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Message from the CEO: 20 June 2017

June 20, 2017

Is speed really the new currency of business?

There’s no doubt it’s been a tough year for retailers, as consumers continued tightening their discretionary spending purses.

Shoppers have been rather prudent, and Deloitte Access Economics’ Retail Risk Review has forecast that it could take some time for this to turn around, and lift from its current six-year low.

But one area that’s shown consistently good results is food spending, and despite weak spending overall, it’s still gaining in strength. Deloitte Access Economics also suggests that an improvement in food spending is expected to fill the gap left by discretionary retail in the short-term, while population growth and international influences will support non-food spend over time.

Coupled with even further competition from international brands for the rest of 2017 and into next year, these results are again reinforcing that Australian retailers simply must invest in the improvement and expansion of their own digital channels, in order to meet consumers’ expectations and compete for what’s left of the discretionary spending pie.

On that note, overseas retailer Nike has been in the news this week for precisely that – announcing its ‘Consumer Direct Offense’ for a faster pipeline to serve shoppers with customisation options; “Express Lane” to help customers get products faster; faster turnaround time for the creation of new products; and its “double innovation” strategy including new apps to help shoppers find and get their hands on their products across more countries.

Nike Chief Executive Mark Parker said the company was getting even more aggressive in the digital marketplace. It’s also reducing the number of sneaker and clothing lines by a quarter to remain focussed on its high-sellers, and new releases.

Unfortunately, Nike’s also slashed 1400 jobs to go with it – something that’s always difficult to hear in the retail industry.

What we can no longer argue among all these changes is that speed is the new currency of business – a concept the man who brought Topshop to Australia six years ago would no doubt attest to.

Hilton Seskin has this week commented for the first time since the Australian arm entered voluntary administration, during a panel discussion at an Australia-Israel Chamber of Commerce lunch in Sydney. He told the audience that his biggest regret was getting into a franchise arrangement where the franchisor basically had “no responsibility”.

He outlined what he believed turned out to be a disastrous system for Topshop Australia, where we received a mishmash of outdated items, left over from its British operation.
“Products that were made in Asia were shipped to the UK, put through a recycling plant, as you call it, a warehouse facility in the UK, converted from US dollars to GBP [British Pounds], flying it out to Australia.”

While there were certainly many other contributing factors to the demise of Topshop Australia, it’s difficult to see how such a supply system would support a brand designed to deliver goods from runway to retail racks at lightning speed.

Meantime, we’re thrilled major stores in the regional Queensland towns of Warwick and Stanthorpe will be able to trade on Sundays and public holidays from next month, following a landmark decision handed down by the Queensland Industrial Relations Commission.

The QIRC ruled in favour of parallel applications brought by the NRA for the two centres, saying Sunday trading would boost employment, increase consumer choice and support the vital tourism industry in both locations.

The decision followed a week-long hearing in February, which included site visits to each centre.

Have a great week.

Dominique Lamb
CEO


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