RetailBiz Round Up for Friday 7 March 2014 – with Patrick Avenell
Today's ASX results are here
Retailers have warmly welcomed the Australian Bureau of Statistics trade figures for January, which showed the sector made a solid start to 2014, writes Trevor Evans from the National Retail Association.
The 1.2 per cent increase (seasonally adjusted) for January 2014 is a further sign of steady improvement for retail and we welcome the ABS report of a 6.2 per cent increase compared with January 2013.
However, while the headline results are encouraging, growth remains fragile with large variations in the performance of various sectors and around the country.
There’s no doubt this is a pleasing result for retailers. It continues a run of steady growth that is now unbroken since August last year. It is important to understand, however, that this growth is off a low base and that not all retailers are seeing this growth.
Our members report to us that performance is patchy from sector to sector and across different parts of the country.
The ABS reported strong increases in turnover for department stores (2.6 per cent), cafes, restaurants and takeaway food services (2.0 per cent), ‘other retailing’ (1.9 per cent), and household goods retailing (1.5 per cent).
Clothing, footwear and personal accessories (1.1 per cent) and food (0.4 per cent) enjoyed modest rises.
New South Wales (2.1 per cent) became the nation’s strongest performing state in January. The Northern Territory (3.3 per cent), Tasmania (1.8 per cent), Victoria (1.0 per cent), Queensland (1.2 per cent) and South Australia (0.6 per cent) also recorded increases.
These rises were partially offset by falls in the Australian Capital Territory (-1.9 per cent) and Western Australia (-0.3 per cent).
These results, combined with feedback from our members, tell us that consumer sentiment is still fragile and the momentum of recent months could be easily lost. This vindicates the Reserve Bank Board’s decision to leave rates on hold earlier this week, and we urge the RBA to consider the patchy nature of these results as it considers monetary policy in the future.
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Margie Osmond from the Australian National Retailers Association chipped in, saying the results were encouraging.
“We are starting to see real momentum now. It’s pleasing to see the sector return to the long term average growth rate of around six per cent,” she said.
“Discretionary spend retailers will welcome this month’s turn of events in which monthly gains were driven by the non-food sector, up 1.7 per cent.
“This is a great result for non-food retailers which have experienced patchier conditions than the food sector during the recovery in retail spending.”
The Australian Retailers Association, however, has been more concerned with lobbying the Federal Opposition to put small businesses first when considering the issue of paid parental leave.
“The current system is overly complex and burdens business with having to carry the costs of changing their payroll systems and the additional paperwork,” said executive director Russell Zimmerman. “We are calling on all parties to put politics to one side and focus on making life a little easier for business owners, in turn helping business and the economy to grow and increasing employment opportunities.”
Big box warehouse retailer Costco’s US parent company, Costco Wholesale Corporation, has reported its sales and earnings for the second quarter of its fiscal year (ending 31 August 2014) and for the half year to 16 February 2014.
Net sales for the quarter increased six per cent to $25.76 billion, the same growth rate as for sales in the half, which now total $50.22 billion. Net income for the quarter is down, however, from $547 million in the previous corresponding quarter to $463 million; a decline of 15.3 per cent. Net income for the half now stands at $888 million, down 7 per cent, year-on-year.
Costco does not break out its international sales by region, so it is not clear what the Australian business is performing, at least not in dollar terms. Taking all of Costco’s international regions as a whole, comparable sales (excluding gas price deflation and foreign exchange) were up 7 per cent.
In a conference call with investors, CFO Richard Galanti confirmed that one more warehouse is expected to open in Australia before 31 August 2014, as well as new outlets in the United States, the United Kingdom, Japan, Canada and, for the first time, Spain.
Galanti was quizzed by investors as to whether membership fees were inhibiting growth in foreign markets. He said that while Costco was pushing for new members in international markets, including Australia, and was “looking at fees”, there were no plans to reduce the cost to join. Costco Australia charges $60 for individuals and $55 for business for a one-year membership, and you must be a member to shop at its five Australian stores (soon to be six when Costco North Lakes opens).
“We have the benefit in most countries of being the only club operator and we’ll continue to use that benefit,” Galanti said. “We’re looking at [fees] but we’re not in a hurry to do anything about it.”
Specialist pet products retailer Petbarn has opted for JDA Software to optimise and centralise its supply chain planning, procurement and replenishment. Petbarn currently operates 106 stores and has a stated store goal of 300.
“Supply chain is strategic to our business, supporting inventory, costs, scalability, planning and customer service,” said Petbarn general manager David Bissett. “We want to ensure that we remain a leader in this regional retail market, while also raising the bar from a capability standpoint. JDA is helping us to focus on the requirements, processes, workflows and implementation methodologies we need to maintain our leadership and to support our long-term, growth strategy.”
The first Australian Uniqlo store is opening at The Emporium in Melbourne on Wednesday 16 April 2014. In the lead-up to this, the Japanese retail giant has revealed ‘The Five Faces of Uniqlo’, a collection of brand ambassadors to promote the retailer down under.
One of them has been on the books for some time: US Masters winner and all-round good guy Adam Scott. He is now joined by excellent actress Sophie Lowe (The Slap), irritating yachtswoman Jessica Watson, food artist Andrew McConnell and monosyllabic Melbourne artist Rone.
Quote of the Day
“We are excited to be entering the Victorian market. It’s been on our radar for some time but we wanted to make sure the first Ribs and Rumps location in the state was perfect before committing to Melbourne. We think the new dining precinct at Northland Shopping Centre ticks all the right boxes.”
Shane Beyer from Ribs and Rumps is excited to open the steakhouses first Melbourne store. Visitors to Northland can put on a bib and flood their arteries with barbecue sauce from 17 March 2014.
Image of the Day
Digital Pulse is proud of itself: last weekend the experiential agency put on a "10-hour live projection extravaganza in the historic Hordern Pavilion" at a dance party for the Mardi Gras. I guess that means they can cope with staging for next conference, or so they would tell you!