News

Daniel Hawkins has been appointed as Domino’s New Zealand’s newest GM of operations, effective immediately.

Hawkins has more than 20 years of experience in technology and digital leadership roles at companies such as Michael Hill and Zarraffa’s Coffee. He joined Domino’s 18 months ago as the chief information officer overseeing the business’ IT functions in both markets.

David Burness, CEO of Domino’s ANZ, said: “As a market with more than 140 stores, and a strong growth plan to build to more than 200 stores in the coming years, I am confident that Daniel is the right person to lead Domino’s through the next stage of growth and development in New Zealand.”

In his new role, Hawkins will work closely with franchisees and team members in 144 stores across New Zealand driving growth, innovation and products.

He succeeds Cameron Toomey, who has returned to Australia after four years in the role.

Woolworths is focusing in on office kitchens across the country as part of the launch of its grocery delivery platform aimed solely at business clients.

The supermarket giant first trialled its “Woolworths at Work” site in 2020 – when most professional services firms were working from home. Despite this, the retailer was able to test and refine the program by delivering to essential services operators.

“A really big part of our focus is essential service businesses – early learning businesses and aged care. They were our core customers that we helped serve,” Woolworths at Work general manager Jarad Nass said.

Now lockdowns are in the rearview mirror, Woolworths hopes to take a slice of Australia’s business supplies market by offering one platform for cleaning products, office supplies and groceries for corporate clients.

Unlike users on Woolworths’ main retail site, business customers have access to real-time spend reports and billing information, free next-day delivery for orders over $99 and more options to get products delivered on Monday mornings.

While Australia’s winter COVID-19 and flu season have led to renewed calls for more staff to work at home, Nass is confident there is still strong interest from workplaces for a one-stop shop for office supplies and groceries.

“What we’ve learned is that it is a very dynamic working environment at the moment, [but] there is still a lot of demand for this service,” Nass said.

Beyond office towers, Woolworths is largely focused on organisations such as schools, hospitals and aged-care facilities, which have been the main sectors using the platform.

The retailer has been working to increase business-to-business sales over the past year. Its B2B food segment, which includes PFD Food Services, its international exports and wholesale business, generated $1.4 billion in sales in the first half of 2022 – an increase of 376 per cent on the same period in 2021.

Woolworths at Work isn’t the first new grocery delivery format Woolworths has tried this year. It also launched one-hour deliveries in a small group of Sydney suburbs via its Metro60 app in June. 

Fellow supermarket giant Coles also has a dedicated business delivery channel, with free delivery on orders worth more than $250.

The Reserve Bank of Australia raised the official cash rate another 50 basis points of Tuesday, putting further pressure on the operating costs of households and businesses.

Despite this, analysts have been viewing the outlook for supermarkets as robust, given businesses and individuals will likely be spending a larger portion of their budgets on everyday essentials rather than luxuries.

Citi analysts have upgraded their 2023 earnings estimates for Woolworths by 3 per cent and Coles by 4 per cent, given expectations that inflation will increase like-for-like sales growth figures over the next year.

Woolworths shares are 7.3 per cent higher for the month, while Coles is trading 7.2 per cent higher compared with the beginning of July.

Coles Group has raised $1.7 million to assist not-for-profit charity SecondBite to continue delivering unsold edible food to those experiencing food insecurity across Australia.

Through the partnership, the retailer has donated unsold edible food to more than 1400 community groups across the country. Other contributions received will be spent on SecondBite’s ongoing operating expenses such as transport, fuel, and refrigeration to help deliver food.

Steve Clifford, SecondBite CEO, said the money raised will help provide vital food relief in the form of cooked meals, food hampers and community pantries.

“The importance of putting a regular, nutritious meal on the table is something we can all relate to, and clearly the need we’re seeing and hearing about resonated with so many Coles customers.”

Matt Swindells, Coles’ chief operations & sustainability officer, said: “We are incredibly proud of our partnership with SecondBite to not only help feed Aussies in need but to also help divert food waste from landfill so that we can become Australia’s most sustainable supermarket.”

Since 2011, the supermarket and its distribution centres across the country have provided around 185 million meals to SecondBite and its network of community food partners.

A new partnership between Woolworths Group and Pact will use 18,000 tonnes of recycled plastics in the packaging of the retailer’s own-brand products.

Pact Group Holdings provides specialty packaging and recycling solutions to commercial and industrial sectors.

Through this collaboration, Woolworths’ product range such as milk bottles, meat trays and beverage bottles will be made with recycled plastic taken from household recycling and container deposit schemes.

Rob McCartney, Woolworths Group MD of format & network development, said the business is working hard to remove plastic from packaging however finds it necessary to protect quality and food safety in some products.

“Across the scale of our range, the real challenge is sourcing quality recycled material in the volumes we need and ensuring it’s coming from within Australia to support the development of our local circular economy and avoid shipping emissions.”

Sanjay Dayal, Pact Group CEO and MD, said the company knows that consumers and businesses are increasingly demanding recycled and recyclable plastic packaging. “Pact is working with committed partners like Woolworths Group to drive that change.”

He added plastic packaging that is designed “effectively” can be used repeatedly creating a local circular economy.

Pact operates five plastic recycling facilities in Australia and is investing $76 million to install new technology and equipment across its packaging manufacturing facilities.

It has already supplied Woolworths with 50 million reusable and recyclable plastic produce crates in replacement of traditional single-use cardboard and polystyrene boxes.

Aldi Australia says it is inevitable grocery prices will rise further in coming months, but the German chain will look to pass as little of these increased costs on to customers as possible.

The discount supermarket aims to be between 15 per cent and 25 per cent more affordable than larger rivals but – like Coles and Woolworths – has accepted price rises across the board as producers battle rising input costs.

Aldi, which has 580 stores in Australia, expects to gain as affordability of living costs becomes more important for consumers in the next year.

Adrian Christie, Aldi’s director of customer interactions, said inflation is impacting the chain’s operations and food suppliers.

“However, Australians can be assured that every aspect of Aldi was built to minimise inflationary pressure, and pass on as little cost to customers as possible,” he told The Australian Financial Review.

“Some grocery prices will inevitably increase in the months ahead, but we want to reinforce our commitment to customers that we will maintain our price leadership relative to our competitors.”

Supermarket inflation reached 6.9 per cent in the June quarter, an acceleration from 5.4 per cent in the March quarter, and was underpinned by bread, cereals, eggs and oils, according to the latest Australian Bureau of Statistics consumer price index data.

Australia’s annual inflation rate jumped to 6.1 per cent, its highest level in more than two decades, the data showed on Wednesday.

Fruit and vegetables prices rose 5.8 per cent on the previous quarter due to flooding in key production areas of NSW and Queensland that disrupted domestic supplies.

Rabobank senior food retail analyst Michael Harvey said there had been an increase right “across the grocery basket”, and warned there was likely more to come with the peak in inflation potentially not yet reached.

MST Marquee head of consumer research Craig Woolford noted prices for packaged goods jumped to their highest in more than 30 years in the June quarter.

“Packaged grocery inflation is at 4.3 per cent compared with a 25-year average of 1.1 per cent. With round two price rises by many suppliers starting to flow, packaged grocery inflation could reach 5 per cent to 7 per cent by the end of the calendar year,” he said.

Following a consumer survey, Barrenjoey head of consumer research Tom Kierath said consumers are indicating they are likely to spend more at Aldi in the next year, at the expense of Coles, Woolworths and Metcash-backed IGA as they seek deals.

Electronics, a typically deflationary category, prices rose by 4 per cent in the June quarter. Other non-food categories like hardware, furniture and auto parts all rose.

Mr Woolford said while these categories are seeing high inflation, consumers are still spending. But he expects prices to rise further in the coming six months because many suppliers have been caught with higher transport, wage and energy costs.

“We could see another 1 to 3 percentage points of retail inflation over the remainder of 2022,” he said.

Living costs were up nearly 9 per cent in the June quarter – well above wages growth of just 3 per cent.

Aldi in the UK overnight said it would give its UK staff a pay rise for the second time this year amid the rising cost of living and as it battles to keep staff.

Mr Christie, of Aldi Australia, which only employees permanent or part-time staff with no casuals, said when asked about a pay raise for local staff that the company offers market-leading rates of pay in the supermarket sector.

“We are very conscious of the impact of inflation on the cost of living for our employees. Like our UK counterparts, we pride ourselves on the benefits including pay offered to our employees,” he said.

Coles has increased the price of its milk by nearly 20 per cent in a move that has relieved farmers, but already irritated some customers. The supermarket said it was necessary to raise the price due to the rising cost of sourcing, transportation, and packaging. 

Coles Brand Fresh White Milk 1L bottles will increase by 25c, 2L bottles by 50c, and 3L bottles by 60c, while the Coles Brand UHT White Milk 1L bottles will increase by 25c.

Michael Hampson, CEO of dairy co-operative Norco, which supplies the Coles brand Milk in Southern Queensland and Northern NSW, said that the increased farmgate price significantly impacted dairy farmers. 

“Through our long-term partnership with Coles, we have been able to support our 300 farmer members with a record farm-gate milk price increase across the total 200 million litres that our members supply to our 100 per cent farmer-owned co-operative,” he said.

“This is especially important as farmers face pressures from rising production costs, with many still recovering from the devastating impacts of recent unprecedented weather events.”

Last month, Coles signed updated contracts with 100 Australian dairy farms to supply milk directly for its brand, including an increase in the farmgate price paid by the company, with multi-year contracts for farmers. 

In addition, the company has agreed to significant increases in wholesale prices in markets where Coles Brand milk is sourced from processors, as the farmgate price the company pays to dairy farmers has substantially risen.

However, the recent increase in milk prices isn’t being taken lightly by consumers. A recent post on a Facebook group, “Simple Savers”, shared a picture of a carton of 3L milk with a $4.50 price tag that received hundreds of reactions.

Some members in the group pointed out that $4.50 was still cheap for milk, while others said it was “ridiculous” with prices that keep climbing.

Leah Weckert, chief commercial officer for Coles, said raising prices is something that the company never takes lightly. However, the increased supply-chain costs, including higher payments to dairy farmers and processors, had forced the company’s hand.

“The feedback we’ve received from farmers and processors following the recent increases in farmgate and wholesale prices has been very positive, and we hope customers will help us continue to support them by purchasing their great quality Australian milk,” she added.

Grocery giant Woolworths Group has snapped up retail digital media company Shopper Media Group for $150 million cash.

Woolworths apparently outbid several private equity suitors.

Woolworths’ retail media business, Cartology, will buy all the equity in the digital, out-of-home, media company that offers targeted shopper advertising through a national screen network of more than 2000 screens in more than 400 shopping centres.

Cartology helps the Woolworths supplier base engage better with customers along the path to purchase by providing detailed customer data and insights into ad campaign effectiveness.

It is the exclusive retail media partner for brands to connect with Woolworths’ 13 million Everyday Rewards members.

Chief executive Brad Banducci said retail media is developing rapidly and is an important part of the evolution of Woolworths.

“We’re excited about the opportunity to bring together the complementary capabilities of our retail media business, Cartology, with Shopper’s expertise in out of home media,” he said in an ASX statement on Monday.

Cartology managing director Mike Tyquin said Shopper Media’s screen network offers advertisers outstanding retail context and proximity.

“Shopper has invested heavily in technology, helping the business pave the way for innovation in retail out-of-home media,” he added.

“The acquisition of the business is an important next step in further unlocking the growth potential of Cartology and accelerating our goal to become the trusted media partner of choice for brands and retailers.

“It will allow us to provide our clients more opportunities to reach their customers via seamless and targeted advertising solutions.”

The transaction is subject to competition regulator approval and the satisfaction of customary closing conditions, with completion expected to occur by the end of calendar 2022.

Shopper Media was founded in 2015 and has about 50 staff. Co-founder and former chief executive, Ben Walker, died in January.

Cartology was established in 2019 as Woolworths’ retail media business and employs more than 200 across Australia and New Zealand. It launched in NZ in February.

Its network comprises more than 1500 digital advertising screens in stores, including in 1218 stores across Woolworths Supermarkets and Dan Murphy’s liquor outlets, the latest annual report says.

Australian retail sales have set a new record for the third straight month with $34.2 billion spent in stores and online in May – a 10.4% increase on a year ago and up 0.9% on the previous month, according to figures released today by the Australian Bureau of Statistics.

Australian Retailers Association (ARA) CEO Paul Zahra cautioned that while sales are strong, the growth is unlikely to be sustainable, and also reflects the higher consumer prices that are now flowing through the economy as inflationary pressures take hold.

“It’s pleasing to see retail sales maintaining their strong trajectory - however, the figures aren’t necessarily a true reflection of how the sector is performing in an inflationary landscape. The high sales volumes can be partially attributed to the higher consumer prices we’re seeing across the economy, particularly in the food industries. Whilst sales are elevated, business costs are increasing enormously, in many areas at a far higher rate,” Zahra said. 

“It’s unlikely we’ll see retail spending maintain these levels as the rising cost of living begins to take hold on family budgets. A generation of homeowners are experiencing their first interest rate hikes, so there’ll be some natural belt tightening. When people rein in spending, discretionary purchases are some of the first things they cut.

“Leasing costs are going up for many businesses, along with fuel and energy, while supply chains continue to be constrained. There’s been no let up to the disruption since Covid hit; things have only intensified since the war in Ukraine and many small businesses in particular are challenged right now.

“These challenges are running alongside the labour and skills shortages that continue to hamstring many in the industry. The majority of ARA members say the situation has gotten worse over the past three months, and without government intervention, the situation will only deteriorate.”

Bubs Australia chairman Dennis Lin has said he is confident the infant formula maker can continue to supply the giant US market in the long term after the company announced a $63 million capital raising.

The ASX-listed company has so far delivered 360,000 of 1.25 million tins of baby formula to the US through a temporary enforcement discretion scheduled to end on November 14, but Lin said the company was in discussions with the regulator to provide ongoing supply to the world’s biggest economy beyond this cut-off date.

“Overall, our confidence is relatively high in being able to continue to supply American families in whatever shape or form, regulatory-wise, beyond the 14th of November. We’re just working with the [FDA] in terms of how that might look for it to be seamless,” Lin said.

The US, which is still grappling with an infant formula shortage that began in February, is experiencing out-of-stock rates of 74 per cent, according to retail tracking data. Lin doesn’t expect the shortage to ease until September. “This is far from a short-term thing,” he said.

On Tuesday, the company went into a trading halt after announcing a $63 million capital raising. The funds will be used to increase the number of staff and turbocharge its Melbourne manufacturing facility.

The equity raising to take place consists of a $32.4 million institutional placement and a $30.6 million entitlement offer.

The equity raising is expected to raise 121.2 million new shares, or 19.8 per cent of Bubs’ existing shares, at $0.52 per share, which is an 18.8 per cent discount on the price of $0.64 when Monday trading closed.

“We’re raising money not because we’re in trouble. We’re raising money because we need growth capital,” Lin said.America’s formula crisis was triggered after a major manufacturing plant of Abbott Laboratories, the biggest baby formula supplier in the US, was forced to shut down in February after a serious bacterial infection from formula manufactured in that plant made four infants sick, two of whom later died.

“We have a window here where our product is good for Australia, China and the US. That means we don’t need to be sanctioning different base ingredients or even different packaging for six of our core infant formula products for three of our core markets,” Lin said.

Around $11 million will be used on operating expenses in the US, including marketing, administration, employment, and consultancy fees.

The final $3 million will go towards covering the cost of the capital raising itself.

Bubs Australia has been working alongside the Biden administration to airlift millions of its products through ‘Operation Fly Formula’. A fourth plane carrying 90,195 tins of baby formula will soon arrive in Philadelphia.

The country’s infant formula shortage has fast-tracked its progress in the US market by 18 months, according to Bubs founder and CEO Kristy Carr.

While Bubs gains a stronger foothold in the US market, dual-listed dairy giant A2 Milk is still awaiting approval from the US FDA through the same fast-tracked process that gave Bubs Australia the green light more than a month ago.

On June 28, organic Australian baby food and formula company Bellamy’s Organics was granted US FDA approval to ship two of its formula products to the US. Bellamy’s has committed at least 696,000 tins, with 300,000 ready for immediate delivery.

American parents were also reportedly stockpiling baby formula during the COVID pandemic, which also disrupted global supply chains.

Abbott’s Michigan plant was cleared to restart production in early June, and was open for less than two weeks before flooding from severe storms forced it to close again.

Prior to the US FDA’s exceptional enforcement discretion that temporarily permits global infant formula manufacturers to supply products, about 90 per cent of the US market was tightly held by three key players: Abbott’s, Reckitt and Nestlé.

After a catastrophic few years for the travel industry, Australian luggage brand July is back on track and launching a new bricks-and-mortar presence in Sydney and the US.

The business, which saw sales fall more than 90 per cent during the worst of the pandemic when the travel industry was forced to shut down, is now enjoying a year-on-year revenue spike of 1500 per cent, and 50 per cent month-on-month.

July co-founder Athan Didaskalou said the business will be launching a store in Sydney’s The Galeries shopping centre in September, then focus on launching stores in New York and Los Angeles soon. 

“The secret sauce for us has got to be our physical retail,” Didaskalou told Inside Retail. 

“In the early days [of July] it was a bit of a flex for us – we knew there was a customer that would need luggage [to travel] the next day, and there’s no e-commerce solution for that. 

“But we’re starting to realise that, when we do our revenue per square metre [analysis], our stores are phenomenally profitable. We want to expand our physical retail presence as much as we can.”

July launched into the US in [2021] when travel in opened up again, and, while its budget pieces didn’t perform well in that market, it’s more premium ‘trunk’ style products are in constant demand and the business “literally can’t make them fast enough”.

And, following its successful expansion into the US, July is likely to try to gain a foothold in the UK with an eye to expanding into Europe.

Under one roof

Back home in Australia, the business’ physical spaces have continued growing, despite the slow return to international travel.

Throughout the pandemic, July decked out its warehouse and headquarters in Melbourne with a new coat of paint, and created a retail space at the front-of-house.

And, though Didaskalou admitted it can be hard to focus on work when customers are shopping just metres away, the feedback gained by having a direct line to its audience has already led to some product improvements. 

“For example, for our ‘carrier lite’ bags, a lot of people have come in and said its too small. And we’ve [been] sitting there, working and listening in, so we made it expandable,” he said. “That insight came from being able to just sit next to the retail store and listening to people.”

Working together under the one roof has also helped the July team to bond, with warehouse, retail and head office workers being able to meet and speak on a daily basis.

Australians “anxious” about delivery times

Throughout the pandemic, Australians’ confidence in shopping online grew by leaps and bounds, and when travel was back on the cards, July saw many more customers shopping its ranges online.

However, after the difficulties delivery providers have faced in the last few years, Didaskalou is seeing far more consumer confidence in buying online where click-and-collect is an option.

“In Australia, there’s still a bit of anxiety around when [online purchases] will arrive,” Didaskalou said. 

“Australia Post and other players have a big job on their hands, [but] people just don’t expect their purchases to arrive anytime soon, so the option for click-and-collect has made things so much easier.”

However, with only two stores in Melbourne and one to come in Sydney, most Australians are unable to use the click-and-collect option at July. 

The way the business deals with this currently is by having several warehouses across the country, and working with small, private courier networks that commit to fast deliveries. That way, if a customer in Perth, for example, purchases a product, it doesn’t have to ship from the other side of the country.