value increase of 21.5%.

The Group also added 300,000 new contactable customers to its base, which now sits at 9.6 million, with a goal to reach 10 million in the year ahead. The total contactable customer base has more than doubled since FY19.

Accent Group said Platypus, Skechers and Hype in particular have continued to grow their customer base and drive repeat customer behavior, alongside the launch of a new customer data platform.

Its loyalty program now has a total membership of 7.4 million across The Athlete’s Foot, Hype DC, Platypus, Merrell and Skechers.

Accent Group CEO Daniel Agostinelli welcomed the results, citing the continued focus on customer, new product, full margin sales, and return on investment as the key drivers.

“What is most pleasing is the strength and consistency of performance across our large core banners, including Skechers, Platypus, Hype DC, The Athlete’s Foot (TAF), Vans and Dr Martens, along with the progress that we have made in our new banners now that trading conditions have normalised,” Agostinelli said.

“One of the key initiatives for H1 was driving the profitability of the Accent Group digital business. Whilst sales were down on last year due to the lockdowns in 2021, we have improved our digital business and online EBIT was ahead of last year.”

Meanwhile, the group opened 53 new stores across its markets, transitioned 13 stores from discontinued to continuing and closed 10 stores where the required rent outcomes could not be achieved. The group now holds 805 stores, with an estimated total of 825 to be achieved by FY23 end.

In the start of the second half of FY23, like-for-like (LFL) sales for the first seven weeks were up 16% on the prior year. Compared with FY20, LFL sales were up 16.1%, a compound annual growth of 5.1%.

“Whilst we recognise that there is some uncertainty in the economic outlook, to this point we have not yet seen any significant change to consumer spending in our categories,” Agostinelli said. “Many of our brands target a younger customer demographic who tend to be less impacted by interest rates and cost of living pressures.

“In conclusion, I am pleased with the ongoing progress that has been made on our key growth strategies as we continue to build a strong, defensible business in Australia and New Zealand.

“Our portfolio of global distributed brands, owned vertical brands, integrated digital capability and large store network are core assets of the group and position the company well for growth into the future.”