Australian Retail Outlook 2019 - Powered by Ferrier Hodgson & Azurium - Inside Retail
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Australian Retail
Outlook 2019 ®
Powered by Ferrier Hodgson & Azurium
Start with WHY?
Define a vision of success
and align strategy
We provide tailor-made solutions
to drive performance improvement,
including strategy development,
change management, digital, real
estate advisory and
retail leasing.
The retail market is changing
We help people navigate
uncertainty and achieve their
potential
www.azurium.com.au | 03 9604 5600
www.fh.com.au | 03 9600 4922
30
CONTENTS
FOREWORD 4
STATE OF PLAY 5
2019 AUSTRALIAN RETAIL OUTLOOK SURVEY RESULTS 11
WINNERS AND LOSERS by Ferrier Hodgson & Azurium
JB HI-FI: FROM STRENGTH TO STRENGTH 19
ACCENT: STEPPING UP IN 2019 20
MECCA: A RETAIL MAKEOVER
MYER: WHO SAID RETAIL IS EASY?
“JUST AFTERPAY IT”
21
22
23
32
FRANCHISING HEADWINDS 24
RETAIL TRENDS by Ferrier Hodgson & Azurium
LAST MILE STAND 27
AUSTRALIA’S NEW RETAIL CALENDAR 28
THE AGE OF BRANDSPARENCY 29
STAND FOR SOMETHING 30
AMAZON: ONE YEAR ON 32
RETAIL PROFILES
GREENLIT: HOUSEHOLD NAME TARGETS BIG 2019 38
DYMOCKS: PAGING MORE SUCCESS 42
ALDI’S ‘ALTERNATIVE’ TREND-FOCUS 46
CAMILLA: FASHIONING MORE GROWTH 48
EXPERT FORECASTS
FORTIFYING AGAINST DIGITAL ATTACKS 53
RECIPES FOR SUCCESS 54
MANAGING ORGANISATIONAL CHANGE IN RETAIL 56
STAYING ONE STEP AHEAD IN FMCG 57
38
The Australian Retail Outlook ADVERTISING
is printed by Octomedia Amir Angler Australian Retail
HEAD OFFICE
amir@octomedia.com.au
Outlook 2019 ®
Level 10, 51-57 Pitt St GRAPHIC DESIGN Octomedia Pty Ltd accepts no liability for any errors,
ommissions, or consequences, including any loss or
Sydney, NSW 2000 Sofia Costales damage, arising from reliance on information in this
PO Box R217 sofia.c@octomedia.com.au publication. The views expressed in this publication
Royal Exchange NSW 1225 reflect opinions of the writers and are not necessarily
Tel : +61 2 9901 1800 endorsed by Octomedia Pty Ltd. We recommend
GENERAL MANAGER obtaining professional advice from an accredited
Fax : +61 2 9901 1800 Amie Larter advisor before relying on the information in this
amie@octomedia.com.au publication. Octomedia Pty Ltd reserves all copyright
EDITOR over the content included in this publication. No part
of this publication may be reproduced, stored in a
Dimitri Sotiropoulos FOR MEDIA RELEASES retrieval system, or transmitted in any form, as per the
dimitri@octomedia.com.au irnews@octomedia.com.au Australian Copyright Act 1968.
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 3
FOREWORD
From the editor
WELCOME TO THE AUSTRALIAN RETAIL
Outlook 2019, co-produced by Octomedia –
publisher of Inside Retail – and Azurium.
It’s certainly been a big year in Australian retail,
even by its own lofty and competitive standards.
Impacted by the effects of e-commerce, the entry
of international heavyweights and consumers
benefiting from having more choice than ever,
retailers certainly have their hands full keeping
up with the pace of change in today’s business
landscape. It’s sink or swim for those in retail
Down Under.
In this year’s edition we look at the latest trends
set to take shape in the industry, hear from some of
the largest local retail names, including the newly
2018 in review
formed Greenlit Brands [formerly Steinhoff APAC, RETAILING ISN’T EASY AND 2018 PROVED
owner of Freedom Furniture, Harris Scarfe, Best & to be another challenging year for many retailers.
Less, Fantastic Furniture] and examine the results Roger David and Laura Ashley entered
from our industry-wide survey. administration and we saw Esprit announce
Ferrier Hodgson’s consulting business, Azurium, the closure of all Australian stores as it exits the
runs the rule over the winners and losers from the Australian and New Zealand markets.
retail scene and provides its Department stores continued to feel the
customary expert forecasts. pinch as digitised consumers challenged
Here’s to another business models. A slew of scandals resulted
successful year in retail, in a parliamentary inquiry into the Australian
happy reading! franchising industry.
The year saw a number of changes begin (or
DIMITRI SOTIROPOULOS continue) to take place. Australia’s traditional
Editor retail calendar is being transformed by the
growing number and size of retail events in
November placing pressure on traditional
Christmas trading. In addition, shifts in
consumer behaviour are placing greater value on
transparency and demand for retailers to stand
for something.
And while broadly the retail market remains
tough, many retailers made 2018 a year to
remember. Amazon Australia bolstered its range
and introduced the highly anticipated Amazon
Prime, and we saw Afterpay transform (and reap
the rewards) of the adoption of new payment
solutions. Retail heavyweight JB Hi-Fi defied its
critics and continued to perform strongly and the
digital transformation of Accent Group’s brands
[Footlocker, Platypus] saw
it post record profits.
The stage is set for a big
2019 for Australian retail.
JAMES STEWART,
Partner, Head of Retail –
Ferrier Hodgson, Azurium
4 | AUSTRALIAN RETAIL OUTLOOK 2019 www.insideretail.com.au
STATE OF PLAY
CHANGE IS THE NEW NORMAL IN 2019
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 5
STATE OF PLAY
Retail Down Under
in 2019
The pace of change in Australian retail is not
slowing down anytime soon – here’s a brief
look at the local business landscape.
THOUGH THE LAST 12 MONTHS (ARO) provides an inside view of those food/grocery, general consumer goods
LAID CLAIM TO YET MORE HIGH operating across the industry, straight and automotive accessories.
profile fashion casualties, with Ed Harry from the horse’s mouth so to speak While 2019 will be no less challenging
joining the list early in 2019, moving and not those on the outside. The than previous years for retailers, (has
forward it’s not all doom and gloom for results make for interesting reading there ever been an ‘easy’ year?) this
retailers operating in Australia. and show that there’s ‘more than meets year’s survey is a good indicator of
The glut of small-middle market the headline’, when it comes to the art what those in the game, make of the
clothing chains entering administration of retailing. market Down Under.
or winding up is not exactly a new Of the 427 participants in this year’s
phenomenon, as consolidation of the survey, over 22 per cent are C-suite GOOD WITH THE BAD
market in this crowded space is never- executives and more than 10 per cent Somewhat intriguingly and at odds
ending. For every headline failure, are area/store managers. Participants with the usual catch cry that business
there’s a matching success story in the represent small, middle and large-sized sentiment is low or crashing, this
fashion world. retail firms, across all retail categories year’s survey found there’s been an
This year’s Australian Outlook Survey including fashion, household goods, increase in respondents that said the
6 | AUSTRALIAN RETAIL OUTLOOK 2019 www.insideretail.com.au
past 12 months were the best trading both have gargantuan turnaround November by consumers.
conditions they’d experienced, while a tasks on their hands. According to data from the
healthy host think that conditions have Meanwhile, in a post-Christmas Australian Bureau of Statistics (ABS),
been good [page 12]. trading update, Wesfarmers revealed Australian retail businesses saw
In bucking the trend, Azurium that Kmart’s total sales (excluding record sales in November 2018, with
says 2018 was a winner for JB Hi-Fi Kmart Tyre and Auto Services) rose turnover increasing 3.6 per cent year-
[page 19] as it navigated technological 1 per cent in the first-half of financial over-year. No longer is Christmas the
transformation through its product year 2019, while comparable sales be-all and end-all for businesses bottom
mix and added whitegoods to its dropped 0.6 per cent. Citi research line it seems.
offering through the acquisition of analysts have asserted that Kmart’s The growing importance of retail
The Good Guys. 19-quarter run of like-for-like sales sales events including Black Friday,
Backed by same-store sales growth growth had likely come to an end, with Cyber Monday and Click Frenzy, now
in its Australian stores rising by 3.4 per Target and Big W to deliver positive act as the established prelude to the
cent and total sales increasing by 5.3 sales in the low single digits. traditional holiday retail period.
per cent in the September 2018 quarter, National Retail Association (NRA)
JB Hi-Fi’s earnings defy the average IDES OF NOVEMBER deputy chief executive, Lindsay Carroll,
downturn in discretionary spending. One of the overwhelming trends anticipates even stronger figures for
Equally, success stories can be seen to note from the end of 2018 and the month of December as a result of
in the likes of Accent Group – owner moving into the current year, is the November’s strong showing in 2018.
“
of The Athlete’s Foot, Hype DC and embrace of online sales events in “Retail turnover from online sales ►
Platypus [page 20] – and Mecca
[page 21] to name but a few retailers
successfully plying their trade in the
current climate. While consumer confidence,
But it would be remiss to say it’s rosy
for everyone. The continued struggles discounting and rental overheads
across the industry are evident – from
The Reject Shop to Myer to multiple
occupied the headline challenges
fashion firms – 2019 is set to be a
testing year for several retailers.
nominated by retailers in this
Azurium has placed Myer onto its
list of losers for the third year in a row,
year’s survey, the threat of offshore
describing 2018 as arguably its toughest online retailers has eased slightly,
year yet [page 22]. 2019 is shaping up
to be the defining year for department a reflection of local firm’s rising
store retailers. It’s hard to argue this
point, given the continued decline of confidence against overseas
Australia’s iconic Myer and David
Jones department store chains, which e-commerce players.”
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 7
continues to increase at a high rate, executive director, Russell Zimmerman increases, over 43 per cent of retailers and this can be attributed to the rise is confident that the industry will surveyed said the percentage of total in popularity of events such as Click “show its stripes” when December trade revenue coming from e-commerce Frenzy and Cyber Monday, combined figures are released. represented less than five per cent of with the fact that buying online is a “Based on what we have seen and their total revenue. Just over 5 per cent convenient option for many shoppers.” heard from retailers and our members, said 100 per cent of their revenue came Online retail contributed 6.6 per cent we believe the overall Christmas trade from online retailing. to total retail turnover for the period, will indicate secure growth, with many compared to 5.9 per cent in October large retailers noticing growth in-store,” SPENDING TIMESHIFT 2018. According to the ABS, this is the Zimmerman says. Azurium says there is an evident shift highest level recorded and continues In this year’s ARO survey, over in when Australian consumers spend in the pattern of increasing online 30 per cent of retailers say they the critical Christmas quarter [page 28], contributions to sales in November. increased revenue from e-commerce with movement in consumer spending But the NRA says rising online sales operations ‘significantly’ over the past in the last few years mirroring the rise of need to be viewed in perspective. 12 months, while over 32 per cent global online retail events. “Online turnover still only accounts enjoyed ‘slight’ increases. Meanwhile Greenlit [formerly for less than 9 per cent of total retail Only 4 per cent of participants Steinhoff APAC] CEO Michael Ford says sales and many retailers offer an online experienced decreases from online the group’s Fantastic Furniture brand channel that complements their physical revenue last year. “generated very strong online sales in store,” says Carroll. All digital positivity aside, it should 2018 while undergoing a rebranding of Australian Retailers Association be noted that despite the bumper its own” while the company’s general 8 | AUSTRALIAN RETAIL OUTLOOK 2019 www.insideretail.com.au
merchandise operations performed delivered a record three million parcels Amazon’s ‘slow start’ after launching
solidly with “Harris Scarfe emerging as across the country on December 17, in Australia last year. The US giant
one of the best performing department representing the busiest day in its history. continues to invest heavily into the
store brands in the country” [page 38]. According to Australia Post CEO, local market and Stewart thinks that
Dymocks general manager Sophie Bob Black, 2.7 million parcels were Australian firms should do the same, by
Higgins says 2018 was the year that delivered on Christmas Eve, with turning defence into attack [page 32].
Black Friday became a “much bigger Australians increasingly leaving
shopping event in Australia” [page 42]. Christmas shopping to the end of CHALLENGES AND
Even supermarket giant Woolworths the month. OPPORTUNITIES
now participates in Black Friday, While consumer confidence,
offering discounts on hundreds of COME ONE, COME ALL discounting and rental overheads
products online for the second year in Despite the retail alarms sounded occupied the headline challenges
a row. around the influx of international nominated by retailers in this year’s
During December, Australia Post retailers entering Australian shores in survey, the threat of offshore online
says it delivered over 40 million parcels recent years, this year’s survey paints a retailers eased slightly, a reflection of
last year, a new record thanks to the picture of local resilience, with over 45 local firms’ rising confidence against
growing popularity of online shopping per cent of respondents claiming they overseas e-commerce players.
and sales events. This was 11.7 per cent are not concerned by overseas firms Meanwhile entering new markets
up on the 37 million parcels the delivery entering the fray. [24.8 per cent] remains a significant
service handled in December 2017. But Azurium’s James Stewart priority for retailers as does expanding
The nation’s postal company says it observes that sceptics should beware product ranges, with over 26 per cent ►
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 9
2019 is shaping up to be the defining
year for Australian department store,
most notably the iconic Myer and
David Jones retail chains.
looking to achieve a wider offering.
Azurium notes that fast food franchising is seen as a sector
that is somewhat isolated from the headwinds of online retail
and the digital revolution [page 54].
BUSINESS AS USUAL
As for the year ahead, retailers predominantly believe trading
conditions will either remain the same or slightly change.
Recent Urban Property Australia (UPA) research finds the
Australian retail property investment market had a strong 2018,
despite a pullback from Chinese purchasers, with $9.7 billion
transacted, the second highest annual level on record. The near
record year of transactions was boosted by the sale of several
major regional shopping centres and CBD-based assets.
“In 2019, we expect a bifurcation of the retail investment
market with investor demand for Australian CBD retail assets
and regional shopping centres to remain stable for trophy
assets; whereas demand for neighbourhood and large format
centres will ease, impacted by the challenging retail conditions”
says Sam Tamblyn, UPA founder and managing director.
In looking ahead and with e-commerce expected to continue
increasing its share of the retail pie, Tamblyn expects rental
growth to remain subdued for retail assets, while yields for
retail property will be under upward pressure as investor
demand eases for the asset class.
10 | AUSTRALIAN RETAIL OUTLOOK 2019 www.insideretail.com.auSURVEY: AUSTRALIAN
RETAIL OUTLOOK 2019
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 11AUSTRALIAN RETAIL OUTLOOK SURVEY 2019
Voices of the industry
Perennial challenges, relative confidence in the face of international players
and generally positive sentiment to get on with the job – depending on who
you ask – are the key findings from the ARO Survey for 2019.
THIS YEAR’S AUSTRALIAN RETAIL OUTLOOK and 10 per cent in sales and customer service.
survey drew responses from 302 local retailers and All retail categories were healthily represented,
170 related industry members. with 25.9 per cent trading in apparel and accessories,
Of the survey respondents, 22.9 per cent 12.1 per cent in household goods, 9.1 per cent in
identified as c-suite executives, owners or board food and grocery, while 11.2 per cent operate in the
members and 36 per cent worked at businesses general consumer goods/variety sector.
with more than 400 people. Pointing to the diverse retail landscape
The survey includes responses from all sectors Down Under, 38.1 per cent of respondents
in the industry, with 10.6 per cent working in identified in the Other category within sectors
marketing, 7.2 per cent in buying and merchandise including travel, pharmacy, and luxury goods. All
planning, 10.8 per cent in area/store management data is in percentages.
Q.1 How would you describe trading
conditions in the past 12 months?
5.1% 38.3% 36.2% 12.9% 6.9%
Best I have Good Ordinary Poor Worst I have
experienced experienced
For the first time in three years, over indicated that conditions were the worst while 36.2 per cent indicated ordinary
five per cent of retailers said that experienced, representing a rise on last trading. The number of retailers
trading conditions were the best they’d year’s 4 per cent. characterising trading conditions as
experienced, compared with 2.5 per cent The overwhelming majority of poor slightly rose on last year’s results,
last year and 3.4 per cent in 2017. responses were less extreme, with 38.3 with 12.9 per cent up from 12 per cent
At the other end, nearly 7 per cent per cent classifying conditions as good, in 2018.
12 | AUSTRALIAN RETAIL OUTLOOK 2019 www.insideretail.com.auQ.2 Q.3 In the year ahead,
how do you expect
How did your full-year trading conditions to change?
compare to the previous?
Significant improvement
17.4% 30.3%
Slight improvement
34.5%
Remained about the same
48.9%
21.4% 20.8%
Slightly worse
19.7%
Significantly worse
7%
Significant changes
In a positive sign for the industry, 17.4 per cent of the Slight changes
industry said their full-year results were a significant
Remain about the same
improvement on the previous year, which compares
favourably with 10.9 per cent of last year’s respondents
Meanwhile, the overwhelming majority of
providing the same response.
respondents expect trading conditions to moderately
Significantly, 34.5 per cent asserted that there’d been a
change, with 48.9 per cent indicating they expect
slight improvement, up on 31.1 per cent from last year, while
slight changes, while 30.3 per cent expect conditions
the number of respondents indicating their full-year was
to remain about the same.
slightly worse decreased from last year’s 22.3 per cent to
Only 20.8 per cent of respondents think there
19.7 per cent.
will be significant changes within the trading
Somewhat alarmingly, the number of retailers who
environment.
experienced a significantly worse full-year rose to 7 per cent,
up on last year’s 3.9 per cent.
Q.4 What
are the
biggest challenges
44.5%
20.5%
Rental overheads
International entrants
facing the retail
34.1% Offshore online retailers
industry in 2019?
48.5% Discounting
With respondents asked
to select the three major 51.3% Consumer confidence
challenges facing the
industry in 2019, the same old
culprits once again prominently featured.
33% Labour costs
The major challenge according to respondents,
backed by 51.3 per cent, was consumer confidence, closely 18.9% Global economic factors
followed by discounting with 48.5 per cent, mirroring the
top two threats from last year’s survey. 16.7% Value of Australian dollar
Respondents said rental overheads remained a
significant problem, with 44.5 per cent of votes up on last 5.9% Taxes
year’s 36.8 per cent. Despite the influx of international
e-commerce conglomerates Down Under, the threat of 5.5% Private label
offshore online retailers declined to 34.1 per cent, down
from 37.7 per cent last year. Labour costs [33 per cent], 8.5% Government regulation
global economic factors [18.9 per cent] and the value of the
Australian dollar [16.7 per cent] were the other significant
12.5% Other
challenges nominated by retailers. ►
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 13Q.5 What will be the top priorities Respondents were once again
given three choices to select
for your business this year? from and most are keen to
increase margin [56.8 per
cent] and turnover [60.6 per
Increasing margin 56.8% cent] in 2019, with retailers
(predictably) selecting the
Increasing turnover 60.6%
two key financial elements.
E-commerce 45.1% E-commerce [45.1 per cent]
remains an area of focus,
Omnichannel initiatives 35.6% with over 35 per cent of
retailers looking to prioritise
Expanding store network 17.4% omnichannel initiatives.
Entering new markets
Entering new markets 24.8% [24.8 per cent] remains
a significant priority for
Expanding product range 26.1% retailers as does expanding
product ranges, with over 26
Closing stores 6.4% per cent looking to achieve a
wider offering.
Reducing product range 9.3% Other comments included
prioritising the improvement
Rebranding 9.3% of personalisation, one-to-
one marketing and seeking
Others 8.7% alternate revenue streams.
Q.6 Do you plan to
change your
Q.7 Does the influx
of international
retailers to Australian shores
number of stores this year? worry you?
In 2019, 28.4 of retailers plan to increase their physical
presence, while 9.3 per cent of respondents expect to
reduce the number of stores they operate. The majority
of respondents [36.9 per cent] expect to keep the same More concerned
amount of stores. 32%
than last year
36.9%
Less concerned
YES – DECREASE THE
22.9%
NO – STAY ABOUT THE SAME
NUMBER OF STORES
than last year
28.4%
25.4%
YES – INCREASE THE
NUMBER OF STORES
ANY PHYSICAL STORES
WE DO NOT OPERATE
Not concerned 45.1%
9.3% Respondents remain bullish about the prospect of
international firms entering Down Under, with over 45
per cent asserting they are not concerned.
Meanwhile, those more concerned than last year
dropped from 54.3 per cent to 32 per cent and those
less concerned than last year rose from 12.1 per cent to
22.9 per cent in this year’s survey, reinforcing the local
confidence from local firms against new competitors.
14 | AUSTRALIAN RETAIL OUTLOOK 2019 www.insideretail.com.auQ.8 Q.9 Did you
3.5
find
How do you 3
that you received
believe the more flexibility and
Australian help from landlords
retail market 2.5 last year?
is placed In a hotly-debated topic for the
compared 2 industry, respondents provided
some interesting responses to
to other what is a contentious issue in
international the industry.
While the majority of
markets? 1.5
respondents [65.5 per cent]
said they received about the
The majority of same flexibility and help from
respondents indicated 1 2.7% landlords, over 19 per cent said
the local retail market they received more. In contrast,
is located firmly in over 15 per cent said that they
the middle-range, received less help and flexibility
compared with overseas 0.5 from landlords.
marketplaces.
While less than 2 per
Significantly more
cent said the Australian
market was in the high Slightly more
rank, 13.3 per cent 0
Remained about the same
placed Australian retail
in the lowest-tier. WEIGHTED AVERAGE Slightly less
Significantly less
Q.10 How do you
expect leasing
terms to change this year? 3.6%
5.3%
It’s very much a status-quo, in
terms of retailer expectations for 10%
leasing charges this year. Over 15.7%
half [52.7 per cent] expect leasing REMAIN
terms to remain the same, while ABOUT
nearly 40 per cent anticipate THE SAME
slight changes. Only 7.8 per cent
expect significant changes to
leasing terms to occur in 2019. ►
SLIGHT
CHANGES
52.7%
39.4%
SIGNIFICANT 65.5%
CHANGES
7.8%
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 15Q.11 How will the value of the Australian dollar impact your
business this year?
8.3% 57% 34.7%
Positive impact Over half [57 per cent] of respondents expect the Aussie dollar to negatively
impact their business this year – a possible indication of the effects from
Negative impact globalisation and political volatility across several continents. While 34.7 per
cent expect no impact on their business, over 8 per cent are more optimistic
No impact about benefits afforded from the value of the dollar.
30.5%
32.8% 32.6% Q.12 How has your
revenue from
e-commerce changed in the
past 12 months?
Reflecting the continued evolution of the industry,
retailers’ response to e-commerce’s impact was
predominantly positive. Only 4 per cent said revenue
from e-commerce operations decreased. Meanwhile, over
30 per cent said revenue had significantly increased, while
nearly 33 per cent said revenue had increased slightly.
Increase slightly
Increase significantly
4% Stay about the same
Decrease
Q.13 What percentage of your total revenue comes from
your e-commerce channel?
Less than 5% 43.2%
Less than 10% 22.2%
Less than 25% 18.6%
Less than 50% 7.2%
Less than 75% 3.4%
100% of revenue 5.3%
0 10 20 30 40 50
Though revenue growth has been large for the majority of retailers, it’s
interesting to note that most respondents said total revenue from e-commerce
represented less than 5 per cent. Only 5.3 per cent of retailers gained all of their
earnings through e-commerce.
16 | AUSTRALIAN RETAIL OUTLOOK 2019 www.insideretail.com.auFacebook 74.6%
Instagram 62.9%
Q.14
Which are the most LinkedIn 23.5%
effective social media
channels your retail Blog/native content
18.2%
business uses? on website
Respondents were asked to select two platforms and the results were Twitter 6.4%
predictable, with Facebook [74.6 per cent] and Instagram [62.9 per
cent] clearly on top, mirroring last year’s result albeit with a marked Don’t use social media 5.5%
rise of over 10 per cent for Instagram.
Native content/blog had a solid response, with 18.2 per cent WeChat 3.7%
nominating their use of this channel.
Pinterest 2.7%
Snapchat 2.5%
Q.15 What areas do you
think consumer
expectations will increase the
most in?
Q.16 What is
the best
Australian retail
Woolworths
Aldi
CottonOn
brand for 2018? Kmart
Online delivery options 38.8%
Though this question is hardly definitive
JB Hi-Fi
in its findings, Australia’s typical who’s Mecca
Online delivery speed 41.3% who came out on top. Aesop
Interesting to note, was the general
Coles
Price 32.8% commentary offered by many
respondents, who claimed it way “far too Smiggle
hard to tell” and that “none stood out". The Iconic
Customer service 34.1%
In-store digital
11% functionality
2.1%
13.3% Product quality
2.1%
9% Product variety 5.7%
2.7%
Product freshness/
17.2% relevance
2.5% Other (please specify)
2.7%
5%
E-commerce’s impact on the industry can be
seen in the response to consumer expectations,
with online delivery options and speed usurping
customer service [34.1 per cent] and price [32.8 3.4%
per cent] as the areas where customers will
expect more from retailers in 2019.
Product freshness/relevance [17.16 per cent] 4.5%
remains an integral area of customer expectation,
according to the survey responses. 3.4%
3.3%
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 17WINNERS
AND LOSERS
AUTHORS
James Stewart, Partner,
Head of Retail – Ferrier Hodgson, Azurium
Nicholas Tsaptsalis, Ferrier Hodgson
Philip Muscari, Ferrier Hodgson
Charlie Griffiths, Ferrier Hodgson
Alexandra Askey, Ferrier Hodgson
David Hacker, Ferrier Hodgson
Peter Mann, Ferrier Hodgson
18 | AUSTRALIAN RETAIL OUTLOOK 2018WINNERS AND LOSERS
From strength to strength
Despite a raft of new challenges, this electronics powerhouse
shows no signs of slowing down.
BY JAMES STEWART, Partner, Head of Retail – Ferrier Hodgson, Azurium
and CHARLIE GRIFFITHS, Ferrier Hodgson
“
...JBH
has continued
to deliver
on its core
business by
leveraging an
efficient supply
chain, digital
capabilities and
new market
growth.”
THE RETAIL ICON THAT IS JB HI-FI sales increasing by 5.3 per cent in the as the most shorted stock on the ASX
(JBH) HAS BEEN IN EXPANSION September 2018 quarter. by delivering a strong FY18 full year
since listing in 2003. Its recipe for Over the same period, The Good Guys result and confirming its sales guidance
success has largely been driven off a also reported same-store sales growth of for FY19. The company reported an
high energy store format, low price 1 per cent and total sales growth of 2.3 increase in its EBIT margin from 6.3
points supported by a strong in-store per cent. per cent to 6.4 per cent which would
discount ambiance and extensive While trading conditions softened suggest that the electronics Goliath
product range. for household goods in 2018, The Good is holding up well in an increasingly
While JBH’s long-term success is Guys still outperformed its largest rival, competitive market.
something to admire, 2018 presented no Harvey Norman, which reported a 1.1 The US retail market suggests that
shortage of potential challenges for the per cent fall in same-store sales over the bricks-and-mortar retailers can compete
brand as Amazon entered the market same period. with Amazon. Best Buy has been trading
and the online electronics retailer Kogan strongly in recent years, but it took a
went from strength to strength. A GOOD BUY significant shift in pricing strategies and
While the impact of Amazon in The acquisition of The Good Guys a recalibration of its online offer to move
Australia has been somewhat muted – arguably provides a more compelling the dial after poor performance in the
remember it should be compared to a strategic rationale for the JBH business years leading up to 2012.
tsunami not an earthquake – JBH through diversification of the JB brand to JBH is in an interesting space. On
has continued to deliver on its core include larger items, typically purchased the one hand, consumer spending on
business by leveraging an efficient in-store and difficult to sell online. tech products is arguably the highest
supply chain, digital capabilities and The difference in performance it has ever been, with Quartz reporting
new market growth. between The Good Guys and JBH consumer spending has surpassed
JBH has also navigated technological inevitably invites comparisons spending on apparel in the US market
transformation through its product between the two, and how JBH will since 2010.
mix and has added whitegoods to its replicate its successful model across On the other hand, spending on
offering through the acquisition of The two brands with significantly different household goods is facing significant
Good Guys. product propositions. headwinds as consumers tighten their
As a result, JBH’s earnings defy the Last year saw The Good Guy’s belts under pressure from falling house
downturn in discretionary spending promotional strategies moving closer to prices, falling equities markets and the
and the broader retail landscape, with JBH’s, as well as a greater emphasis on weakening Australian dollar.
same-store sales growth in its Australian consumer electronics in store. The stage is set for an interesting 2019
stores rising by 3.4 per cent and total In 2018, JBH also defied expectations for JBH.
2019 AUSTRALIAN RETAIL OUTLOOK | 19WINNERS AND LOSERS
Stepping up in 2019
With a focus on digital initiatives and backed by retail veterans,
this footwear firm has eyes on more growth this year.
BY JAMES STEWART, Partner, Head of Retail – Ferrier Hodgson, Azurium
and PHILIP MUSCARI, Ferrier Hodgson
DESPITE AUSTRALIA’S CHALLENGING RETAIL and 10 per cent within 2 years. Ultimately, it is expected
climate, Accent Group (Group), whose brands include The same day delivery will roll out across all 350 stores with the
Athlete’s Foot, Platypus and Hype, continued to thrive in 2018. possibility of 3-hour delivery in the future.
The Group posted a record net profit of $47.1 million and
EBITDA of $90.8 million, up 17.9 per cent and 16 per cent A TOE IN THE MARKETS?
respectively on the previous year, off the back of $860.8 Other initiatives introduced as part of the businesses
million in sales. omnichannel transformation included the introduction of click-
The Group, formerly RCG Corporation Limited, operates and-collect and click-and-dispatch.
420 stores across Australia and New Zealand under 10 Click-and-collect was introduced across all retail brands and
retail brands, holding exclusive distribution rights for 10 accounted for more than 5 per cent of digital sales for the Group
international brands. in FY18. Click-and-dispatch grants an online customer access
Underpinning these results is a fresh digital strategy to the catalogue of all stores and accounted for 36 per cent of
focused on connecting the physical and digital stores to offer a digital sales in FY18.
seamless experience to customers. The digital strategy centers The early results from these digital initiatives have been
around the Group’s newly created ‘Digital Hub’, a place promising with a 130 per cent increase in digital sales in FY18.
where the organisation’s digital talent can connect, collaborate The digital strategy has been supplemented by investments
and drive changes. in brick-and-mortar stores and reduced discounting.
The Digital Hub has allowed the Group to gather customer During FY18, 29 stores were refurbished while CEO, Daniel
data and make substantial changes to the business, which Agostinelli, banned discounting at all Group stores in late 2017
have enhanced the in-store and online experience across deriding it as “lazy retailing” and creating the perception that
their brands. For example, the Group has created endless isle the product was substandard.
capability for their customers, providing access to the entire Moving forward, the focus shifts to expansion.
inventory catalogue across all brands. This includes inventory The Group expects to open 30 new stores in FY19 including
of all stores and online warehouses. a 600 square metre Platypus megastore in Melbourne Central.
The Group is also focusing heavily on speed-to-market. There are also plans for an additional 30-40 new stores opening
Accent already offers next day delivery for online sales, over the next two-three years.
however in July 2018, same day delivery commenced in 12 Perhaps the most exciting and ambitious proposal is the
Platypus stores with a $14 delivery fee. planned international expansion of the Platypus brand. The
After just 10 days of going live, the Group said same day Group plans to introduce the Platypus model overseas, starting
delivery accounted for 3 per cent of total orders and this is in Singapore, by leveraging the experience and knowledge of
expected to increase to 5 per cent after year one of operating retail icon, Brett Blundy, the Group’s largest shareholder.
20 | AUSTRALIAN RETAIL OUTLOOK 2019WINNERS AND LOSERS
A retail makeover
There’s seemingly no end in sight for the growth of this cosmetics powerhouse,
as it continues to delight customers with physical and digital nous.
BY JAMES STEWART, Partner, Head of Retail – Ferrier Hodgson, Azurium
and ALEXANDRA ASKEY, Ferrier Hodgson
F R U S T R AT E D W I T H I N -S T O R E four times faster than the legacy brands YouTube and Instagram now offer
C U S T O M E R S E RV I C E F O R of the department store era. a steady stream of beauty tutorials
cosmetics? Not getting what you Today, Mecca’s approach to cosmetics and product reviews that 10 years ago
want online? For those of you looking has landed itself as a beauty destination, largely didn’t exist. In 2017, YouTube
for some divine intervention in offering cutting edge brands side-by- beauty content videos grew from 55
personal cosmetics... side to high-end labels. million to 88 million, registering more
Welcome to Mecca. than 700 million views.
Mecca is arguably the hottest THE POWER OF THE SELFIE Mecca has successfully leveraged
cosmetic retailer in Australia and has The growth of online engagement in these platforms developing a loyal
established itself as the place to be for beauty products has revolutionised the following of ‘beauty junkies’ who
beauty products, service and knowledge way major brands engage with their can access the brand’s online
“
for the Australian customer. target customer. content, top beauty products for the
season and video tutorials for new
CURATE YOUR STYLE releases. Thoughtfully curated content
While the traditional beauty market was creates a sense of community and
being dominated by department stores,
The growth loyalty between the brand and its
with single brand counters operated by of online engagement devotees. Physical and online stores
a brand representative, Mecca’s founder, in beauty products have also been successfully integrated,
Jo Horgan, recognised the desire of creating a seamless shopping
Australian consumers to try imported, has revolutionised experience across platforms.
high-end labels, that moved away from the way major brands In-store, customers are greeted by
the department store approach. the physical counter-part of Mecca’s
Rewind to 1997 and Mecca’s first engage with their ‘Top 5 Products for Summer Skin’ that
store opened in South Yarra, offering target customer.” they may have read about online before
consumers a handful of imported, going into store.
innovative brands. Customers can also use the in-store
Now Mecca offers over 120 brands snap-chat decals, studio lights (for
across its physical and online stores, the ‘perfect camera-ready look’) and
providing consumers the opportunity even selfie-studios, to create their
to curate their own beauty collection own online content. Not only does
and style. the amalgamation of physical and
Mecca’s successful expansion has digital create an enticing experience for
capitalised on the choice that beauty- customers, but it also furthers Mecca’s
loving customers are after. online reach through micro-influencers.
The beauty sector is defined by a Although the brand is reluctant to
level of customer engagement that discuss its financials, industry sources
is unique. Beauty customers are estimate Mecca annual revenues to be
passionate, socially aware and want to circa AU$350 million and that it holds
understand a beauty brands story, brand roughly 25 per cent of the market. What
values, its product ingredients and is most impressive is Mecca’s growth,
expect a commitment to environment with Horgan on the record in late 2017
and often animal welfare. stating that the brand had experienced
At $5 billion in sales a year, year-on-year growth of 45 per cent for
global brands take notice of what the previous five years.
the customer wants. In the era of choice and instant
The emergence of challenger gratification that beauty customers
brands was recognised by Horgan, desire, Mecca is their match. A
with Mecca’s original store offering a truly modern Australian brand with
curated sample of these brands, such a thoughtful digital strategy and
as Nars, Too Faced and Hourglass. interaction between online
These challenger brands now take up and physical, we expect Mecca
10 per cent of the beauty market, with will continue to grow its loyal fan
McKinsey reporting their sales growing base in 2019.
2019 AUSTRALIAN RETAIL OUTLOOK | 21WINNERS AND LOSERS
Who said retail is easy?
It’s been 12 tough months for Myer and 2019 is not looking any easier
for the department store retailer.
BY JAMES STEWART, Partner, Head of Retail – Ferrier Hodgson, Azurium
and PETER MANN, Ferrier Hodgson
O N C E T H E M A I N AT T R A C T I O N listing on the ASX in 2009, largely due chief executive of UK retailer House
OF THE MALLS AND SHOPPING to the company’s move to write-down of Fraser (which itself went through a
precincts across the country, Australia’s its brand name and goodwill, but also performance turnaround), analysts have
long-standing love of department stores impacted by a total sales decline of questioned the appropriateness of this
is finally fading. 3.2 per cent and operating gross profit appointment given his lack of Australian
Impacted by fast fashion retail down by 2.9 per cent. retail experience and point to the fact that
chains, online retail models and This poor financial result has simply House of Fraser entered administration
digitised consumers, across the globe added fuel to the fire for significant in the UK shortly after his appointment
department store heavyweights are shareholder and retail icon, Solomon as Myer CEO.
restructuring their businesses, changing Lew, who continued to relentlessly attack As 2018 progressed, more issues arose
their product mix and closing stores due Myer’s management for incompetence, as shares were put into trading halt late
to poor performance. calling for the board to step down. in November by the ASX compliance unit
The department store model, a Indeed, at Myer’s annual general in response to reports of falling sales for
model that is over 100 years old, is under meeting in November 2018, the the first quarter of FY19. The share price
siege as customers lose patience with retailer’s management team suffered closed at 45 cents prior to the trading
substandard service, poor pricing and a second strike against its board and halt, almost a tenth of their listing price
product range parameters that are limited executive remuneration, however a spill of $4.10 in 2009.
by their physical store environment. motion to declare all director positions
was defeated. ACROSS THE SEGMENT
FROM BAD TO WORSE A silver lining to Myer’s 2018 results Comparatively speaking and less
Myer has now made its way onto our list is the increase in online sales, which publicised than Myer, rival department
of losers for three consecutive years, with rose 34.1 per cent to AU$192.5 million in store David Jones posted a reduction
2018 arguably its toughest year yet. FY18, albeit only a small portion (7 per in same store sales of 0.4 per cent for
While Myer has become the poster cent) of total sales. the year to June 24, 2018. Like Myer,
child for the challenging retail landscape In a performance-driven industry, David Jones experienced strong online
retailers now live in, controversy and Myer’s poor results have inevitably sales growth (21 per cent) but the online
ongoing speculation regarding its seen key leadership changes. John King channel is currently too small (5.3 per
financial future have continued to was brought in from the UK to replace cent of total sales) to make a meaningful
embattle the retailer. the outgoing Richard Umbers in June impact on total sales.
In 2018 Myer posted an annual loss last year. While key department store players
of AU$486 million, its first loss since While King’s CV included a role as have been challenged, some discount
department stores, which have also
encountered significant headwinds in
recent years, led the way in FY18.
Wesfarmers’ Department Store
Division posted $8.8 billion in revenue
and a record EBIT of $660 million (an
increase of 21 per cent year-on-year) for
FY18. The results of the division, which
is made up of discount department
stores Kmart and Target, offered a
positive story among an industry which
continues to be challenged.
Kmart’s run of success has come
through continued evolution of product
mix, store formats and customer service,
and shows the discount department store
can hold a valuable place in Australian
retail. However, Kmart’s 2018 Christmas
sales failed to meet expectations,
prompting Wesfarmers to flag lower
earnings for the division for the half-year.
2019 looks to be defining year for the
department store model.
22 | AUSTRALIAN RETAIL OUTLOOK 2019WINNERS AND LOSERS
“Just Afterpay it”
Though regulatory clouds loom ahead, rapid and relentless growth for this
fintech firm highlights the spending habits of millennial consumers.
BY JAMES STEWART, Partner, Head of Retail – Ferrier Hodgson, Azurium
and NICHOLAS TSAPTSALIS, Ferrier Hodgson
Y O U K N O W Y O U ’V E M A D E I T
A S A S TA R T -U P W H E N Y O U R
company’s name becomes a verb. We
“Google” questions to find the answer,
“Uber it” to get from A to B, and
“YouTube it” to find out how it’s done.
So what do millennials call it when they
want to “buy-now-pay-later”? They
“Afterpay” it!
Afterpay, the payment platform
allowing an immediate purchase that is
then paid-off in four equal fortnightly
instalments, went from fintech start-up
in 2015 to a darling of the ASX worth
nearly AU$5 billion in 2018.
In three years, Afterpay has rapidly
grown to have 2.3 million active
customers and over 18,000 retailers,
including Kmart, The Iconic, Rebel
Sports and Officeworks.
All this has amounted to
Afterpay delivering AU$2.2 billion
in sales for its retail partners and
processing approximately 25 per
cent of total online fashion retail sales
and 8 per cent of total online retail the payment process, and he’s been has called a parliamentary inquiry into
sales in Australia [Australian Financial proven right so far. financial products not subject to scrutiny
Review, 2018]. Afterpay’s business model captures in the Royal Commission and Afterpay
Co-founder Nick Molnar came up the shifting spending behaviour of appears to be in the firing line.
with the concept when trying to grow millennials, which Molnar believes is While regulatory uncertainty looms,
basket size and conversion rates in his increasingly cashless and free of credit. the changing Australian landscape
online jewellery business. Molnar was Afterpay pays the retailer for the seems unlikely to be stemming
convinced millennials would be more customer’s purchase, less a commission Afterpay’s growth as their venture into
willing to make purchases if there was of course, and then assumes the the USA continues full steam ahead.
risk of recovering this amount from Since launching in the USA in May
“
a service available that could smooth
the customer. However, should the 2018, Afterpay has signed over 900
customer miss a payment, Afterpay retailers, including Urban Outfitters,
charges a late fee allowing it to amassing around 300,000 consumers.
Molnar collect revenue from both sides of the These early signs suggest Afterpay has
was convinced transaction. At last report, customer late the potential to make a huge splash as
fees account for 24 per cent of Afterpay’s it took the business nearly 18 months to
millennials would revenue with the remaining 80 per cent reach similar numbers in Australia.
be more willing to representing retailer commissions. Considering the size of the US
As Afterpay doesn’t technically market, US$450 billion in annual online
make purchases if charge any interest to the customer, it’s sales vs US$18 billion in Australia, any
avoided being governed by the National foothold Afterpay can build is likely to
there was a service Consumer Credit Protection Act. be significant to its overall performance.
available that could 2018 has seen Afterpay’s share price
double during some of the toughest
smooth the payment REGULATORY CLOUDS,
INTERNATIONAL GOODS retail conditions in recent history
process, and he’s This could all be about to change making it an unarguable winner. With
due to the growing calls for Afterpay the potential for global expansion
been proven right to be subject to responsible lending gaining traction, its winning days may
so far.” regulations. The Australian Labor Party continue well into 2019 and beyond.
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 23WINNERS AND LOSERS
Franchising headwinds
A slew of scandals and a parliamentary inquiry dealt a number of blows to
Australia’s franchise industry in 2018. Is the industry set for a major shakeup?
BY JAMES STEWART, Partner, Head of Retail – Ferrier Hodgson, Azurium
and DAVID HACKER, Ferrier Hodgson
declining) sales, high franchise licensing
fees and high occupancy and wage
expenses (from trading outside normal
hours).
RETAIL FOOD GROUP
Perhaps the most publicised example of
the franchise industry’s struggles last
year is Retail Food Group (RFG). The
group, whose brands include Gloria
Jeans Coffee, Donut King and Brumby’s
Bakery has been dragged through the
mud in 2018.
RFG has experienced troubles since
a Fairfax Media investigation revealed
the business model had created
financially distressed franchisees. This
prompted questions about the value
of its brands and the quality of the
company’s performance.
Despite a 7.1 per cent increase in
revenue, the group reported a full year
loss of AU$307 million for FY18. The
questions raised from the investigation
severely damaged the brands, which
saw Gloria Jeans Coffee book a AU$90
million goodwill impairment and
Michel’s Patisserie record a AU$59
million impairment for the period.
These were among a total of AU$403
million in impairments across its suite
of brands.
To further RFG’s pain, CEO Richard
Hinson abruptly resigned at the end
of last year, following a management
It’s not been a great restructure outlined at the company’s
year for the parent annual meeting.
company of Michel’s
Patisserie, Brumby’s
HARVEY NORMAN
Bakery, Donut King
and Gloria Jeans. Harvey Norman was dealt several
blows last year after a bumper 2017.
Shareholders voted to reject the
A FAR CRY FROM THE FRANCHISE under the very public microscope retailer’s remuneration report at its
BOOM OF PAST DECADES, of the parliamentary inquiry into AGM in November, with the board
Australia’s franchising industry is facing the Franchising Code of Conduct, receiving a first strike. This presents
some serious headwinds. which saw a number of submissions the challenge of a potential board spill
The AU$170 billion sector came out to the enquiry label the franchise at this year’s meeting should a second
of 2018 battered and bruised, with model broken and detail widespread strike be received.
several franchise models embroiled in mistreatment of franchisees. Shareholders cited the lack of
scandals ranging from poor treatment of The public scrutiny overlays difficult independent directors on the board,
franchisees to systemic underpayments trading circumstances where many loans made to a franchise and the
of employees. franchisees are struggling to make businesses risk assessment capabilities
The industry has faced scrutiny a buck in the face of flatlining (or following failed agriculture and
24 | AUSTRALIAN RETAIL OUTLOOK 2019“ The likes of
Yum Restaurants
Australia (KFC’s
franchisor),
Beacon Lighting
and The Good
Guys have begun
purchasing back
franchises and the
shifting landscape
has raised
questions as to
what the future of
retail franchising
in Australia looks
like.
mining investments. Net profit was the investigation has been somewhat Lighting and The Good Guys
down 16.4 per cent in FY18 on the damaging for the brand’s image. have begun purchasing back
previous year, underpinned by property Despite the investigation, financial franchises and the shifting landscape
revaluations and failed investments. performance certainly doesn’t appear has raised questions as to what the
Harvey Norman’s share price dipped to have been affected, with Domino’s future of retail franchising in
to four-year lows and the retailer will posting a record profit after tax of Australia looks like.
be looking at 2019 as an opportunity to AU$136 million in FY18, up 15 per cent The parliamentary inquiry has
bounce back. on the previous year. Same store sales shone a light on deep issues within
are also up across all markets for the Australian franchising seeking to raise
DOMINO’S AUSTRALIA period, including 4.5 per cent growth in the standard of conduct in the sector.
An 18-month investigation by the Fair the domestic market. The Franchise Council of Australia’s
Work Ombudsman into Domino’s Time will tell if Domino’s well- recommendations to the inquiry
Pizza’s practices concluded late in publicised issues will have an adverse include mandatory legal and business
2018, handing down a number of effect on their financial performance. advice prior to purchasing a franchise
findings, including the discovery of and the introduction of a mandatory
underpayments, non-payment for work, OTHERS franchise registration requirement.
leave entitlements and several other While several franchises’ struggles As some of the franchising
breaches by franchisees. have been highly publicised, changes heavyweights feel the pressure and the
Domino’s has said that it is are also occurring away from the regulatory setting shifts, the stage is
dedicating resources to achieve full spotlight. The likes of Yum Restaurants potentially set for a major shakeup of
compliance in the future, however Australia (KFC’s franchisor), Beacon the industry.
2019 AUSTRALIAN RETAIL OUTLOOK | 25RETAIL TRENDS
AUTHORS
James Stewart, Partner,
Head of Retail – Ferrier Hodgson, Azurium
Alexander Burrows, Ferrier Hodgson
Harrison Bailey, Ferrier Hodgson
David Hacker, Ferrier Hodgson
Christopher Nicolaci, Ferrier Hodgson
26 | AUSTRALIAN RETAIL OUTLOOK 2019 www.insideretail.com.auRETAIL TRENDS
Last mile stand
Australia’s geographical challenges have forced local retailers to rethink how
they can effectively service consumer’s growing appetite for delivery.
BY JAMES STEWART, Partner, Head of Retail – Ferrier Hodgson, Azurium
and ALEXANDER BURROWS, Ferrier Hodgson
AS RETAILERS COMPETE focused on providing multiple delivery BRINGING DELIVERY IN-STORE
FOR MARKET SHARE IN AN options for customers. To avoid issues (and costs) associated
increasingly saturated market, last mile These options vary largely, from with the last mile, retailers are
delivery and click-and-collect have third-party delivery (Australia Post), embracing the click-and-collect model.
become defining battlegrounds for to express or couriered packages. Consumers can ensure that their
attracting and retaining customers. Customers can use click-and-collect or desired products are available before
“
The new age of smart devices and three-hour rush leaving the
other mobile technology has led to a delivery is offered house and avoid
surge in e-commerce and turbo charged during business delivery fees.
customer demand for higher levels of hours if you live ...customers are In early 2018,
service, convenience and speed through in a major city (or demanding greater Officeworks
all channels. fringe suburb) and stated that 20
Like their global counterparts, are prepared to transparency around per cent of their
Australian retailers face the challenge pay the premium product tracking online orders
of sustainably servicing the demand for of $14.99. were fulfilled
fast and efficient delivery at price points Accent Group,
through the delivery through click-and-
that customers are willing to pay. whose brands cycle…” collect (Channel
Global retailers have undoubtedly include Platypus, News, 2018). Coles
raised the expectations of customers Footlocker and Hype – another one of have added 1,200
and pushed local retailers to assess our winners of 2018 – launched same day locations across Australia, comprising
their logistics and fulfilment delivery across its entire retail network 25 per cent of total online sales
capabilities in order to stay last year. The group, like an increasing (Australian Financial Review, 2018).
competitive. Conquering the last mile, number of retailers, are leveraging their Adobe’s head of digital
the final, and most costly, step in the store network as fulfilment centers to transformation, Scott Rigby, refers to
sale of a product is no easy feat. ship from stores, rather than regional the latest data from the bumper 2018
Overseas, retail heavyweights such as warehouses and as distribution centers Thanksgiving shopping weekend in
Amazon, Walmart and Alibaba continue for collection of purchases. the US, which includes Black Friday
to invest in last mile innovations and These retailers are among a growing and Cyber Monday, as a sign of what’s
acquisitions to bolster their capabilities number of brands, including The Iconic to come.
in this area. These Goliaths are rolling and Cue, that are building same-day “Australia can use the US data as a
out a host of delivery and collection delivery into their offering. Inside Retail barometer for trends, where we saw
options around the world including reported on Cue becoming a trailblazer a record 50 per cent increase year-
24-hour self-service kiosks, delivery as the first national bricks-and-mortar over-year for click-and-collect,” he
‘robots’ and even couriers unlocking retailer to launch three-hour delivery said. “This reinforces the importance
your door and leaving deliveries in your nationally last year, joining online for businesses to have the ability to
home through Amazon Key. marketplace The Iconic. orchestrate campaigns across online
In Australia however, the domestic Additionally, customers are and offline retail experiences.”
market presents challenges less demanding greater transparency The last mile remains one of the
prevalent in many overseas markets, around product tracking through the toughest logistical challenges for
including consistent delivery delivery cycle, seeking features such as retailers. With these issues comes
times across all regions due to our Australia Post’s text message updates new innovations, startups and more
geographical spread and lack of and notifications. effective methods to meet customer
population density, outside the While same day delivery is targeted demands. As customer demands shifts
major cities. by many retailers, it’s no longer just to customer expectation, optimising the
JB-Hi-Fi, listed as one of our winners the speed of delivery, but also visibility, last mile will become an even greater
in 2018, is an Australian retailer that has transparency and customer control. focus for retailers in 2019.
www.insideretail.com.au 2019 AUSTRALIAN RETAIL OUTLOOK | 27You can also read
