New York-based luxury accessories and lifestyle house Tapestry has ousted its CEO suddenly due to the company’s poor sales results and plunging share price. 

Tapestry – parent of Coach, Stuart Weitzman and Kate Spade – has lost more than half of its value within the last year, from US$50 to $20.44 on Tuesday. 

The company announced overnight that CEO Victor Luis would leave both his executive role and his seat on the board with immediate effect. He has been replaced by Jide Zeitlin (pictured above) as CEO, the board’s current chairman who will continue in that role as well.

The company has also named Susan Kropf, a current member of the Tapestry board, as lead independent director.

Luis has led Tapestry for five years and in its announcement, Zietlin paid tribute to Luis’ achievements. 

“Early in his tenure, he was a critical part of Coach’s development outside of North America, first as president and CEO of Coach Japan and then assuming responsibility for the brand’s entire international organisation. Over the past five years as CEO, Victor was instrumental in the successful transformation of Coach and the establishment of Tapestry as New York’s first house of modern luxury lifestyle brands.”

Luis oversaw the acquisition of luxury footwear brand Stuart Weitzman. However, three weeks ago Tapestry disappointed shareholders and analysts after its latest add-on Kate Spade, showed weak growth. Fourth-quarter profit fell from $212 million to $149 million on sales of $1.5 billion.

Zeitlin said the board remains committed to Tapestry’s multi-brand model, while recognising the need to sharpen its focus on execution, 

“Given the continued strength and momentum at Coach – the largest brand at Tapestry – our top priority remains driving significantly improved performance at our acquired brands.”

Myer has released its full year 2019 results, reporting that despite a decline in total sales the digital sales for the business increased by 21.9% to $292.1 million. 

While total sales declined by 3.5% to $2,991.8 million compared to $3,100.6 million in 2018, the digital sales – which comprise of online sales and sales via in-store iPads – now represent the largest store in the business and make up 9.8% of total sales. 

The business also reported that comparable store sales declined by 1.3% in 2019, however the cost of doing business improved by 3.1% to $1,002.4 million compared to $1,035.0 million in 2018. 

Myer CEO and MD John King cited store improvements and closures and the Customer First Plan as reasons for the results. 

"This result demonstrates our focus on profitable sales, a disciplined management of costs and cash, as well as deleveraging the business.

"In the first year of the Customer First Plan, we have progressed a number of strategic initiatives, but recognise there is much more to be done to transform this business in the interests of customers and shareholders.

"We have made progress working with landlords, through a portfolio partnership approach, to reduce our footprint and refurbish stores to transform the customer experience, whilst simultaneously delivering material cost savings.

"We announced with Scentre Group a plan to refurbish our store at Belconnen to create an enhanced shopping experience across a reduced floor space. 

"Similarly, we will hand back a floor and refurbish our Cairns store from January 2020. We have also agreed to exit level four of Emporium in Melbourne from May 2020," he said. 

King also cited improvements in the back-end operations, the relaunch of the website and improved staff training as factors in the results. 

"Pleasingly customer service metrics have improved during the year reflecting back office efficiencies, the new labour model that ensured more appropriate service levels at peak trading times, greater training levels and improved product knowledge.

"The rollout of new and ‘Only at Myer’ brands continues with a significant brand refresh currently underway across all stores, with more than 90 new brands expected to be added to our range by Christmas 2019.

"The continued strong growth in digital sales, now representing our largest store and 9.8% of total sales, was particularly pleasing. 

"This growth reflects both the upgraded website that was launched in September 2018 and a significant increase in products available online, which included the addition of several concessions. 

"We aim to match our store and online ranges by the end of this calendar year and are confident that there are significant opportunities to continue to grow this channel.

"During the year we reduced costs by $32.6 million reflecting the enhanced new staffing model in-store, more focused marketing spend, reduced store occupancy, as well as efficiencies and reduced waste across all areas of our business," he said. 

Further in the results statement, Myer said that it believes it can implement additional cost savings in its supply chain. 

Myer released its full year 2019 financial results on September 05.

At variety retailer Miniso –  a cross between The Reject Shop and Japanese chain Daiso – same-store sales are growing more than 20 per cent as customers fill their baskets with budget-priced cosmetics, accessories, stationery, homewares and novelty merchandise from brands such as Marvel and Pink Panther.

After opening its first store in Australia in early 2017, Miniso plans to open  as many as 10 franchised stores a month over the next 15 months, lifting its footprint from 32 stores  to 100 by the end of 2020 and increasing pressure on competitors such as The Reject Shop.

The China-based retailer, owned by the Aiyaya Group, is also close to launching a new brand in Australia to accelerate its growth and tap new parts of the market.

"One thing never changes – customers always want something that's a good price, not cheap, but a good price," says Miniso Australia vice-president Richard Li.

"What we try to do is optimise everything we can to give the best price to customers.

"We also find customers like to buy things they've never seen before – last year we kept pushing things like Pink Panther products and Sesame Street – those kinds of things helped us a lot."

Co-founded in 2011 by Chinese entrepreneur Ye Guofu and Japanese designer Miyake Junya, Miniso is one of the world's fastest-growing retailers. It has almost 4000 stores in more than 100 countries and sales have more than doubled to $US2.5 billion ($3.7 billion) in three years.

Miniso's aesthetic is similar to that of Japanese retailers Muji, Uniqlo or Daiso, but the chain differentiates itself from rivals with low prices (most products cost between $5 and $10) and exclusive products designed in-house or with brand partners.

"We find a lot of the product in the Australian market is kind of overpriced," said Mr Li. "What we try to do is find a sweet spot between price and production and give the benefit to the customer."

Refresh its range

Miniso releases 200 to 400 new products a month to refresh its range and encourage customers to shop frequently in store. As a result Miniso, which does not sell online, attracts strong foot traffic to shopping centres and has been able to negotiate attractive rents with landlords such as Scentre Group.

Sales in Australia reached $30 million in 2018 as the company opened 17 new stores and turnover at existing stores rose between 20 and 30 per cent.

"We did some crazy things in the first year – we find if we expand too fast we can make mistakes – so we slowed down a bit to build up a solid foundation," Mr Li said.

He said the Miniso brand was not yet well known in Australia outside Asian communities but was well regarded by investors because of its strong growth overseas.

"Many franchisees are overseas investors. They see it as a good opportunity. That's how we can expand so quickly ... all the shops are profitable so the franchisees are all happy," he said.

Myer  laser focus on cutting costs and shrinking stores has rewarded the department store with its first profit growth in nine years, sending shares soaring.

Myer's underlying profit before one-off costs rose 2.2 per cent to $33.2 million, slightly ahead of analyst consensus forecasts of $32.7 million and a significant improvement on last year's $494 million loss.

This profit boost was not driven by sales, however, with comparable store sales dropping 1.3 per cent. Instead, a $32.6 million reduction in costs and a halving of capital expenditure helped return Myer into the black.

Myer shares rose 10.5 per cent to 63 cents on Thursday, which followed a 5.5 per cent rise on Wednesday.

Myer chief executive John King labelled the result as "disciplined", with the company putting a focus on closing stores and reducing how much staff it had in its stores during non-peak hours.

The company's cost of doing business, which includes labour costs, decreased 3.1 per cent.

Significant opportunities remain across our network for space hand-backs or closures, and these discussions will continue with landlords

"We have progressed a number of strategic initiatives, but recognise there is much more to be done to transform this business in the interests of customers and shareholders," Mr King said.

However, the chief executive pointed to a "challenging macro environment" in the year ahead, and noted the store was continuing to pursue additional store closures.

Myer reduced its gross lettable area by 29,000 square metres over the past 12 months, and has flagged that an additional 5 to 10 per cent reduction in store space was still under discussion.

"Significant opportunities remain across our network for space hand-backs or closures, and these discussions will continue with landlords," Mr King said.

Last week, Myer's biggest rival David Jones announced plans to "aggressively" shrink its store footprint,  targeting a 20 per cent reduction by 2026. With both department store owners historically in lockstep, it was expected Myer would follow suit.

Despite Myer's profitable result, some analysts were cautious. Citi's Bryan Raymond rated the stock a sell with a target price of 49 cents, saying the outlook for 2020 was poor.

"Myer has delivered earnings growth and good cash flow, which debtholders will be satisfied with," he said.

"However, the source of improved earnings was from lower costs and may impact future sales growth, in our view."

Online, exclusive brands to boost growth

Total revenue decreased 3.5 per cent to $2.99 billion, but came in stronger than analyst forecasts of a 5.1 per cent drop. Earnings before interest, tax, depreciation and amortisation also beat estimates, up 7.2 per cent at $160.1 million.

Sales for Myer's private label brands increased 1.9 per cent, and the company flagged an expansion of its 'Only at Myer' brands, with 90 new labels set to arrive in-store by Christmas.

Mr King said these new brands, which include Oasis, Vero Moda and Karl Lagerfeld Paris, were "outperforming their peers".

Online was a point of significant growth for Myer, with digital sales up 21.9 per cent to $292.1 million, generating 9.8 per cent of total sales and matching the sales at Myer makes at its largest store.

Mr King said the company was still expanding the range of products it had available online and aimed to match its store and online ranges by the end of 2019.

Myer's balance sheet improved over the financial year, with net debt falling $69 million to $39 million, which is its lowest net debt position for more than a decade.

One-off costs totalled $8.7 million, consisting of redundancy costs, costs for onerous leases and asset writedowns.

The company did not pay a dividend, continuing to keep it suspended.

When Miniso initially entered the Australian market in 2017, the Chinese retailer said it would open 300 stores across the country. But 32 stores and two years later, plans have changed slightly. 

“What we found is that the market is a bit different than what we thought in the beginning,” Richad Li, vice president of Miniso Australia, told Inside Retail.

“The logic at the beginning was based on population,” he said, referring to the “ideal number” of shops per capita that Miniso uses when it enters a new market.

“But you need to think about how your traffic will be impacted by the density of the population.” 

Miniso on Thursday announced plans to open 100 stores across Australia by the end of 2020, an impressive number to be sure, but also a significant drop from its initial goal.

Australia is notoriously difficult for businesses like Miniso, and arguably Amazon, that rely on high population density to make their model, built on economies of scale, profitable. 

Li clarified that the company still wanted to open 300 stores in Australia eventually, but that this number would include other brands in the Miniso stable that sell different products and target different customers. 

“The reason [we want to open 300 stores] is not only to chase the huge goal,” he said. 

“We need more shops and more business to reduce our per unit cost.” 

As Miniso’s footprint expands and its turnover increases, the cost of shipping goods to Australia, warehousing and distributing them to stores comes down. 

“Even if we’re selling products cheaper than our competitors, we have more gross margin because of volume,” he said. 

“Then we have enough volume to optimise our supply chain to reduce per unit cost, and this can increase our margin. It’s a positive feedback circle.”

Marvel-lous Miniso 

Founded five years ago by Japanese designer Miyake Junya and Chinese young entrepreneur Ye Guofu, Miniso is a low-cost retailer offering a wide range of household products. 

The chain positions itself as a Japanese brand, though it is headquartered in China and many of its products are manufactured there, and has 3869 stores in more than 80 countries. 

In 2018, the company had a turnover of US$2.5 billion ($3.7 billion) globally. Turnover in Australia was around $30 million, according to Li. He expects that figure to triple by the end of next year, as the company’s physical footprint expands.

The company has forged profitable partnerships with globally recognised characters, including Hello Kitty, Pink Panther, Sesame Street and most recently the Marvel superheroes, including Captain Marvel, Iron Man and Captain America. 

East coast in focus

Li said Miniso would focus its expansion efforts on the east coast of Australia, given the location of its warehouse in Sydney.

“We have shops in Perth right now, but the challenge for Perth is the logistics. It costs more to ship products from Sydney to Perth than from China to Perth,” he said.

But he said it was not only good for consumers but for Miniso’s “branding” to have a footprint there.

Miniso currently has stores in some of the country’s top shopping centres, including Chadstone in Melbourne and Westfield Parramatta, and Li said the retailer would continue to seek locations in newer shopping centres, where it is easier to secure a good position than in existing centres.

The fashion at Myer’s spring-style showcase in Melbourne yesterday reflected the retailer’s approach to business: considered, confident, consolidated … and accessible to everyone.

With the embattled department store due to report its latest financial results next week, chief executive John King was exuding quiet confidence about the retailer’s future, saying its “customers first” plan was progressing well.

“I’m excited about the future,” he said.

“We’ve spent the last year trying to reconnect to our roots and, more importantly, with our customers, to make sure we’re relevant in this changing face of retail.”

The chain had already started to follow a more mid-priced offering, to differentiate itself from David Jones, which is chasing the aspirational end of the market.

But the fashion on show yesterday looked every bit as covet­able for the coming season.

The retailer has recently added about 90 new brands, Australian and international, many of them exclusive, including Hansen & Gretel, Husk and popular Scandinavian brands Rotate and Rodebjer.

Collection highlights were showcased by a diverse range of models across size, age and background.

Clare Hurley, Myer’s category manager womenswear, said: “Whether you’re young, old, looking for activewear, casual wear or something for the races, we’ve got newness for her in every segment.”

Ms Hurley said the focus this season was on the evolution of existing trends rather than bringing in entirely new aesthetics.

Among these, colourful tailoring would continue to be a big trend.

“Coloured suiting will be so prevalent this season. We’ve got beautiful lilac, strong, vibrant reds and the pink suit — you’re going to see every other person in a pink suit,” she said.

“It’s just eye-catching. Also it’s versatile — you can wear the jacket with a pair of jeans, the pant with a T-shirt and denim jacket.”

On that note, she added that there had been a slight move away from dresses to separates.

And in case you were wondering, this year’s most ubiquitous item is digging its claws in.

“Six months on, everyone is still in an animal-print skirt with an oversized knit, and in three months’ time it will be with a white T-shirt.

“Animal print is still really strong,” Ms Hurley said.

Comparable sales were down 0.1 per cent and overall revenue for the segment dropped 0.8 per cent to $2.2 billion. Woolworths Holdings slashed the value of David Jones by $430 million earlier this month.

The chain has 47 Australian stores and Woolworths Holdings chief executive Ian Moir said the goal for David Jones was to reduce floor space 20 per cent by 2026 through negotiations with landlords.

"We've got to get less stores and less space in the lower demographic areas, we've got to exit any marginal or undesirable leases," he said.

Initially the company had indicated it would exit those leases on expiry, but Mr Moir said on Thursday he was planning to do it earlier by getting "more aggressive" with landlords.

"You have to create partnerships with some landlords and take a more aggressive stance with other landlords, but we are absolutely focused on getting our space down," he said.

David Jones' biggest landlords include large listed property players such as Vicinity Centres and Scentre Group.

He would not say which stores would close, nor how many, though he said regional locations was a "reasonable assumption". He noted a reduction in space also meant shrinking existing stores by cutting the number of floors it occupied.

"That means less of some categories bit more of others, different brands, taking some brands out, and introducing different brands," he said.

It's still going to be a very tough marketplace. I think retail is still going to be in the middle of real strategic structural change.

Woolworths Holdings chief executive Ian Moir

"In some of those big stores, we've got a lot of space we don't really need because the model has changed. So we can have a much more profitable offer on much less space."

Mr Moir will also be moving to be primarily based in Australia, saying he wanted to personally see the David Jones transformation completed.

The company also flagged an additional $13 million in cost savings in the business, which Mr Moir said was from cuts across "every single area" of the business, including marketing and travel costs.

Conditions were marginally better at Woolworths Holdings' Country Road Group, which manages the Country Road, Mimco, Trenery, Witchery and Politix brands. Operating profit dropped 2.9 per cent to $100 million, though comparable sales were up 0.6 per cent.

However, Mr Moir said he was also looking to exit undesirable leases at stores in the Country Road Group. He said the company would look to negotiate more turnover related leases rather than ones with fixed price increases.

Online growing well

Online continued to be a bright spot for both David Jones and Country Road, growing across both and contributing to 20.3 per cent of total sales at Country Road.

David Jones' online penetration currently sits at 8 per cent, with Mr Moir hoping to grow that to 20 per cent in five years with the online operations "much more" profitable than its physical locations.

He dismissed the possibility of the brand being online only, however, saying high-end customers who spend "big bucks" will always want to see the product.

Woolworths predicted Australian sales for the group would grow off the back of improved consumer spending, though comparable sales growth in the first seven weeks of the current financial year had dropped 1 per cent at David Jones.

The lacklustre result followed disappointing earnings at discount department chains Big W and Target. Target's parent company, Wesfarmers, also flagged store closures as it grapples with soft consumer spending.

Mr Moir said Australian trading conditions were the weakest since 2009 but predicted conditions would likely improve through the financial year, pointing to the stabilising housing market and tax cuts as potential drivers of a recovery.

"But I think it's still going to be a very tough marketplace. I think retail is still going to be in the middle of real strategic structural change," he said.

"Because we’re a price leader and we’re there fighting to get better deals and prices, if things do tighten up, we win customers in that environment," he said.

"We would love it if all customers did a Google search before they made a purchase, if they compared prices, if they went on multiple websites, compared specs, read reviews, we would love that.

"It's at the lowest point over my eight years at eBay, and one of the lowest in online history," he said.

"There's no doubt this is a challenging environment, there's a lot of competition, and there's a lot of focus on delivering value to consumers."

In the latest piece of bad news for the sector, the Australian Bureau of Statistics on Monday released data showing the seasonally adjusted estimate for inventories, which indicates the amount of merchandise a company has on hand, fell 0.9 per cent for the quarter.

In the wake of a poor June result for retail trade, economists said the inventory result showed retailers were adjusting stock levels to match weak demand.

Despite some "cautious optimism" from retail powerhouse such as JB Hi-Fi and Woolworths, analysts are predicting the pain to continue despite some fiscal and monetary stimulus.

Fresh retail trade figures for July will be released Tuesday, with Morgan Stanley analysts predicting a small 0.3 per cent increase, down slightly from 0.4 per cent in June.

Intense competition, but Amazon no worry

Mr MacKinnon said sellers on eBay were facing increasing competition, but noted that same competition didn't apply to eBay itself, despite pressure from players like Amazon and Kogan.

You can't change the rules of retail that great prices and great selection trump everything.

eBay Australia managing director Tim MacKinnon

eBay receives 11 million unique monthly visitors and has over 40,000 different small businesses selling on the platform. Mr MacKinnon said the company was in the strongest position it had even been.

"Two out of three Australians have bought something from eBay the last 12 months, which is the highest share of the population using eBay than any time in our history," he said. "We're clearly the market leader in online shopping."

The company is celebrating 20 years of operations locally, which Mr MacKinnon said had seen the company go through numerous changes, moving from a second-hand goods seller to a marketplace-focused business model.

Despite competitors such as Kogan constantly moving into new verticals like superannuation and credit cards, Mr MacKinnon said eBay wasn't planning to follow suit, predicting the future of online retail would likely be more of the same.

Technology advancements such as augmented reality and increased personalisation would likely play a limited role compared to the "fundamentals" of having low prices, cheap shipping and a broad selection.

"You can't change the rules of retail that great prices and great selection trump everything," he said. "I know that's a boring answer, but it's the most fundamental thing you need to do."

This week, major fashion brand Zara announced a pledge to use 100 percent sustainable fabrics by 2025. The company also upped the ante for large-scale sustainable fashion by promising to use 80 percent renewable energy for its headquarters, factories and stores by the same deadline.

“We need to be a force for change, not only in the company but in the whole sector,” said Pablo Isla, CEO of Inditex, the corporation that owns Zara. “We are the ones establishing these targets; the strength and impulse for change is coming from the commercial team, the people who are working with our suppliers, the people working with fabrics.”

Inditex is the third-largest apparel company in the world and promises that its other brands, including Massimo Dutti, will follow Zara’s example. Zara is by far the corporation’s largest brand, pulling in 70 percent of its sales, which totaled $29 billion USD last year. A major component of the sustainability plan involves increasing the offerings and sales from Zara’s eco-conscious line, Join Life.

Zara also partners with the Red Cross to donate leftover stock and has an ongoing project with the Massachusetts Institute of Technology to innovate new ways to recycle fabrics.

The announcements come after increased pressure from consumers worldwide who seek sustainable fashion choices and critique the waste generated by the fast fashion industry. Zara claims it is not "fast Fashion," even though a documentary recently revealed that factory workers are judged by a woman holding a stopwatch and that the time between spotting a trend and having it hit Zara stores is only 2 to 4 weeks. Most fashion brands, by comparison, take 40 weeks.

Critics and experts of the fashion industry noted that the new sustainability plan does not address concerns about the conditions for factory workers, despite recent controversies when disgruntled workers stitched S.O.S notes into Zara clothing.

Today the global beauty industry is a $532 billion business. The U.S. currently is the world's largest beauty market, with about 20% share, followed by China (13%) and Japan (8%). While projections for growth vary, most agree it will continue to advance at a 5%-to-7% compound-annual-growth-rate to reach or exceed $800 billion by 2025.

Even if the world economy dips between now and then, the beauty business is more likely than other discretionary categories to hold its own. That’s owing to the “Lipstick Effect,” a theory proposed by Professor Juliet Shor back in 1999 in her book The Over-Spent American.

Shor hypothesized that when times get tight, consumers will continue to indulge in prestige cosmetics – little luxuries – that give them an emotional lift, while forgoing expenditures on higher-priced luxury goods. Having studied “why people buy things they don’t need” since then (it’s the title of my first book), I have no reason to dispute her theory. The “Lipstick Effect” holds. 

That said, not all brands will benefit or grow as fast as the overall market. Quite the contrary, there will be plenty of losers, as well as winners, in the business of beauty, because it faces seismic shifts in how women, and increasingly men, define beauty and the role of beauty products in their lives. 

A new study by Ipsos sheds light on the changing face of beauty, along with predictions about the trends that will shape the future of the beauty marketplace. The report, entitled "What the Future: Beauty," summarizes a series of in-depth global consumer surveys. It provides an over-the-horizon look at the consumer trends that will grow in importance over the next five years. 

As much as we like to think that consumers are always looking to try new beauty products, the Ipsos survey finds most consumers are satisfied with the products they currently use and are available today. 

Over 80% agreed with the statement “My personal beauty and grooming needs are met by products I can buy today.” Further a majority (55%) are likely to “choose a trusted brand that I know over a new brand that I haven’t used before,” with the same percentage (55%) saying “I am loyal to the face, body, hair or beauty care items I use.”

Thus, it is no surprise that Estée Lauder and L’Oreal both posted such strong results recently, with EL net sales up 9% and L’Oreal up 5.5% last year. Both companies own a plethora of well-established and trusted beauty brands, ranging from mass to prestige. Both companies also acquire emerging brands, but not until they have a proven track record. 

And each companies’ well-earned reputation allows them to introduce new products and brands under their umbrella with less risk than an emerging brand faces. Reputation Institutes’ 2019 Global RepTrak study ranks L’Oreal No. 49 and Estee Lauder No. 53 among the world’s most respected brands. 

Consumers’ preference for brands they know and trust poses challenges for new beauty brands to breakthrough. New brands must offer something really new and different to pull people away from what they are using now. 

Natural, clean, and sustainable beauty can get them to switch

When it comes to product features that attract beauty buyers to new brands, natural, clean and sustainable are what they are drawn to. Two-thirds said, “I would be interested in trying new products from other brands if they are natural,” and 59% agreed, “I would be interested in trying new products from other brands if they are clean.” New sustainable brands also attract the interest of 55% of those surveyed as well.

Natural, clean and sustainable, while close, are not synonymous. Natural according to the survey means products that are 100% made from naturally-occurring ingredients with nothing artificial. Interestingly, only 25% of customers believe natural also means organic.

Clean signifies products that are healthy and free from “bad” ingredients, with nothing artificial added. Sustainable refers to how the product ingredients are sourced, being sustainably produced with little impact on the Earth’s natural resources. Using recycled and recyclable materials is also associated with sustainable beauty products. 

Manufacturing beauty products to meet one or all of these criteria – natural, clean and sustainable – is a particular challenge for the major brands due to their scale. R. Alexandra Keith, CEO of Proctor & Gamble Beauty, said, “If the entire industry switched to organic and natural materials, it would be a problem for the Earth and for food sources.” 

So in meeting the need for natural, clean and sustainable beauty, the advantage goes to smaller brands that don’t have the scale challenges of bigger ones. 

Having a personal hands-on experience with a new brand is critical

While beauty brands see digital e-commerce and digitally-enhanced in-store and virtual try-on apps as the wave of the future, a sizable percentage of beauty customers (41%) said they would not buy any beauty product that they had only tried-on virtually. They want a real-world, hands-on experience with new products before they pull the trigger. This need gives brands in physical retail the edge in introducing new products. 

However, e-commerce brands can overcome some consumers’ resistance by offering a free sample to test first (36%), as well as an easy return policy (20%). In addition, if e-commerce beauty brands offer cheaper prices online, they stand a good chance to get hesitant customers to give the product a try (22%). 

Other strategies, like free virtual application classes or  virtual video consultations with a sales representative, are not likely to persuade potential customers to give a new product a try, at least not today. 

Getting up-close-and-personal is how to influence beauty customers

The beauty industry is number one when it comes to influencer marketing, according to a study by Rakuten. But this survey by Ipsos suggests that such strategies may not be all that effective. 

Rather, the people closest to the consumer have the most profound influence in an individuals’ beauty routine, especially friends (50%), mothers (49%) and sisters or other family members (41%). These close personal contacts are way out in front of magazines (27%), online videos (27%) and Instagram and other social media (25%) as influencers. 

Of course, consumers are not always conscious of what and how their behaviors are influenced, but these survey results suggest that the people consumers know and trust are more influential than paid influencers or traditional marketing and advertising methods.

Given the outsized influence of mothers on younger women’s beauty routines, it points to the need for beauty brands to develop multi-generational strategies. 

This is especially important in light of demographic trends. Women aged 65 and older will be the fastest-growing female age segment through 2025, rising 36%, while Millennial-aged women (24-to-44 years) will only increase by 9%. By contrast women aged 18-24 years and 45-64 years will decline slightly in number, -1% and -3% respectively, according to Census Department projections. 

Beauty looks like me

Because beauty customers often take their cues from those closest to them, it is no surprise that they are looking for beauty products that are appropriate to their age and ethnicity. What’s more, they expect to see beauty in all its many shapes, sizes, and colors presented in positive and realistic ways. 

Accurately and positively reflecting age is top on their list (54%), followed by images that show reality (i.e. cellulite, tooth gaps, scars, gray hair, wrinkles), not photo-shopped perfection (51%). Embracing the beauty in all body sizes (49%), facial features (47%), race/ethnicity (42%), skin color (40%) and genders (40%) are also important. 

The beauty consumer is changing in how they define beauty and demanding an inclusive and authentic image. “In the past, the idea was that if you told people they weren’t good enough, by creating this aspirational messaging, they would constantly be spending money buying your product to try and be good enough,” shared Anastasia Garcia, a fashion photographer and body diversity advocate. 

“But the truth is, you don’t have to make people feel like crap to buy a product. If you celebrate people, they're going to want to buy into that product,” she continued.

Claiming one’s authentic beauty

This Ipsos study shows the changing face of beauty and it is the natural beauty in each person, not some unrealistic, unachievable ideal. 

The long-established aspirational concept of beauty, and products designed to help consumers achieve them, needs to give way to a more personal, inclusive, and authentic image. 

The people we are closest to have a far greater impact on how we define beauty and guide us in our choices, more than paid influencers or brand-generated advertising and marketing. This has implications too for beauty retailers to make the most of their potential to develop close personal connection with customers. 

Fellow Forbes.com contributor Richard Kestenbaum reported that half the growth in beauty is coming from online. But that also means the other half is coming from physical retailers who have the advantage of cultivating that critical personal connection with customers. Trusted in-store advisors are best able to help customers find products and brands that will help them realize their own personal beauty image, not copy that of a model, celebrity, or paid influencer. 

In closing, one of the more interesting questions included in the study was this: Have you ever thought someone was unattractive initially but changed your mind over time? Nearly two-thirds replied yes and explained that their perception changed after getting to know the individual better. 

Ultimately beauty is as beauty does and it is defined in this survey as confidence, kindness, and intelligence. Consumers today are claiming their right to define beauty on their own terms. That is an insight that will guide the beauty industry to grow and prosper in the future.

While some retailers flagged a shaky outlook for 2020, Mr Harvey indicated the company had a strong start to the year, with same store sales in July and August up 3 per cent.

Mr Harvey said he is heavily investing in his operations overseas – "which is not good for Australia".

"We are all trying to grow our companies but you can't invest for the sake of it, you have to have a reason," Mr Harvey told The Australian Financial Review.

Woolworths chief executive Brad Banducci said while the economy was in reasonable shape, swift action would be required if conditions deteriorated.

"We'll just have to wait and see how things play out. If things start to worsen then some pump-priming would be useful," Mr Banducci said.

Flight Centre chief executive Graham Turner said more rate cuts were unlikely to be the answer, as the Reserve Bank prepared to meet on Tuesday.

Richard Murray, the chief executive of electronics and appliances retailer JB Hi-Fi, said more important than stimulating the economy was wanting “the government to make decisions that support long-term economic growth."

Coles chief executive Steven Cain agreed “the government seems to be doing the right things which are bringing interest rates down, reducing taxes, they're doing their bit to help.”

Coca-Cola Amatil CEO Alison Watkins said “the most important things really are that we encourage and create conditions that give confidence for companies to invest and generate productivity growth - that's going to drive our economy.”

The CEOs turned Josh Frydenberg's call for business to invest back on the Treasurer, warning the government can not rely on business investment to lift productivity and stave off a slowdown.

Business leaders put the onus back on the government to be ready to act beyond recently introduced income tax cuts, scheduled public infrastructure spending and record low interest rates.

Prime Minister Scott Morrison made the "back in black" budget pledge a cornerstone of his May election victory but corporate leaders warned an economic slowdown might force the government to change tack.

"It's important that politicians follow through on their promises but then sometimes economic conditions require changes," Transurban CEO Scott Charlton said.

WorleyParsons chief executive Andrew Wood agreed that "you’ve always got to react to the circumstances you find yourself in".

"Any business, any government, as much as you can declare a direction in your operations, in the end you’ve got to do what the is the right thing for the business and the country at the time," he said.

"The government should just continue to consider all aspects of the global economy and the Australian economy."

Economists expect local economic growth to be reported on Wednesday to be a subdued 0.5 percent in the June quarter and to slip to 1.4 percent for the year -  the weakest annual result since 2009.

Other CEOs responded with variations of the same theme, urging the government to be ready to consider greater fiscal stimulus as also urged last week by former Prime Minister Kevin Rudd.

"At some stage we have to start running some surpluses ... but we should always have the flexibility to reverse that if things go wrong," managing director of Link Administrative Holdings John McMurtrie said.

Stimulus debate

The chief executive of infant formula group Bellamy's, Andrew Cohen, said Australia should not only rely on monetary policy.

"Although a surplus is a noble goal, we should not be over-reliant on monetary policy in difficult times,'' Mr Cohen said.

Reserve Bank of Australia governor Philip Lowe has repeatedly called for the government to consider greater infrastructure spending and structural reform to boost economic growth and wages.

“Monetary policy cannot deliver medium-term growth,” Dr Lowe said last week. “We risk just pushing up asset prices."

Mr Frydenberg has insisted the government will deliver its surplus for 2019-20 and has signalled a willingness for a minor acceleration of infrastructure spending that would not jeopardise the forecast $7.1 billion surplus.

The government and RBA are hopeful recent income tax cuts, the June and July interest rate cuts and federal and state government infrastructure spending will boost the economy in the second half of this year.

Ian Ball, the chief executive of engineering services group Cardno, said even more spending on infrastructure would be the best way to unleash additional government spending.

"Much of our transport infrastructure is outdated or overloaded and while it's pleasing to see governments investing in badly needed infrastructure projects, what we don’t currently have is an integrated national infrastructure plan for two to three decades we stick to,'' Mr Ball said.

Mr Frydenberg’s call last week for business to invest, rather than returning cash to investors, sparked a vigorous debate among CEOs, with some like Boral chief executive Mike Kane responding he didn't want to be told by politicians what he was supposed to do.

Others like CSL chairman Brian McNamee said Mr Frydenberg had "every right to ask companies to invest in our future", and Macquarie Group's Shemara Wikramanayake said she would “endorse that wholeheartedly”.

Virgin Australia chief executive Paul Scurrah said he backed any moves that helped accelerate economic growth.

"As a group that relies on economic growth we would support anything that stimulates the economy,'' Mr Scurrah said.

There is however a general sense that immediate pump-priming action may not yet be required.

"I would hold off on fiscal stimulus for now and keep our powder dry, I don’t think we’re at that point just yet," Sydney Airport chief executive Geoff Culbert said.

Qube CEO Maurice James agreed. "My view would be that we’re not there yet and I think if conditions deteriorate that is certainly an option for the government."

Generation X has taken over control of corporate Australia, producing a new wave of CEOs who are far more international than their US counterparts and are more likely to have been promoted from within.

A detailed survey of top-50 CEOs also finds that science degrees were their most popular way to the top, surpassing commerce or law degrees. The University of NSW is the top incubator of corporate leaders, far more important than older or international universities, including Oxford, Yale and Stanford.

While one quarter have MBAs, seven individuals succeeded with high school-only qualifications: Michael Cameron at Suncorp, who is leaving the company, Peter Harmer at IAG, Trevor Croker at Aristocrat Leisure, Stuart Irving at Computershare, Gregory Goodman at Goodman Group, Peter Allen at Scentre Group and Bob Johnston at GPT Group.

The findings, in the Apollo Communications Australian Top 50 CEO Report, suggest that Australian business leaders come from far more diverse backgrounds than the stereotype of CEOs coming from a club of private school-educated lawyers and accountants.

Almost half were born overseas, compared with fewer than 5 per cent in the US. Their average age is 54, which means that Generation X, which was born between the mid 1960s and the early 1980s, has assumed charge from the Baby Boomers born after World War II.

Other leaders with science backgrounds were Patrick Regan at QBE, Francesco de Ferrari at AMP, Graham Chipchase at Brambles, Julian Segal at Caltex, Jack Truong at James Hardie, Peter Botten at Oil Search, Mark Steinert at Stockland, Scott Charlton at Transurban and Ron Delia at Amcor.

Of the 24 foreign-born CEOs in the top 50, nine were from the UK, four from the US, three from South Africa, two from New Zealand and one each from Vietnam, Columbia, India, France and Ireland.

“This suggests that equality of opportunity for people from different ethnic backgrounds is alive and well in Australia, compared to the world’s largest economy," said Apollo Communications CEO Adam Connolly.

Irrespective of where they were born, 80 per cent of the CEOs had worked overseas. Mr Connolly said this confirmed that "global experience is highly valued by boards, even if it is largely seen as irrelevant by customers."

"Becoming a CEO may bring enormous power and wealth, but it has limited job security," the report says.

Two-thirds of the CEOs were promoted internally to the position, rather than from outside, suggesting that high-profile hires such as new National Australian Bank CEO Ross McEwan from Royal Bank of Scotland this year are exceptions that don't reflect usual business practice.

"There needs to be a compelling reason for an organisation to go outside for their leadership choices," said Adam Badenoch, a Melbourne-based partner at global headhunting firm Heidrick and Struggles.

"The difficulty arises when an organisation is looking to truly transform. In those circumstances, having fresh eyes can be an advantage and those wedded to the past can be challenging."

The important attributes for a CEO, in the opinion of the community, are ethical standards and trustworthiness, based on a survey of 1000 people by research firm PureProfile for Apollo.

One of the least important attributes was that he or she be socially progressive - a criticism often made by conservative commentators about Mr Joyce, who was a champion of same-sex marriage.

“Australians also don’t want their corporate leaders to be social activists," Mr Connolly said.

One in four Australians don't trust corporate leaders to behave ethically, and an even higher number - 60 per cent - would like to see them subjected to more regulation.

The community support for tough oversight suggests the banking royal commission and the scandals that initiated it may have hardened Australians' distrust of big business.

Mr Scott said on Tuesday the domestic economy was "not too bad" and probably a lot healthier than some commentators appreciated when compared to the rest of the world.

"I think a lot of people like complaining about things, but when you compare the Australian economy to a lot of other economies in the world, things aren't too bad," he said.

"I wouldn't necessarily say that the consumer environment is negative. The domestic economy is not too bad."

Mr Scott said Australia had had it good for a long time and after almost three decades of uninterrupted economic growth there was a danger of being too pessimistic.

"We are just reminding ourselves internally that there are lot of things that are within our control to improve our performance, improve the offer to customers, to invest in the future and we really should be more focused on that than complaining about the market," he said.

Strong results

Wesfarmers suggested the impact of weakness in the residential housing sector on Bunnings had been overestimated after the powerhouse hardware chain delivered another strong result and pointed to signs of improvement in its department stores Kmart and Target.

Mr Scott also took issue with comments from Treasurer Josh Frydenberg Suggesting companies should invest more in growth instead of returning excess cash to shareholders through special and bumper dividends.

The Wesfarmers managing director said it was possible to do both as the Perth-based conglomerate had shown in the past 12 months when it reinvested $860 million in business growth and paid a total of $3.14 billion in dividends, including a special $1-a-share dividend in April.

"It is in our shareholders interest to receive the benefit of franked dividends and to get the benefit of the tax that we pay on our corporate profits," he said after Wesfarmers declared a final fully franked dividend of 78¢ a share.

Mr Scott made it clear Wesfarmers was focused on growing its remaining businesses and putting less emphasis on acquisitions after abandoning its $1.5 billion takeover tilt at rare earths producer Lynas Corporation on Thursday.

"Obviously with the concerns around trade war tensions and slowing of growth in some international markets, I think it would be wise to be somewhat cautious around the outlook," he said.

"That is why we have a really strong balance sheet, that is why we are very much focusing on our core operations."

The $44 billion company is on track to close out its $776 million acquisition of lithium player Kidman Resources early next month and denied having regrets about the takeover amid weakness in the lithium sector.

More growth

Wesfarmers said it was well positioned for sustainable growth despite a forecast big drop in earnings from its department stores and flagging headwinds for its industrials division over the longer term.

The company reported net profit after tax of $5.51 billion in its maiden full-year results post the Coles demerger in November.

The net profit after tax result was boosted by $3.17 billion relating to discontinued operations, including gains on the Coles spin-off and sales of Bengalla coal operations, Kmart Tyre and Auto Service (KTAS) and Quadrant Energy.

NPAT from continuing operations was $1.94 billion, up 13.5 per cent compared to the prior year.

Mr Scott admitted the performance of Kmart Group, which takes in Target stores, was underwhelming.

Kmart revenue increased 1.1 per cent to $8.59 billion but earnings excluding KTAS and significant items fell 13.7 per cent to $540 million.

Wesfarmers reported earnings before interest and tax of $2.97 billion led by Bunnings with $1.62 billion compared to $1.5 billion last year.

Mr Scott said Wesfarmers remaining operating divisions – the Bunnings, Kmart, Target, Officeworks and the chemicals, energy, fertilisers, industrial and safety businesses - had continued to generate solid returns as the company transformed its portfolio.

Citi analysts said the results were largely in line with expectations and unlikely to drive material changes to consensus 2019-20 forecasts.

They expect the share price to be supported by improved trading in Kmart and solid Bunnings performance with an improving backdrop.

Moody's said the results had been underpinned by Bunnings despite the softer housing market and it rated the hardware chain as the key to driving value because of its high margins, cash flow generation and growth profile.

"While EBIT from Kmart Group was lower than the previous year, with a profit of $540 million, it remains far better positioned than its key competitor Big W, which is expected to report a loss for the year," Moody's noted.

Mr Scott said Wesfarmers had increased online sales by 33 per cent across it retail business and was looking for more growth after the $230 million acquisition of online retailer Catch Group.

He said more work was being done to reposition the Target range as Wesfarmers continued to close stores in 2019-20.

Accent Group last week reported a record set of FY19 results. The footwear firm, which owns the Platypus, HypeDC and The Athlete’s Foot retail chains and distributes brands such as Skechers, Vans and Dr. Martens, posted a 22.5 per cent year-on-year increase in EBITDA to $108.9 million on sales of $772.5 million for the year ended June 30, 2019. 

Across brands, online sales nearly doubled and now account for around 15 per cent of total sales, while the retailer’s strategic shift away from discounting continued to improve gross margin. And the current year is already shaping up to be a strong follow-up to FY19. 

The retailer launched a new kids’ shoe concept, The Trybe, in July, and plans to open several more stores over the coming months. Last week, it announced another new business, Pivot, aimed at value-conscious shoppers. 

We caught up with Accent Group CEO Daniel Agostinelli post-results to discuss all this and more. Here are six key things he mentioned.

Personal highlights

“What is most impressive for me and what I’m mostly pleased about is that our distributed brands all performed above expectations,” Agostinelli told Inside Retail. 

Accent Group’s distributed brands include: Skechers, Merrell, CAT, Vans, Dr. Martens, Saucony, Timberland, Sperry Top-Sider, Palladium and Stance.

“The product pipeline has been fantastic from all of these brands, and what we’re hearing from them is that the forward pipeline is just as good, so we’ll have a free kick moving forward.”

Platypus

“The Platypus banner continues to see us open in places we didn’t expect to open. We’ve opened in some country areas, including Albury, Victoria, and Elizabeth, South Australia. They were not on our radar, but our customers are voting with their wallets. They like what we’re doing.” 

Pivot

“The other chain we’re looking to launch next year is Pivot. This business will be servicing the value-conscious branded consumer,” Agostinelli said.

“It’s all branded product in the $90-100 market. It looks and smells like the high-end stuff. It’s for the average consumer out in the suburbs who may not want to spend $200, but wants branded product.”

“The product we’re thinking of for this chain will not be available under any of our current banners. Every brand [we stock] has what they call their value segment. We don’t feel it’s being serviced in a major way at the moment. We see opportunity there.”

Omnichannel 

“We invested fairly heavily two to three years ago in our digital hub. That runs all our digital sales. This year we had 93 per cent growth [online], and that’s compounding on the year prior. And it will continue to  grow as the customer shifts towards buying more online,” he said.

“We definitely still feel that you need stores. We are about to launch same-day delivery across all our banners, and next-day delivery after hours. If a customer buys something online tonight, they may not want it to arrive next-day while they’re at work. They may want it to arrive after hours.

“At the same time, we’re launching Saturday deliveries. This is quite innovative in the footwear space. It’s not easy to execute, but we have some great courier partners. It’s just extending on our absolute obsession with customer experience. That is a major word that is thrown around at Accent Group. We’ll do whatever it takes.” 

US-China trade war

“We’ve asked this question of some of our third-party brands, and it has not been a topic that they’re really certain on at this stage about what may or may not happen,” Agostinelli said. 

“We actually see it as a potential opportunity. As prices go up in the US, it may make our pricing look better. But there’s not a definite answer [about the impact of the trade war] at this moment.”

Sustainability

“It’s high on our agenda. Thankfully brands like Veja and Dr. Martens have come out with vegan products,” he said. 

“We’re looking at any area we feel that would allow us to move into a sustainable space…what will our carry bags look like in the future? Vegan products have been a major hit with our customers.”

Wesfarmers will shut stores at struggling discount chain Target and aim to boost its online sales after another lacklustre performance from the department store overshadowed an otherwise strong full-year result.

Chief executive Rob Scott also said Wesfarmers would continue to pursue acquisitions after a string of sales and the divestment of Coles lifted the group's net profit after tax (NPAT) to $5.5 billion.

A strong performance from Bunnings and Officeworks drove a 13.5 per cent increase in NPAT from continuing operations in the last financial year to $1.9 billion as revenue lifted 4.3 per cent to $27.9 billion. Bunnings and Officeworks made up 76 per cent of Wesfarmers' earnings.

Bunnings' earnings before interest and tax (EBIT) increased 8.1 per cent, and Officeworks' grew 7.1 per cent, though profit growth for both slowed compare to the previous year.

Department stores set to shrink

The department store division performance was below expectations, with an EBIT drop of 13.7 per cent.

Target suffered a 0.8 per cent drop in like-for-like sales, prompting Mr Scott to flag significant changes at the struggling retailer.

"Ultimately, it will be most likely a smaller business over time as we reduce the size of the network and focus more on quality over quantity," he said.

The move comes after Big W announced in April it would shut 30 stores and David Jones earlier this month revealed a $437 million writedown.

He also highlighted opportunities to improve profitability, including a push into higher-quality apparel and homewares products, with Mr Scott admitting Kmart and Target's offerings have not been different enough in the past.

''In terms of investments, the next opportunities are those with a strong adjacency to an existing business.'' - Wesfarmers chief executive Rob Scott

He also hinted Target could pivot to a more online-focus, with e-commerce and click-and-collect becoming a "big part" of Target's strategy.

"I think over time, we'll see e-commerce sales represent a very significant proportion of Target's total sales," he said.

The company's $230 million acquisition of Catch Group, announced in June, will also allow the retailer to split its product offering, selling products on Catch which don't "logically" fit in Target stores.

Jim Power, an analyst at large Wesfarmers shareholder Martin Currie, was confident the company would make the right changes to its department stores.

"[Wesfarmers will] work through their footprint, figure out what stores make money and try to work on the footprint as much as the consumer proposition," he said.

As well at the Catch Group transaction, the past year has seen Wesfarmers make bids for resources companies Kidman and Lynas, and market watchers were keen to hear where Wesfarmers would look next to spend its healthy balance sheet.

Mr Power was definitely expecting Wesfarmers to make more acquisitions.

"Something related to the core business, where they have insight and they bring something to the company they buy is perfect from our point of view," he said.

Mr Scott remained tight-lipped on where specifically Wesfarmers was hunting, but noted it would likely be complementary to existing operations, pointing to Catch and Kidman as examples.

"The next opportunities are those with a strong adjacency to an existing business," he said. "We're always quite opportunistic and discerning around the investments we make."

Its "first priority" would be to continue to invest in its current operations, however, and Mr Scott reinforced the company would not pursue acquisitions for the sake of it.

He also ruled out another run at rare earth business Lynas after the company backed away from its $1.5 billion bid last week, saying the company had "very much moved on".

Trade tensions temper outlook

Global trade tensions will likely have an effect on the company and the broader Australian economy, Mr Scott warned, with the chief executive "cautious" on providing guidance for 2020.

"With the concerns around trade tensions, the slowing of growth in some international markets, I think it would be wise to be somewhat cautious around the outlook," he said.

Citi analyst Bryan Raymond said the result out of Bunnings was a positive but noted the "largely in-line" result was unlikely to change 2020 forecasts, giving the company a sell rating.

"We expect the shareprice to be supported by improved trading in Kmart and solid Bunnings performance with an improving backdrop," he said.

Wesfarmers shares closed up 1 per cent at $39.10. The company will pay a final dividend of 78 cents, on top of a previously announced $1 special dividend, to be paid on October 9.

Caltex will also shift its corporate headquarters from the Sydney CBD to Alexandria, four kilometres to the south, next year as part of a new $100 million a year cost-cutting drive, and has slashed its capex budget for this year.

The news has left some investors questioning how Caltex will deliver a promised increased return for shareholders just when it is set to undergo a transition in leadership given chief executive Julian Segal flagged his intention to retire earlier this month. 

Mr Segal described the 54 per cent drop in benchmark profit for the June half as disappointing but said Caltex was already responding by focusing on capital discipline and reducing costs. He said the strategy was fully supported by the board and he would be remaining as CEO "for quite a while" to carry it through.

"Caltex has a history of adapting to operating conditions to continue to succeed and we will remain agile to deliver for our shareholders," he said.

The weak result was not unexpected after Caltex cut its earnings guidance in June but the shares still fell 6.4 per cent to $24.66.

The drop extended a 4 per cent slide in the stock on Monday after rival Viva Energy offered a weaker than expected outlook for the second half that revealed the extent of the weakness in retailing margins.

Citigroup analyst James Byrne said Caltex's new chief financial officer, Matt Halliday, previously of Rio Tinto, seemed to already be making an impact on the business, driving cost reductions, the divestment of under-performing retail stores and reducing capex to strengthen the balance sheet.

"This good news offsets the outlook that $120-150 million in EBIT [earnings before interest and tax] uplift from convenience will no longer be achieved," Mr Byrne told clients.

"We doubt the market had much convenience benefit anyway, so with $100 million in cost out, this may be a net benefit for expectations."

The market had been losing faith in Caltex's retailing profit targets over the past six to 12 months as returns from the rollout of new and revamped stores proved slow to emerge.

But Mr Segal said he was still very confident the retail transformation would deliver "meaningful growth", noting that while the increase in earnings would be smaller, it would be achieved with lower capital spending. He said that the retailing alliance announced on Tuesday between BP and David Jones Foods reflected Caltex's 2½-year-old strategy to upgrade its convenience retailing offer at its petrol stations.

The decision to close 50 stores and sell the sites is the result of an ongoing review by Caltex of all its convenience retail network. About 500 sites have been identified as delivering strong returns and growth, while another 240 are still under review but will remain part of the network.

Mr Halliday said the 240 sites were important as part of Caltex's branded network but deeper analysis was required to find the best pathway to apply the retailing strategy.

Caltex now expects to spend about $300 million on capital investment this year, down from an original guidance range of $320 million to $385 million.

Net profit leaving aside the value of inventories, the figure most closely watched by the market, sank to $135 million in the six months ended June 30, within Caltex's June guidance of $120 million to $140 million.

Bottom-line net earnings dropped to $155 million from $383 million a year earlier on revenues that edged up 1 per cent to $10.3 billion.

Earnings before interest and tax from fuels and infrastructure fell 38.5 per cent to $193 million, while convenience retail EBIT almost halved to $85 million from $161 million in the first half of 2018.

Caltex's sole remaining refinery, the Lytton plant in Brisbane, saw an average gross return on converting a barrel of crude oil into a barrel of petrol, diesel and other refined fuels of $US7.50 in the first half, down from $US10.06 a barrel in the year-earlier half.

The company reduced its guidance for full-year fuels sales from its own production to about 5.5 billion litres, from 5.8 billion litres, because of high oil purchasing costs.

Caltex declared an interim dividend of 32¢ per share, down from 57¢ a year earlier.

Department store David Jones is getting into the $4.7 billion convenience game by way of a partnership with BP, which will see selected BP sites offer exclusive, high-quality products under the David Jones Food banner.

Over the next six months, 10 strategically positioned sites around key regions in Melbourne and Sydney will be transformed to focus on busy, urban, health-conscious consumers.

The offer will add a further 350 products, including food-for-now and food-for-later options, as well as fresh items such as sandwiches, sushi, rotisserie-chicken, and long-life groceries.

“The traditional service station offer of today will not fulfil the retail customer needs of tomorrow,” BP Australia vice president of sales and marketing Brooke Miller said.

“BP’s vision is to transform convenience retailing in Australia, and enhancing our brand via strategic partnerships underpins our strategy to deliver market-leading fuels, technology, rewards and convenience offers to Australian consumers.”

Pieter de Wet, managing director of David Jones Food said the launch will signify a new chapter for the department store’s food banner.

“Consumer behaviour is changing and demand for fresh, food-for-now and food-for-later options to grow. Customers expect convenience and quality to go hand in hand, and our collaboration with BP enables us to share the David Jones Food offering with more customers than ever before,” de Wet said.

“We are committed to the ongoing development of the range and together with BP see an opportunity to deliver an experience that fits with the busy lives and changing needs and preferences of our customers.”

The lessons learned in these initial 10 sites will inform the next phase of development, though BP and David Jones expects to expand the offer through the national BP network.

The changing face of convenience

The convenience sector has seen large changes in the last decade, as consumer behaviour shifts away from the classic three-meals-a-day and an all-encompassing grocery shop on the weekend.

BP Australia general manager of retail Amanda Woollard previously told Inside FMCG that customers have influenced the speed of change in the convenience industry, and that the traditional ‘servo’ of old has been superseded.

“Clustering product and service offers in one space is proving popular; it all comes back to creating the best experience in the most convenient way,” Wollard told Inside FMCG.

“A key pillar of our strategy is about giving customers time back in their day. We’re seeing a rise in urbanisation so we’re focused on providing time-pressed, urban shoppers the flexibility to buy what they need, when they need it, and in a location that is convenient to them.”

Billionaire Brett Blundy is proving there’s plenty of life left in the retail sector just yet.

Blundy is the major shareholder in the ASX-listed jewellery chain Lovisa, which has been one of the strongest performers among Australian stocks this year and hit a record high on Friday.

Lovisa is the jewel in Blundy’s collection of investments. Its shares are up by more than 90 per cent since January 1, giving him a stake worth more than $530 million for his 40 per cent shareholding in a company that now has market capitalisation of almost $1.3bn.

t is also one of the best stockmarket listings in recent years. Lovisa shares have increased six times in value after floating on the ASX at $2 per share in December 2014.

Lovisa has more than $100m in annual sales outside Australia, and opened 24 stores in the UK and Europe last year and 18 in the US.

Brett Blundy

• Age: 59
• Lives: Bahamas
• Net worth: $1.42bn
• Source: Collection of retail businesses through BBRC Worldwide
• Secrets of success: Well-placed and well-priced retail offerings such as jewellery chain Lovisa.

Accounts lodged with Companies House showed Lovisa making a £1.5m ($2.7m) loss on £10m revenue in 2018, the latest available financial information, in the UK.

Lovisa said in the accounts that Brexit could have an adverse impact on its performance in the UK given its products are “discretionary” and not “necessities”. But it also added that given the company’s “competitive price point … we believe the business is well placed to manage whatever economic conditions prevail”.

Blundy’s fortune was recorded at $1.42bn when The List - Australia's Richest 250 was published by The Australian in March, though that figure is likely to have increased given the good performance of Lovisa and other stocks Blundy holds.

He has more than $1.1bn in shares across four listed retail or retail-related stocks, led by Lovisa but also including the Aventus Property Group, homewares group Adairs and Accent Group, the owner of brands such as Platypus, Athlete’s Foot, Skechers and Hype DC.

Accent shares are up 30 per cent this year, pushing the value of Blundy’s 18 per cent stake to almost $160m.

Blundy’s shares in Aventus are worth $377m. He has a 27 per cent stake in the company, which has a portfolio of 20 large format retail centres worth $2.1bn and has seen its shares increase in value by 22 per cent since January 1.

Adairs has been the laggard for Blundy, having fallen 9 per cent this year. But its shares jumped more than 8 per cent on Monday when it said that while its profit outlook was flat it expected its costs to reduce from investing in its supply chain and logistics capabilities.

Then there is the private Honey Birdette lingerie business, which has more than 50 stores across Australia and is expanding into Britain and the US.

It made a net profit of about $7.4m from $51m of revenue in the 2018 financial year, according to documents lodged with the corporate regulator.

Those results were up from a $4.5m profit and income of $42m in the previous year. Honey Birdette paid its shareholders, including Blundy, a dividend of $7m for the year.

The brand has attracted some controversy, including criticism of its advertising campaign and Blundy has reportedly faced court action from a co-founder who has alleged she was short-changed when she sold her stake in the business five years ago.

Blundy had legal success last year in another case, when he secured a $100m payout from another member of The List in Ian Malouf for Blundy’s then stake in Malouf’s Dial-a-Dump, which was later sold to the ASX-listed Bingo Industries.

Blundy, now based in the Bahamas, made $500m from the sale of another retail chain in Bras’n’Things in February 2018 and more recently offloaded his luxury superyacht Cloud 9. The Perfectly Placed retail recruitment business and Mr Vitamins chain are also in his portfolio, and he also owns commercial properties.

Blundy is also one of the biggest landholders in Australia through his BBRC Beef business, a market he first invested in during 2010. AGJournal list him as the country’s 13th largest land holders with 2.37m hectares across four cattle stations in the Northern Territory. His company runs more than 175,000 cattle and paid $100m for two of its stations in 2015.