##### AustralianRetail

®

##### Outlook2022

Powered by KPMG


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C O N T E N T S

Foreword
Industry in focus
Australian Retail Outlook 2022 Survey

COVID: A time for reinvention
by KPMG


Coronavirus’ call to transform
Personalisation is the new loyalty program
Omnichannel reporting evolves on fast
forward
The evolution of merchandise planning
Retail business models redefined
Welcome to the supply chain of the future
Level up: What’s next for sustainability?
Hope lies for New Zealand retailers
Working out your workforce

Retail profiles

Freedom: Welcome home
InStitchu: A good fit with room to grow
Elk rides the conscious consumerism wave
Mirvac: Community and connection
BBQ Galore turns up the heat
Toys ‘R’ Us makes an international play
How Every Human is making fashion for
everyone
Harris Farm: Re-purpose, recycle, repeat
Witchery: Style by design
Superdry brings Tiktok into its comfort zone

Expert forecasts
by KPMG

Economic outlook 2022: optimism, growth
Three steps to shoring up the supply chain
Your guide to going public in 2022
How to combat the rise of cyber fraud


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36

54

**Advertising**
Jeff Purser
ads@octomedia.com.au

**Graphic Designer**
Sofia Costales

**CEO**
Amie Larter
amie@octomedia.com.au

**Cover**
Freedom


**The Australian Retail Outlook**
**is printed by Octomedia**

**Head Office**
S3, Ground Floor, 131 Clarence Street, Sydney,
NSW
PO Box R217 Royal Exchange
NSW 1225 Tel: +61 2 9901 1800
Fax: +61 2 9901 1800

**Editor**
Jo-Anne Hui-Miller
jo.anne@octomedia.com.au

**Subeditor**
Haki Crisden


Octomedia Pty Ltd accepts no liability for any errors,
omissions, or consequences, including any loss or
damage, arising from reliance on information in this
publication. The views expressed in this publication
reflect the opinions of the writers and are not
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No part of this publication may be reproduced, stored
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the Australian Copyright Act 1968.


We would like to acknowledge the Gadigal people of
the Eora Nation, the traditional owners of the land upon
which we work and pay respect to Elders past, present
and emerging.


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**From the editor**

EACH AUSTRALIAN RETAIL OUTLOOK
SURVEY, WE ASK OUR READERS

about their thoughts on trading
conditions, what their revenue is
looking like at the moment and the
biggest challenges for the industry.
Respondents share their experiences
and insights with us and we’re able to
gauge where their businesses are at
right now. I’m sure you already know
that in this edition, we’ll be discussing
supply chain challenges, the future of
omnichannel retail and sustainability
– all while dealing with the rise of
Omicron around Australia.

But right now, I’d like to acknowledge

the exhaustion and uncertainty that
many in the retail industry are feeling,
no matter where they are right now,
whether that’s in the warehouse, the
design studio, on the shopfloor or the
executive leadership team. It’s no secret
that many of us have suffered from
long-term stress and mental health
issues at some point in the past couple
of years. Retail is a tough industry to be

**COVID:**
**A time for**
**reinvention**

THEY SAY WHAT DOESN’T KILL YOU
MAKES YOU STRONGER. While 2022
couldn’t come fast enough for some
retailers, 2021 was a boom year for
others. With lockdowns a thing of the
past (we hope), 2022 promises to be a
more predictable year for retail, where
borders are open, populations are
mobile and face-to-face retailing is
celebrated. Woohoo!

But it’s not likely to be all beer and

skittles. The acceleration of online
retail continued in 2021, as many
consumers made it their channel
of choice, and there is no doubt
that it is here to stay. Data-driven
online retailing is the new oil and
will continue to challenge traditional
bricks-and-mortar models as the
channel-agnostic customer becomes
more demanding than ever.

We also expect supply chain capacity

constraints and record high freight rates
throughout much of 2022, creating
challenges in inventory management,
forecasting, and cashflow.

The skills shortage that is being felt

across the economy is also likely to
continue. While opening borders will
be of considerable help, the issue is
whether inbound international travellers
will have the confidence to return
without fear of being caught in another
lockdown, something Australia has
become famous for around the world.

Many retailers are also

understandably nervous about


in right now, as consumer behaviours
are ever-shifting and the forecast rule
book has been thrown out the window.

Meanwhile, customer abuse is at

an all-time high. According to
the Shop, Distributive and Allied
Employees’ Association, 59 per
cent of frontline retail workers have
experienced an increase in customer
abuse during the pandemic. Threats,
abuse and violence by customers
in Sydney jumped up to 78 per cent
since the start of the pandemic.

We’ve been searching for the

‘new normal’ since March 2020 and
it concerns me that mental health
issues have been part of it ever since.
Thankfully, many progressive retail
businesses are now having open
conversations with their teams about
mental health, providing employee
assistance programs and re-visiting
their workplace flexibility options.
After all, these teams are the lifeblood
of businesses.

“We know we are stronger together

and our combined efforts can make
a real difference,” General Pants

the so-called Great Resignation
becoming a reality. In 2022, managing
a workforce to avoid further burnout,
absenteeism, and attrition will be a
genuine challenge.

While COP26 tested the

commitment of governments around
the world to reducing climate change,
it will be business that leads the
agenda, and ESG has reinforced itself
as retail’s ticket to play. There can
be no doubt that the expectation
dial of the consumer has shifted
exponentially, and purchasing decisions
will increasingly be influenced by ESG
considerations in 2022.

The agile shall win the day
In 2021, we saw many retailers
become truly omnichannel and
redefine their customer strategy,
promise, and journeys in a disrupted
retail landscape. In addition,
personalisation (driven by digital
innovation and data) has become a
key focus for retailers, as customers
now expect highly tailored and
targeted interactions with the brands
and organisations they engage with.

As we move on from what we hope

was the worst of the pandemic, bestpractice retailers are continuing to
adapt to the new normal, including
upgrades in their front, middle and
back offices, store rationalisation, and
heavy investment in understanding
their customer, digital offerings, and
supply chain agility.

Even so, the performance of the

Australian economy and the retail
sector this year still largely depends
on what happens with COVID-19. Will
it eventually turn into an influenzalike endemic, or will it break out into


chief executive Sacha Laing wrote on
Linkedin earlier this year in an open
letter to the retail industry.

“We need to address the immediate

support needed for those experiencing
mental distress today… this is our
opportunity to show our communities
and our teams that they are not alone.”

I hope you gather some helpful

insights in this year’s Australian Retail
_Outlook. Let’s hope that this time next_
year, we’re in a much happier and
safer place.

Jo-Anne Hui-Miller
Editor,
_Australian Retail Outlook_

a more deadly strain that reverses
the hard-fought health and economic
gains achieved to date. While only
time will tell, the past two years have
demonstrated Australian retailers’
capacity to remain agile and reinvent
themselves in times of uncertainty.

Good retailers are doubling down on

their competitive advantage at speed,
and those retailers that embrace
an environment where consumer
behaviours and expectations have
accelerated at rapid pace look to have
an exciting year ahead.

James Stewart
Partner, National Leader
Restructuring Services, KPMG

Lisa Bora
Partner, Customer, Brand &
Marketing Advisory, KPMG


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I N D U S T R Y I N F O C U S

#### The rollercoaster continues

It’s been two years since Covid first hit, and retailers are still

caught in a whirlwind of supply chain crises, shaky consumer

confidence and ever-changing restrictions.

By Jo-Anne Hui-Miller


JUST WHEN RETAILERS THOUGHT THEY
HAD EXPERIENCED THE WORST OF
coronavirus in 2021, from a return to
lockdowns to a major global supply
chain crisis in the lead-up to Christmas,
Omicron arrived on our shores in
December, rounding off yet another
challenging year for retailers.

“This year has seen business

enter unchartered waters, with
Omicron impacting business more
than any other time in the pandemic
with almost no government support,”
said Australian Retailers Association
(ARA) CEO Paul Zahra.

“Around 70 per cent of ARA members

say they currently have staff in isolation,
a third have limited trading hours in
some locations, and around one in five
have had to close some stores altogether
due staff shortages. These challenges are
going to be with us for some time and
targeted support is desperately needed
from government so small businesses
can survive.”

Continued delivery and supply
chain problems
According to this year’s Australian Retail
_Outlook Survey, some of the biggest_
challenges right now include shipping
and delivery and supply chain, followed
by lockdown restrictions and staffing, all
of which are closely related and impact
one another.

After a challenging year dealing with

the Delta variant, particularly for New
South Wales and Victoria which spent a
large chunk of it in lockdown, a global
supply chain crisis kicked off, rippling
across all areas of retail.

In September, Australia Post struggled

so much under the weight of online
orders and increased numbers of isolating
staff that it stopped taking e-commerce
collections twice in eight weeks.

“With parcel volumes at Christmas

levels, our network continues to be under
increased pressure, and is amplified in
Victoria where we continue to manage
a heavily reduced workforce due to the
impact of the Delta strain,” the business
said in a statement, adding that 200 staff
at the time were in isolation.


“The safety of our people is our

highest priority, one which we will not
compromise on.”

Several months on and it seems that

supply chain issues are here to stay
for the time being, as Omicron is now
impacting the transport sector. According
to the Transport Workers’ Union (TWU) in
January 2022, between a third and half
of transport workers are currently unable
to work due to complications with
COVID-19, putting major stress on the
supply chain and leaving supermarket
shelves bare.

“Unless the Prime Minister adopts

a national plan to head off this supply
chain challenge at the pass, future
outbreaks and restrictions may again
bring transport to its knees,” said TWU
national secretary Michael Kaine.

Vaccine mandates
A year ago, most of us would never
have imagined that vaccines would
become a hot topic in the office (or
more accurately, over a Zoom chat).
But when vaccines finally arrived in
Australia, it wasn’t long until businesses
began considering whether or not to
make them mandatory amongst their
employees. While mandates were
quite controversial among the wider
community, according to the Australian
Retail Outlook survey, 54.07 per cent
of respondents claimed that vaccine
mandates were in place for at least
some of their staff, if not all. Meanwhile,
the vast majority (79.25 per cent) actively
encouraged their teams to get the jab.

Woolworths began strongly advising

staff to get the vaccine at the beginning
of the national rollout and offered paid
leave for frontline team members to
access bookings. It also established
vaccine clinics at distribution centres
and closed Big W stores.

“We have a clear obligation to provide

our team members with the safest
possible work environment as we
supply the food and essential needs
our communities rely on,” he said in a
statement.

“We have 170,000 team members

across our stores, distribution centres


and support offices, and more than 1,200
retail stores. With each store welcoming
an average 20,000 customers a week,
a single team member can come into
contact with quite literally thousands of
people in the course of a normal working
week. As we enter the next phase of the
pandemic and learn to live with COVID19, we need to strengthen our workplace
safety settings and vaccinations are
clearly a key part of this.”

A new wave of innovation
Of course, necessity is the mother of
invention and coronavirus has paved
the way for innovative entrepreneurs to
find solutions to consumer problems.
While Australia’s uptake of online grocery
shopping has been slower than in other
economically developed countries like
the UK, the pandemic has accelerated
adoption rates since Covid hit.

And as the supermarket giants

struggle to keep up with demand
for online orders during lockdowns,
innovative new players are swooping
in to get their piece of this $7.1 billion
market. There’s global platform Geezy
Go, sustainability-focused Pretty Green
and Sydney start-up Milkrun, which
raised $75 million in under four months.

In the past two years, many in the

fashion industry have reconsidered the
traditional business model, where many
retailers felt the need to constantly drop
new collections, leading to ever-increasing
amounts of landfill. Now, innovative
designers are embracing creating nonfungible tokens (NFTs), digital assets that
represent unique real-world items, like
items of clothing, and are sold online. It’s
not just your typical tech disruptors who
are getting on the NFT bandwagon either,
but a whole raft of established brands,
from luxury brands like Burberry and
Balenciaga to mainstream retailers like
Nike and Havaianas.

While not all retailers will be able to

develop NFTs or deliver essential items
within the space of 10 minutes, this
progressive, forward-thinking mindset is
what will take businesses into the future.
I can’t wait to see what retail excellence
will look like this time next year.


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A U S T R A L I A N R E T A I L O U T L O O K 2 0 2 2

Industry insights:

Executive voices

Just when we thought the worst of coronavirus was over in 2020, Australia

was hit with Delta and Omicron variants in the space of 12 months,

plunging many businesses back into uncertainty for yet another year.


WHILE THE ROLLERCOASTER OF UNCERTAINTY CONTINUED
IN 2021, this time, many retailers were armed with a raft of
newly-acquired skills and strategies that they had deployed
during the first wave of coronavirus. Meanwhile, consumer
confidence continued on shaky ground as the country went in
and out of lockdowns across various cities.

In this year’s Australian Retail Outlook survey, more than

half of respondents (65.93 per cent) were in the C-suite or


senior management and 38.52 per cent led businesses with
more than 100 employees.

A wide range of categories were represented in this year’s

survey, with 14.07 per cent of respondents coming from the
fashion sector. Participants also came from health and beauty
(10.37 per cent); grocery and supermarket (9.63 per cent);
furniture and homewares (6.67 per cent) and sports and
recreation (5.19 per cent).

How would you
describe trading

Q.1

conditions in the past 12
months?


Despite the rocky year, almost half of
respondents (42.22 per cent) revealed
that, overall, trading conditions were
“good”, while 12.59 per cent said they
were the “best I have experienced”. In
2020, many businesses were forced
to quickly focus on e-commerce
and create digital initiatives, so it is
possible that in 2021, they reaped the
benefits of those efforts. ►


12.59%

Best I have experienced


42.22%

Good


17.04%

Ordinary


11.85%

Poor


16.30%

Worst I have experienced


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A U S T R A L I A N R E T A I L O U T L O O K 2 0 2 2

Q.2 Q.3


Significant improvement

22.39%

Slight improvement

33.58%

Remained about the same

16.42%

Slightly worse

16.42%

Significantly worse

11.19%


Following on
from the previous

respondents (55.97
per cent) revealed
that they had
experienced an
improvement in
the past 12 months
compared to the
previous year.

In the year ahead, how
do you expect trading

Q.3

conditions to change?

16.30%

42.96%

40.74%

Significant changes

Slight changes

Remain about the same

The overwhelming majority of respondents (83.70 per
cent) believe trading conditions will continue to change,
42.96 per cent of whom predict significant changes on
the horizon. After another year of switching in and out
of lockdowns and restrictions as we’re hit with different
variants, it’s clear for many that continued change is
inevitable.


47.41% Shipping and delivery

44.44% Supply chain

38.52% Lockdown restrictions

33.33% Staffing


26.67%

24.44%


Consumer confidence

Global economic factors

Labour costs


What were the
biggest challenges

Q.4

retailers faced in 2021?

Due to the global supply chain crisis the retail industry faced
last year in the lead up to Christmas, it’s no surprise that a
large portion of retailers indicated that shipping and delivery
(47.41 per cent) followed by supply chain (44.44 per cent)
were two of the biggest problems in 2021. This was closely
followed by lockdown restrictions (38.52 per cent) and
staffing (33 per cent), all of which impacted each other. ►


15.56%


14.07% Discounting

13.33% Vaccine mandates

11.11% Rental overheads

10.37% Government regulation


7.41%

6.67%

4.44%

2.22%

0.00%


Other (please specify)

Value of the
Australian dollar

Work health and safety

Overseas competition

Taxes


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A U S T R A L I A N R E T A I L O U T L O O K 2 0 2 2


How will the value of the
Australian dollar impact

Q.5

your business in 2022?


How has your
revenue from

Q.6

e-commerce changed in the
past 12 months?


The majority of
respondents (55.56
per cent) reported that
they have experienced
increased sales from their
e-commerce channels,
likely a result from
continued lockdowns
and shifting consumer
behaviour since the
coronavirus hit.

Increased significantly

Increased slightly

Stayed about the same

Decreased

We don’t have e-commerce

26.67%


47.41%

42.44%

No impact

Negative impact

Positive impact


28.15%

27.41%

14.81%

3.70%

27.41%


10.37%


Interestingly, almost half of respondents (47.41 per cent) felt the
value of the Australian dollar will have no impact on trade this
year, while 42.22 per cent believe it will have a negative impact.


What percentage of your
total revenue comes from

Q.7

your e-commerce channel?


20.74%

Less than

10%


20%

Less than

5%


17.78%

Less than

25%


Despite the growth in e-commerce
in the past two years, the majority of
respondents (58.52 per cent) report
less than 25 per cent of their revenue
actually comes from online. In fact,
20 per cent of respondents report
that less than 5 per cent of their
revenue comes from the channel. It’s
clear that in most cases, bricks-andmortar still play a significant role in
the transaction process. ►


2.96%

Between 75%

and 99%


0.74%

Less than

75%


7.41%

Less than

50%


3.70%

100% of
revenue


We don’t have

revenue from

e-commerce


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A U S T R A L I A N R E T A I L O U T L O O K 2 0 2 2


Which are the two
most effective social

Q.8

media channels your retail
business uses?

While Facebook, Instagram and LinkedIn
continue to be the most effective social media
channels for retailers, interestingly, Facebook and
Instagram’s popularity decreased by 14.73 per cent
and 6.8 per cent respectively compared to last
year. This could perhaps be due to the growth in
TikTok (up by 2.54 per cent). Interestingly, no-one
rated SnapChat as being one of their most
effective social media platforms.

Facebook 57.78%


What areas do you think
consumer expectations will

Q.9

increase over the next 12 months?

Online delivery speed 46.67%


35.56%


Online delivery speed

Customer service


34.07%

As e-commerce has
become a regular fixture
for many shoppers,
convenience is the name
of the game and like
last year’s survey, it’s
likely that consumers’
expectations around
online delivery speed,
online delivery options
and customer service
will continue to increase.


Price

Omnichannel


25.19%

24.44%


Customer service

Product quality


15.56%


14.07%

13.33%


In-store
digital functionality


Product
variety

Other


10.37%

6.67%


Instagram 54.81%

LinkedIn 25.93%


How helpful was the government’s
economic response to businesses

Q.10

impacted by coronavirus?

Not at all helpful

10.37%


Blog/native content on

website 14.81%

We don’t use

social media 11.11%


Slightly helpful

Helpful


YouTube 9.63%

Other 4.44%


Very helpful


Not applicable

8.15%

Many retailers continue to benefit from Federal and State governments’
economic response to business, with 81.49 per cent finding the support
to be helpful. Initiatives such as NSW’s Dine & Discover vouchers, which
helped get customers back out and shopping again, and the JobSaver
program, which provided support for companies to keep their staff
employed (and ended in November 2021), helped keep businesses trading
and operating throughout another difficult year. ►


TikTok 4.44%

WeChat 2.22%


Pinterest 2.22%

Twitter 2.22%


Snapchat 0.00%


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A U S T R A L I A N R E T A I L O U T L O O K 2 0 2 2


How have your business plans
changed due to coronavirus?

Q.11

It’s been a year of discovery for many businesses, as 32.59 per cent
explored new territory, choosing to focus on a new product, category or
customer segment. Others accelerated their existing plans (26.67 per
cent) to take quickly advantage of new opportunities as they arose.


32.59%


26.67%


22.96%


We pivoted the business to focus on
a new product/category/customer
segment

We fast-tracked our existing plans

We are proceeding with our existing
plans as scheduled

We put our existing plans on hold
and are sticking with the status quo

Not applicable


14.07%


3.70%


result of the pandemic?

As a result of coronavirus,
have you invested more in 8.89%

Q.12

your digital business?

While physical stores continue to open and shut as
restrictions change and many consumers are choosing to avoid busy public spaces, it’s likely that retailers will continue to 22.96%
invest more in digital. 68.15%

Yes

No

We don’t have a digital side to the business

If you have a physical store network, have you consolidated it as a

Q.13


Yes - we’ve consolidated 15.15%

No - we’ve added stores 11.36%

15.15%

25.76%

11.36%

47.73%


0 10 20 30 40 50

It’s been a rollercoaster for physical store owners who have likely opened and closed their doors several times in the past 12
months. One of the biggest trends in retail in the past couple of years has been around moving towards an omnichannel model,
where retailers can serve customers however they choose to shop, whether it’s via social media or click-and-collect. ►


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A U S T R A L I A N R E T A I L O U T L O O K 2 0 2 2


Were landlords more willing
to reduce rents this year?

Q.14


Based on the experiences of respondents, it seems that
landlords largely remained the same when it came to
negotiating rent.


7.41%


30.37%

Significantly more

Slightly less


8.15%

Slightly more


14.07%


36.30%

Remained about the same

We don’t have stores


3.7%


Significantly less


Do you think relationships between landlords and retailers are
more strained as a result of coronavirus?

Q.15


While 60 per cent of
retailers believe landlords
and retailers continue
to struggle throughout
coronavirus, this is down
from 80.57 per cent from
last year’s survey.

Yes

No

Not applicable

25.93%

17.78%


60%

21.48%

18.52%

24.44%

Significant

changes


31.85%

Slight

changes


How
do you

Q.16

expect leasing
terms to change
next year?

Shopping centre foot traffic
continues to be down and as
a result, many operators are
reconsidering their leasing
strategies. According to more
than half of respondents, we
can expect further changes to
leasing terms in the future. ►


Remain about

the same


Not

applicable


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A U S T R A L I A N R E T A I L O U T L O O K 2 0 2 2


Are you
mandating

Q.17

the vaccine for all/
some of the staff in
your business?

More than half of retailers (54.07 per
cent) said they are mandating the
vaccine for at least some of their
staff. Last year, food manufacturing
company SPC was the first Australian
company to make vaccines
mandatory for staff in September.


Yes

No

Not applicable


54.07%


Have you actively
encouraged your

Q.18

staff to get vaccinated?

While almost half of respondents have not
made vaccines mandatory for staff, the
vast majority (79.25 per cent) have actively
encouraged their staff to get shots.

79.26%

Yes

No

Not applicable

11.11%
9.63%


9.63%

36.30%


Will current global supply
chain issues negatively

Q.19

impact your business?

80.74%


13.33%

Yes

5.93% No

Not applicable

The overwhelming majority of respondents (80.74 per cent)
believe that the current global supply chain crisis will
negatively impact their business. In the lead up to Christmas,
many physical retailers had empty shelves, while online
retailers struggled with major delivery delays.


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C O V I D : A T I M E F O R R E I N V E N T I O N

Coronavirus' call to transform

The pandemic has accelerated the pace of change in retail,

creating an opportunity for businesses that can adapt faster and

better than their peers. Managing stakeholders will be key.

James Stewart, Partner, National Leader Restructuring Services, KPMG

Gayle Dickerson, Partner, Restructuring Services, KPMG

David Hardy, Partner, Restructuring Services, KPMG


IT IS OFTEN SAID THAT THINGS ARE NEVER AS BAD OR AS
good as we think they are. And if necessity is the mother of
invention, it could also be said that COVID-19 will be looked at
as the mother of reinvention for many retailers. As we gather
momentum in 2022 and return to a ‘new normal’, retailers are
looking to transform their business models to leverage a retail
environment where consumer behaviours and expectations have
changed at warp speed. However, the cost of transformation is
real and there are operational hurdles to be overcome.

Supply and freight costs
Retail supply chains continue to be challenged by capacity
constraints at major global ports and airports and record-high
freight rates. This has affected Australian retailers’ ability to
import stock. We are seeing some retailers stockpiling inventory
when they can to mitigate re-stocking issues during critical
trading periods. The uncertainty around inventory management
and supply issues creates complexity for cashflow forecasting.
The risk for some retailers now is inventory hangover following
the festive season if sales targets were not achieved. This could
mean clearing more stock than usual, with the associated


margin impact, as we gather pace into 2022. According to
the Australian Retailers Association, supply chain issues are
expected to continue for some time, likely through to 2023 and
retailers need to be prepared for these. There will be increasing
pressure on pricing and margins to reflect the increasing costs
of doing business.

Back to business as usual
As we continue to respond to COVID-19, several relief
measures that buoyed retailers through the worst of the
storm will end (if not already), including government stimulus,
landlord rent relief, and deferred liabilities. Some retailers will
have to adjust to this after losing market share or suffering a
permanent reduction in sales.

While many retailers reduced their cost base in response

to the pandemic, some lost market share or have seen
permanent reductions in sales, placing pressure on profitability
as they return to business as usual. Retailers also have the
challenge of managing deferred liabilities that may have built
up during the pandemic and will need to be paid as normal
trading conditions return. ►


-----

C O V I D : A T I M E F O R R E I N V E N T I O N


ESG: retail’s new ticket to play
The importance of ESG started pre
COVID-19 but now the expectation
dial of the consumer has shifted
exponentially. Purchasing decisions
are increasingly being influenced
by ESG considerations and we have
seen a paradigm shift over recent
years in response to these demands.
Implementing ESG initiatives across
the entirety of an organisation comes
at a cost; the challenge for retailers is
bearing the initial cost (knowing it’s one
that needs to be made). Investment in
ESG becomes a question of priority – do
retailers allocate the money at a time
of transformation and uncertainty?
Given the shifting dial of consumer
expectation, this will often be a ‘yes’
because it’s simply a ticket to play.

Turnaround or transformation
Retailers are taking the opportunity
to transform their business model to
adapt to the new normal. We are seeing
retailers undertake store rationalisation
programs and invest heavily in digital
offerings and infrastructure. These
transformative costs will often not be
provisioned for on the balance sheet.
The question retailers need to be asking
is, ‘How do I unlock funds to transform
my business while also meeting trading
challenges, shifting consumer behaviour,
expectations and stakeholder demands?’

Stakeholder management
Ultimately, any turnaround or
transformation requires trust between
a retailer and its stakeholders. Often


stakeholders will resist change unless
they can see the tangible benefits that
it will bring. It is imperative for retailers
to communicate well and manage
their stakeholders effectively during
transformative change. This means
communicating with key customers and
suppliers, financiers, and shareholders.
Based on our experience managing
stakeholders during times of uncertainty,
stakeholder management should
include:


of an independent adviser are building
stakeholder confidence that:

-  Management is adopting appropriate

strategies to resolve the issues at
hand

-  The underlying business is

sustainable and capable of
performing in the future

-  The management team is capable,

competent and able to execute on
the plans going forward



-  The financial
forecasts are robust,
and the underlying
assumptions are
reasonable and capable
of being achieved.

It is not the role

of the independent
adviser to persuade
third-party
stakeholders to
management’s point
of view on key issues.
Rather, their role is
to be the honest
broker – the bridge


1. Transparent

communication
of the key issues,
challenges, and
opportunities

2. Timely disclosure

of key events or
problems (a ‘no
surprises’ policy)

3. A clear commercial


communication of the key issues, Any and the underlying assumptions are
challenges, and reasonable and capable

“

opportunities turnaround or of being achieved.

2. Timely disclosure transformation It is not the role

of key events or problems (a ‘no requires trust of the independent adviser to persuade
surprises’ policy) between a third-party stakeholders to

3. A clear commercial strategy for how retailer and its management’s point of view on key issues.

issues will be resolved, with stakeholders.” Rather, their role is to be the honest
timelines and broker – the bridge
targets that are measurable, to between management and third-party
identify progress. stakeholders that both parties trust.

In 2022, while we do look to operate

While management is focused on under a new normal, the retail trading
business as usual and strategic landscape has changed permanently
initiatives, an independent expert and there are new and hidden costs
adviser can help bridge the trust gap retailers need to keep in mind. At
between borrowers and stakeholders, the core of any transformation are
if the adviser is reputable, understands stakeholders and they should be taken
the industry sector and has the trust on the journey. For many retailers, now
of both parties. Some of the key roles is the time for reinvention.


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C O V I D : A T I M E F O R R E I N V E N T I O N


Personalisation is the new

loyalty program

Customers and businesses benefit when engagement goes
way beyond awarding and cashing in points. Keenly tailored

individual experiences are the key.

Lisa Bora, Partner, Customer, Brand & Marketing Advisory, KPMG

Alex Moreno, Partner, National Lead Partner Salesforce, Technology Advisory, KPMG

Richard Gilson, Director, Digital Delta, KPMG


TODAY, CUSTOMERS EXPECT HIGHLY
tailored and targeted interactions to be
of value, they need to be personalised
and timely, and must provide meaningful
and relevant experiences. Traditional
‘earn and burn’ loyalty programs are
expensive and are not leveraging the true
power of personalisation to improve a
retailer’s business performance.

To deliver valuable and highly

personalised customer communications
and interactions, retailers need to
capture all the signals that a customer
displays through their engagement with
the organisation. This is across the buying
journey and over the lifetime of that
customer’s interaction with the brand.
This requires creating a digital fingerprint
that integrates the customer’s profile
data, captures their transactions, tracks
all interactions across all channels, and
can predict future behaviours, values,


and preferences.

What is critical and differentiating is

that personalisation extends beyond
traditional marketing communication
and flows right through to service
delivery, merchandising, offer creation,
and bundling of services. This ensures
minimal discounting and margin erosion
and true tailored service delivery. Those
that embrace personalisation not only
deliver on customer outcomes, but also
on business performance.

The accumulation of points is no

longer valued; it’s about how loyalty
programs can offer more immediate
customer value and benefits, with
personalisation as the means of delivery.

The value of personalisation
The power of personalisation is no secret.
Amazon estimates that around 35 per
cent of its revenue is solely based on


targeted personalised recommendations
when customers browse their website.
Also, research by Gartner recently
discovered that when used at the right
touchpoint’s, personalisation boosts
engagement and increases revenue by up
to 28 per cent and sales conversion by
up to 71 per cent*.

As a result, many organisations

and retailers are making significant
investments in this area to develop
contextual and personalised experiences
to differentiate themselves in the market:

-  The Wine Collective is an Australian

brand on a mission to reform how
the wine industry sells to consumers.
To achieve this, it has developed
an advanced personalisation
engine that provides customised
recommendations each time a
customer shops. The result is a ►


-----

C O V I D : A T I M E F O R R E I N V E N T I O N



-  personal wine store, which reduces

the brand’s 10,000 products down
to a targeted selection based on
customers’ behaviours, preferences,
and previous interactions.

-  Best Buy is bridging the on- and

offline personalisation space with its
app, which enters ‘local store’ mode
and sends relevant personalised push
notifications, tailoring the experience
to the location’s inventory. Using
advanced analytics, Best Buy has
honed its personalised emails’ timing,
frequency, and product to make sure
customers never miss out on the
items they like best.

How it’s done
Organisations struggle to successfully
integrate key capabilities to deliver true
personalisation. Many possess the key
skills, platforms, data, and analytics
required, but lack the ability to use these
assets to their full potential.

KPMG has identified capabilities that

need to be aligned to develop deeply
personalised customer engagement
that responds to the key moments that
matter for each interaction:

1. A cross-functional way of working

that breaks down traditional
structures to place the key
capabilities (data, insights, CX,
marketing, merchandising) in a
more agile operating model that
can quickly develop and test new
initiatives and deploy them promptly
into channels.

2. Collection of deep customer insights

to inform the design of customer
journeys, interactions, and treatment
strategies, and identify future


pathways, behaviours, value
and needs.

3. Continual and transparent

measurement to quantify in-market
performance easily, provide prompt
feedback, and support the ability
to experiment with new ideas and
designs and quickly assess their value
to the customer. Testing and learning
activities across personalised pricing
and personalised bundling are key.

4. A scalable customer engagement

platform that is enabled by a trusted,
integrated, and comprehensive
(transactional, contextual,
behavioural) view of the customer,
supported by the real-time capture
of all channel responses. The
platform must provide the ability
to adapt continually to evolving
market expectations, to optimise and
orchestrate the experiences in each
interaction.

Investments in standard CRM

functions and technology alone
will not deliver the full benefits
of personalisation for you, they
will allow a single source of truth
and segmentation capability but
extending into decision-engine design
is crucial to extract full value from
multiple technology investments.

For an optimum solution, imagine

a layer cake, where the foundation
layer is clean and trusted customer
data, followed by a platform whose
clever architecture allows it to adapt
to the market quickly, a layer of
efficiently designed processes, and
lastly a layer of intelligent automation
that can provide real-time insights
to users while interacting with
customers via assisted channels.


That final layer can also use the
same insights to automate tailored
experiences via unassisted channels.
Over time, you will be able to finetune this model as you observe what
works and what doesn’t.

5. An emphasis on ‘lights out’

automation, to accelerate the
development of new customer
initiatives, mitigate the numerous
hand-offs between teams across the
value chain, and apply algorithmic
intelligence to the decision-making
process across all channels.

6. A focus on developing meaningful

interactions that generate value for
both the customer and organisation.
Success is not to be measured in
terms of volume of interactions but is
based on a personalisation approach,
which involves communicating
less, with a focus on generating
more value, as measured in loyalty,
advocacy, engagement metrics, and
conversions to revenue.

Although many retailers are beginning

to develop their capability to deliver
personalised customer interactions, very
few have truly mastered the ability to
deliver these consistently at scale.

Those that are successful possess the

ability to quickly design and deliver great
customer outcomes. Aligned to this is the
ability to make use of the sophisticated
adaptive analytics found in many
customers’ engagement platforms to
automate, orchestrate, and personalise
the experience across channels.

_*Source: ‘How to Improve Customer_
_Experiences in Digital Commerce_
_Payments’, Gartner, 2020_


Retailers

“
need to capture all
the signals that a
customer displays.”


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C O V I D : A T I M E F O R R E I N V E N T I O N

Omnichannel reporting
evolves on fast forward

The integration of on- and offline makes real-time access to data

between sales channels more important than ever.

Daina Klunder, Director, CFO Advisory, KPMG

A NEW RETAIL REALITY HAS inform future strategies, including Dashboard tools allow for data to
EMERGED. ONE FILLED WITH MORE investment decisions that come be pulled from multiple sources and
online shopping, click-and-collect down to a choice of physical retail presented in a precise, uncluttered
and fast delivery options. Reliance on space vs infrastructure to support visual format. Having the most
technology and new reporting online business. current available data immediately
capabilities has hit a new high due to enhances decision-making. Making
the acceleration in volumes of online Move beyond manual reporting rapid decisions based on good enough
sales, which have now become the We see many retailers spend information is more valuable than
preferred channel for many significant time compiling reports making slow decisions based on
customers. Finance functions need to in manual ways, unfortunately ‘perfect’ information.
adapt to ensure that they can provide at the expense of quality time Real-time reports work on a ‘set
accurate and relevant reporting in spent analysing performance and and forget’ basis, where you build
real time for their businesses. providing actionable insights to the report once and these reports

The expansion for many retailers make impactful decisions. Critical are readily available at the click

from a single sales channel (the information can often be delayed of a button. These can then be
bricks-and-mortar store) to an in reaching decision-makers by up switched to reflect different date
omnichannel offering has created to a month, which may result in ranges, sales channels, and product
the need for accurate profitability missed opportunities. To be able to SKUs – to name a few options – so
and forward-looking information on a access sales performance, cost, and performance in different time frames
channel-by-channel basis. profitability analysis information in can be examined.

One big challenge is to accurately real time, finance functions need to

determine the sales each channel continue to embrace the opportunities The transition to forward-looking
drives and attribute the respective of automation and innovation. During information
costs of making the sale. As the the pandemic, successful retailers Although historical financial reporting
cost to serve the customer through have embraced will continue to
different channels varies due to integrated be important
the different activities necessary to fulfil the order, retailers are budgeting and forecasting tools It is for retailers, the rapid pace and
asking themselves whether they can so they can ever-changing
easily determine what is the most make real-time “imperative for environment often
profitable channel for making a sale and take appropriate action to decisions based on current and retailers to delays this data until it’s too late.
amplify the opportunities. forecast sales Retailers need to

have integrated

Prior to COVID-19, many retailers volumes across understand the

were not set up to facilitate this. their different drivers of financial

reporting across

However, in the new age of measuring sales channels. outcomes and
omnichannel sales performance, it finance teams

all sales channels.”

is imperative for retailers to have Introduction of should be
integrated reporting across all sales data visualisation empowering
channels, to allow decision-makers to platforms business users to assess
confidently compare the profitability Retailers who embrace the full performance drivers in real time,
for online sales versus in-store sales capability of data visualisation ensuring critical decisions are made
throughout the value chain, so they platforms can produce management immediately. Finance functions
can make informed decisions relating dashboards that deliver simple and are now expected to play a bigger
to operational adjustments, strategy, meaningful insights. Visualisations role in modelling future risks and
and investments. allow finance leaders to eliminate opportunities to support decisions.

Due to the fast pace of retail, data some manual monthly processes Behaviour needs to move away

and insights need to be of the highest while also interrogating reports from solely measuring and reporting
quality while also being readily whenever they need, through self- on financial outcomes and veer
accessible. This is critical to empower serve reporting. This gives them an towards measuring and reporting on
agile decision-making, which helps instant understanding of key the underlying drivers of financial
optimise business performance and business drivers. performance.


-----

C O V I D : A T I M E F O R R E I N V E N T I O N

The evolution of

merchandise planning

Merchandise planning has changed in recent years, in response

to the pandemic and big shifts in consumer habits and lifestyles.

Here’s how retailers are adjusting.

Phil Welch, Director, Operations Advisory, Consumer & Retail, KPMG

CUSTOMER LIFESTYLES ARE DRASTICALLY EVOLVING. THE Retailers are finding omnichannel fulfilment complex.
pandemic continues to influence customer purchasing Merchants must adapt their allocation and replenishment
priorities and penetration in the omnichannel environment, models to support total demand, rather than basing them
which is affecting assortment mix and demand at each on sales units by location. The challenge for retailers is
location. to adjust allocation for efficient and profitable fulfilment

This is creating new challenges for retail operations, through the most appropriate methods, to prevent

including a particular demand for agile merchandise unbalanced inventory by store.
planning and supply chain processes. These activities
require frequent decisions on product assortment, store, Customers’ evolving expectations
and floor-space allocations. Such decisions are not new; Customer expectations and purchasing behaviours are
however, they are now occurring outside of typical planning changing rapidly, responding to new regulations placed on
cycles and with less data to guide them. retail within a volatile trading environment and their own

Here are some of the big trends and the merchandising personal choices related to socialising in crowded shopping

moves they’re forcing retailers to make. centres. Click-and-collect and curbside pick-up are now

terms widely used in homes. Home delivery has increased,

The work-from-home phenomenon with the parcel carrier acting as an extension of the retailer.
Remote working is a new way of life and has disrupted Retailers are being challenged to redefine their promise to
retail, creating spikes in demand for product categories and customers and their in-store and online experience.
high demand in new locations, with no historical data or Leading retailers are establishing a competitive
trends to help prepare for this change. The trend of working advantage by responding with agility in their operations
from home is expected to continue, with many businesses and re-emphasising their customer-first approach across
realising they can find a new the entire organisation. This
balance of working onsite requires the whole business
and offsite. Meanwhile, to buy into a seamless,

Now more than ever,

the spikes in sales and end-to-end customer-
locations have eased and centric view to deliver on

the heads of omnichannel are “

retailers have established the customer promise.
new buying patterns – but influencing merchandise and Any remaining operational
the volatile environment still exists, as the impacts of the supply chain decisions.” silos within a retailer are challenged to become totally
pandemic are constantly customer focused.
changing. The supply chain and last mile delivery are playing a

Having adjusted for the impacts of working from home key part in the customer journey and the after-purchase

and a migration away from city centres, retailers are experience is important, too. This creates an added
establishing their competitive advantage by focusing on complexity for the omnichannel promise to the customer.
customer experience strategies. Managing omnichannel Now more than ever, the heads of omnichannel are
complexities is how retailers will deliver on their customer influencing merchandise and supply chain decisions.
promise and expectations. Retailers are redefining their customer strategy, promise,

and journeys based on an accelerated omnichannel

The complex shift to omnichannel environment in a disrupted retail industry. They are
Australians are shopping online more than ever. Customers rationalising their assortment profiles and principles by
now purchase online from brands they deem trustworthy. channel, analysing their online and bricks-and-mortar
Because of this, retailers will reshape their online product ranges, ordering allocations and product space by location.
profiles and reconsider their store footprint for products It is important every part of the organisation, including
and categories. It is predicted that, by 2024, up to 10 per supply chain and merchandise teams, become aligned on
cent of floor space will be repurposed in department stores fulfilment methods and play their role to deliver on the
as the shift to omnichannel continues. customer promise.


-----

C O V I D : A T I M E F O R R E I N V E N T I O N

Retail business models redefined

New business models have arrived. To make these ways of doing

business deliver on their promises, retailers will need to start

looking at the new metrics that matter.

Shae MacDougall, Director, Audit Assurance Risk, KPMG

THE RETAIL INDUSTRY HAS PROVEN IT
CAN ADAPT AND INNOVATE TO MEET
consumer expectations and invest
in the technology to enable this. As
store-based retail moves beyond its
zenith, this ability to adapt is causing
growth in platform ecosystems and
omnichannel development – driving the
next wave of competition and businessmodel evolution.

With an evolving range of new routes

to market, today’s retailers will need to
decide which model they want to operate
in the future or risk their business failing.

Current platform businesses and


multinational retailers are transforming
themselves into platform ecosystems,
which we expect to take larger market
shares in years to come. Platform
businesses have grown in prominence
over the last 20 years by harnessing the
digital market. In some cases, platform
business models facilitate the exchange
of products and services between two
or more user groups – a consumer
and a producer. They are increasingly
dominating the go-to-market channels
and taking a broader approach to target
both B2B and B2C offerings. Platforms
provide a retail ecosystem offering
customers numerous propositions – from
retail products to banking services – to
maximise customer lifetime value.

Omnichannel retailers will have to

focus on the delivery of a seamless,
customer-centric, channel-agnostic
proposition. This positioning will be
comfortable for many retailers and
competition in this space will be fierce.
A ruthless focus on costs will be
required to maintain profitable
offerings to customers.

Category specialists emerge
Meanwhile, category specialists
and independents are positioning
themselves to showcase their strengths
as local, purpose-led organisations.
We saw this emerging trend during
COVID-19 lockdowns, as ‘shop local’
category specialists offered unique and
focused products and services targeted
towards a specific retail category or a
defined customer. Category specialists


product innovation and enjoy a loyal

often offer considerable expertise in of where critical cost reductions can be

customer base.

The transition to any of the three

models – category specialists, platform
ecosystems or omnichannel – will require
pace, capital, and capabilities. With not
all of these available in abundance for
most organisations, many will need to
pursue partnerships. Investors certainly
seem to believe platform business
models will continue to dominate the
future business landscape. Essentially,
these partnerships would serve as readymade, relatively proven ‘white label’
platforms that enable retailers to evolve
and scale without investing lots of capital
to develop the capabilities in-house.

Metrics that matter
As retailers determine the model that will
drive their success and the partnerships
required to deliver it, a need to measure
success differently emerges. This will
cause a shift in focus from the metrics
that matter today to a more holistic
view of retail’s staple metrics – sales,
profit, and stock. For example, as cost
becomes an increasingly important
factor in competitiveness for all
retailers, effectively measuring the true
profitability of transactions becomes key.

Retailers have always measured

transactions in terms of sales and
profit but now the true cost needs to
be factored in, too. In other words, how
much does it cost to serve the customer.
Factoring in this cost gives a true picture


of where critical cost reductions can be
gained, as well as providing a pure view
of return on investment.

Integrating old and new
Traditional bricks-and-mortar metrics,
such as gross margin per square metre,
are becoming less important on their
own, as they no longer tell the full picture
in an omnichannel environment. Only
when gross margin per area is combined
with online metrics such as demand and
cost to serve, can a retailer can begin to
understand how space (across online and
in-store) is driving outcomes.

In all models, there is a requirement

to invest capital in stock and maximise
stock turn. In the future, the importance
of these measures will be around
specificity. As stock moves through
different parts of the supply chain, being
able to measure it precisely will allow
retailers to focus on stock by channel
and react when it is outside of what is
expected.

Regardless of the model, unlocking

true value requires retailers to drive an
analytics-led culture that leverages an
integrated customer and product view.
This needs to employ numbers that
matter, not legacy metrics that no longer
paint the full picture. As customers
interact with retailers in different ways,
measuring the impact of range across
channels and price point in near real time
becomes an essential part of decisionmaking. It enables the agility necessary
to react to customers’ changing needs.


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C O V I D : A T I M E F O R R E I N V E N T I O N

Welcome to the supply

chain of the future


A handful of major obstacles stand in the way of retailers being
prepared for the demand and supply issues they will face going

forward. Here’s how businesses are clearing each hurdle.

Robert Poole, Partner, National Sector Leader, Consumer & Retail, KPMG


AS WE LOOK BACK AT THE PAST COUPLE OF YEARS FOR
clues about what the future holds for supply chains, we see
similar issues have become apparent across e-commerce and
international logistics. Whilst 2020 was about dealing with the
outcomes of the acceleration of e-commerce and omnichannel,
in 2021, retailers were trying to cope with a perfect storm of
demand and supply issues, including international shipping
uncertainty, loss of capacity, increased costs – even a lack of
containers and pallets.

This has resulted in a convergence of the challenges for retail

and global logistics. The major challenges retailers are now
working on resolving are:

1. What should my future target operating model (TOM) for the

supply chain be?


2. How do I incorporate process and physical automation

throughout the supply chain?

3. How do I manage increased process complexity?
4. Understanding true channel cost and SKU profitability.
5. How do I integrate my new suppliers and third-party

logistics partners?

Let’s examine the solutions for each of these issues.

Building a new target operating model
One outcome of the challenges identified above is a new
1

TOM specialised for agility and resilience, and developed based
on the six elements shown below. This is being used to embed
the agility that was required during the pandemic into longerterm operations.


What’s in a target operating model?



- 


-----

C O V I D : A T I M E F O R R E I N V E N T I O N


This new TOM is oriented around end-to-end supply chain
planning, predictive analytics, and greater investment in
planning systems to optimise process, people, and technology.

Increasing numbers of partners are being integrated into the

business model, resulting in a particular focus upon governance,
performance insights, and the service delivery model.

Integrating process and physical automation throughout
the supply chain
2

Higher levels of automation require a ‘manufacturing’ mindset
to optimise the different automated elements across the entire
value chain, and within distribution centres in particular. Each
element of the value chain has different levels of productive
capability and requires extremely high levels of co-ordinated,
day-by-day, hour-by-hour planning to gain the full benefit of
large capital outlays. Bigger retailers are facing challenges in
managing network-wide capacity across multiple fulfilment
nodes with different optimisation characteristics, and re-tooling
workforces accordingly.

Certainty of delivery is now becoming

as important as speed. Retailers are
increasingly looking for ways to increase
co-ordination across the supply chain,
along with automation in fulfilment

“

planning and execution. This increases
middle- and back-office productivity, allowing more strategic decision-making networks just as
from people. much as delivery.”
Managing increased process
complexity
3

Retailers are investing in new sales and operations planning,
along with replenishment methods and tools. This is tied to the
need to consider alternative sources of supply – international
and domestic – as part of holistic and dedicated supply
chain risk management. Retailers now need to prioritise what
stock gets delivered and when, due to capacity constraints.
Increasingly, companies across many industries are integrating
predictive analytics into supply and logistics planning to provide
data for tough operational decisions.

Retailers are developing the flexibility to organise multiple

channels to customers on short notice. Inventory deployment
policies within fulfilment channels connected across the
business have never been more important for the fulfilment of


customers’ baskets, where multiple products and categories
potentially land.

Understanding true channel cost and SKU profitability
To make the right decisions about which channels and
4

methods of delivery are the most profitable for products,
retailers are implementing advanced analytics for the cost to
serve and segmentation optimisation. These are then used to
decide the optimal portfolio mix of products and services to
profitably delight customers.

Increased visibility of SKU profitability via each channel –

difficult to achieve in legacy systems – is allowing retailers to
tailor product and service offers closely to individual customer
demographics, locations, and fulfilment needs.

Integrating new suppliers and third-party logistics partners
To deal with the global supply crisis and explosion of
5

omnichannel business models, retailers started with building
capacity. Now they need to pick the winning suppliers – the best

performers, who can maintain the new
face of their brand (the delivery driver) –

Retailers need and integrate them into more automated logistics and merchandise planning.

Barriers to entry in e-commerce are rising,

“

to optimise reverse driven by lack of capacity and increased
networks just as compliance requirements for third-party logistics partners, in both physical
much as delivery.” products and customer data.Reverse logistics is becoming more

critical, driven by environmental, social,


and governance requirements, and larger return volumes.
Retailers need to optimise reverse networks just as much as
delivery, often using different capabilities from their third-party
logistics partners. For example, the delivery driver now has the
added complexity of carrying out multiple tasks beyond just
dropping items at your front door – from assembly and recycling
to upselling and gathering customer experience data from
individuals.

All businesses are on their own journey to manage these

challenges, with the aim of developing agility and resilience
beyond simple physical logistics and volume capacity.
Increasingly, companies are looking to engage external expertise
that can bring them global best practice – just as their
customers ‘shop the world’ for the best value.


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C O V I D : A T I M E F O R R E I N V E N T I O N

Level up:

What's next for sustainability?


Find out how far your organisation has progressed down the path towards

being an industry leader in corporate purpose and sustainability.

Robert Poole, Partner, National Sector Leader, Consumer & Retail, KPMG

Sarah Newman, Director, Sustainability Services, KPMG


IT’S NO SECRET THAT THE
ENVIRONMENTAL, SOCIAL AND
governance (ESG) expectation dial has
shifted exponentially. The subject is
dominating the media, with the retail
sector firmly in the spotlight. In
KPMG’s 2021 Global CEO Outlook, ESG
and corporate purpose were the top
two issues among the 1,300 CEOs
surveyed across 12 countries, including
50 from Australia.

The importance of ESG considerations

emerged before COVID-19 but has now
escalated. Purpose, reputation, and
integrity are playing an even larger role
in consumer purchasing decisions.
KPMG research shows that 80 per cent
of customers now prefer to buy brands
that align with their values and 54 per
cent of customers say an organisation’s
environmental and social record has
changed their purchasing decisions[1].

Brand purpose and how well ESG

is integrated within an organisation
can truly set it apart. Consumers are
judging retailers on their treatment
of employees, company diversity,
human rights in the supply chain,
environmental footprint, and resource
circularity. All this has helped push
consumer brands to prioritise ESG as a


strategic business focus.

Based on KPMG’s market observations

and experience, we position most
Australian retailers in one of the following
three categories of ESG integration:

Need to review goals and priorities
Consumer brands that are
1

newcomers to ESG are positioned at
the entry level of the integration scale.
Typically, their focus is keeping on top
of regulatory and reporting requirements
and they may lack resources or
executive sponsorship for additional
aspirations. There are more than 500
formal and informal sustainability
frameworks globally, which creates a lot
to manage. Adopting industry standard
frameworks such as the UN Sustainable
Development Goals, and certifications
such as B Corp, can provide a formal
framework to track progress.

A major consideration in this category

is the risk of greenwashing – retailers
publishing sustainability credentials, such
as eco labels, but not actually having
data to prove the claims they are making.

Need to operationalise ESG
Many retailers are in this second
2

category; they meet or exceed their


regulatory obligations and they
understand the value proposition that a
stronger focus on ESG can provide. These
retailers also can attract green finance,
as the volume of funds committed to
sustainable investment strategies, like
green bonds and sustainability-linked
loans, continues to strengthen.

More Australian retailers have started

integrating sustainability goals into the
core of their business strategy. To do
this, they have identified their priority
ESG areas and set aligned targets, such
as zero net emissions, increasing the
diversity of the workforce, improving
responsible sourcing practices, and
circular innovation. Many have started
to monitor progress, as consumers
expect sustainability claims to be
supported by data.

A major challenge for these retailers

is incorporating ESG into their day-today operations. Data systems need to be
built and business processes updated
to underpin ESG measures. Examples
of this include the data taxonomies
required to drive Scope 3 carbon
accounting, end-of-life recycling and
full traceability and transparency of the
supply chain. These retailers need to go
beyond their sustainability report ►


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C O V I D : A T I M E F O R R E I N V E N T I O N


and operationalise ESG – taking into
account the governance and business
case development required to invest and
transform.

Data systems

“need to be built and

business processes
updated to underpin
ESG measures.”

Leading on ESG
The third category is reserved for
3

ESG standouts who are leading the way
in building a sustainable and inclusive
economy. They include disruptors and
innovators.

Disruptors are newer companies

challenging traditional business models
with ESG and purpose at their core


from inception. An example is the
Zero Co start-up, which in late 2020
commenced delivering environmentally
friendly cleaning products packaged in
reusable and refillable containers made
in Australia from recycled beach and
ocean waste. In less than a year, Zero Co
is achieving sales in excess of $1 million
a month.

Innovators are existing retailers that

have redesigned their business model
to make sustainable change, with
economy-wide impact. A number of
local retailers are planning net-zero
emissions by 2050. Internationally,
Britain’s biggest retailer, Tesco, has
made the same commitment. The
company’s 2050 target, often referred
to as Scope 3 emissions, covers not
just the carbon from its own operations
but also what comes from its food
producers, suppliers, and other partners
involved in the value chain. Reducing
Scope 3 emissions involves creating
partnerships to fast-track innovation
and develop technology that doesn’t yet


exist – for example, a means of reducing
methane emissions from livestock –
thereby creating real economy-wide
change.

Consumers prefer brands that

reflect societal values and they have
high expectations for how brands
conduct themselves. Failing to place
ESG at the heart of decision-making
leaves retailers vulnerable to losing
competitive advantage. Most retailers
sit in the middle category of needing to
operationalise ESG – they have goals
and ambitions but now need to go
beyond their sustainability report and
embed ESG into their core operational
functions. This takes planning, time
and resources, but the benefits often
speak for themselves. While the costs
of implementing ESG initiatives may
impact operating profitability in the
short term, the cost of inaction may be
greater down the line.

1. Me, My Life, My Wallet, third edition.
KPMG publication.


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C O V I D : A T I M E F O R R E I N V E N T I O N

Hope lies ahead for

New Zealand retailers

The coming year may offer the sector the chance to attract a cashed up post-

pandemic consumer, but they’ll have to clear many obstacles along the way.

Leon Bowker, Partner, Deal Advisory, KPMG

David Ossa, Associate Director, Deal Advisory, KPMG

AFTER A LONG RUN WITH NO ACTIVE COVID-19 CASES, NEW limits, recordkeeping and mask wearing. A key consideration
Zealand was hit hard by the Delta variant in the second half of for retailers has been whether to enforce vaccine mandates
2021. The country faced the most cumulative days in lockdown for employees in their workplace. On the customer side, there
since the pandemic began, especially in Auckland. This heaped is consensus in the sector that requiring vaccine certificates
pressure on retailers that were already dealing with supply from consumers would be challenging, due to the heavy
chain disruptions, labour shortages, and increased staff costs. flow of people in and out of physical stores. But deciding
As New Zealand continues to reopen under the new traffic light whether to require vaccinations from employees will require
system, retailers will also have to operate with additional safety a comprehensive risk assessment. Retailers risk losing staff if
measures in their workplaces. they require vaccinations – not to mention the potential legal

Despite the government’s financial initiatives to support challenges that could come from this requirement – but not

businesses that COVID-19 restrictions have affected (including requiring vaccinations might keep some consumers away. Some
the Wage Subsidy, Resurgence Support Payment, Small Business retailers, such as the Warehouse Group, have already made
Cash Flow (loan) Scheme and changes to rent relief measures vaccinations compulsory in their workplace from January 2022.
for landlords and tenants), the extended periods of lockdown
and travel restrictions across the country have already tested Havoc in the supply chain
the resilience of the retail sector, especially smaller businesses The global supply chain continues to suffer from delays in
with limited online presence and tight capital reserves. As fulfilment of critical orders, empty shelves, increased shipment
New Zealand retailers gather pace into 2022, there are several costs, and customer dissatisfaction. New Zealand, where
challenges facing them this year and beyond. international trade represents roughly 60 per cent of the

country’s economic activity, has not been immune to the effects

**Retail monthly card spending*** of this global phenomena. Amid the backlog in supply from

7,000.00 lockdowns around the globe, local retailers are experiencing

5,250.00 unprecedented surges in freight costs due to the increased

economic activity government stimulus packages have caused.

$'000 3,500.00 Some are being forced to carry additional stock to account for

1,750.00 17-Aug-21: Effective from 11:59pm, New Zealand entered Alert Level 4, delays and interruptions. This has resulted in higher funding

entailing a complete lockdown requirements and costs, forcing retailers to increase product

'- prices (contributing to the current increase in inflation rates

Jan-25 Mar-25 May-25 Jul-25 Sept-25 in the country[1]), which may affect consumer behaviour moving

*Categories include durables, fuel, motor vehicles, apparel, and consumables. It excludes hospitality. forward.
Source: Stats NZ

Labour shortages and increased staff costs What does the future hold?
Attracting and retaining staff has been a persistent headache While conditions in the sector have been difficult, it is becoming
for retailers across the country. Some have been forced to apparent that larger, well-established retailers have performed
offer higher wages and additional benefits, such as in-store well. Conversely, smaller businesses with limited e-commerce
discounts, flexible hours, and career progression opportunities capabilities and less bargaining power with suppliers and
to retain their employees. This has proven particularly hard, landlords have been struggling. However, there is reason for
especially in an environment where wages have continued to optimism in the short term, due to a strong economic bounce
increase – the average wage in the sector is now NZ$25.05, back after months of lockdown late last year – similar to that
compared with the adult minimum hourly wage of NZ$20.00 experienced after prior lockdowns – and accumulated savings
and the hourly living wage of NZ$22.75. Staff shortages across by consumers during lockdowns. The real test this year will be
the sector have continued to challenge retailers, exacerbated by retailers’ ability to adapt to a post-pandemic normalcy marked
New Zealand’s restricted borders, which have limited the influx by higher online sales, in-store safety requirements, vaccination
of casual and permanent workers into the country. certificates, and escalating labour costs. Getting the formula

right could mean the difference between survival and failure for

Trading under the traffic light framework many retailers.
New Zealand commenced operating under the new traffic
light framework when all District health boards achieved 90 1 Data from Stats NZ shows the CPI rose 2.2 per cent in the
per cent double vaccination for the eligible population. The September 2021 quarter, the biggest quarterly movement since a
system imposed additional safety protocols, including capacity 2.3 percent rise in the December 2010 quarter.


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C O V I D : A T I M E F O R R E I N V E N T I O N

Working out your workforce

Expect a big retail rebound in the coming year, but not without a happy,

engaged workforce. Here are some expert insights on how to get and keep one.

Belinda Robson, Director, Management Consulting, KPMG

FEW AREAS OF THE ECONOMY HAVE BEEN AS AFFECTED BY
COVID-19 as the retail sector. Non-food retailers have been
forced to close, switch to online or click-and-collect, and
switch back again.

Food retailers became essential frontline workers and dealt

with a time of booming sales and insatiable demand. There
has been volatility, uncertainty, frustration, and panic buying.
But despite the unpredictable environment, retailers saw staff
continue turning up to work, day after day. The debilitating
absenteeism predicted based on US and UK experiences didn’t
happen in Australia. Incredible resilience surfaced in workplaces,
backed up in many cases by a new style of compassionate
leadership. As we now look ahead to 2022, there is an overarching
sense this year will be one of regrouping and rebuilding as the
retail sector rebounds. People leaders will be considering how
these market conditions can be harvested in a sustainable way.


Speaking to a number of human resources personnel/

people leaders across the retail sector, three key workforce
considerations for 2022 emerged.

Burnout: Our two biggest cities, Sydney and Melbourne,
emerged from extended lockdowns only late last year,

1

and are still collectively processing the challenges, mental
health and otherwise, this caused. Immediately following the
lockdowns, many retail staff launched straight into peak trading
season, which was amplified due to pent up demand and an
exuberant return to physical retail spaces.

Retailers will undoubtedly want to take advantage of the

predicted rebound in retail spending. However, it will need
to be done in a sustainable way to avoid further burnout,
absenteeism, and attrition. In the short term, it will be
important to engage and prepare teams adequately for what’s
ahead, and to generate excitement about what can collectively
be achieved. Communications should focus on inspiring teams
by connecting to organisational purpose, ambitions, and vision.
At a tactical level, leave and shifts will need to be actively
managed for maximum coverage but also to allow time for
personal restoration.

Culture: New cultural attributes that have formed within
organisations over the past two years have, in many cases,

2

created unique levers for high performance and provided a
platform for organisational resilience. Many retailers saw new
leadership styles emerge that were more compassionate,
vulnerable, and inclusive. This style embedded itself in
organisational values and behaviours and created motivation
for people to uphold momentum. At the same time, significant
efforts were made to create and maintain connections across
dispersed teams and bridge the (real or perceived) gap between
frontline employees and support employees, executives, and
middle managers. Creating cohesive teams, which are so critical
to successful retail environments, will drive improved wellbeing,
resilience, and performance. Retailers should be looking to
define their cultural drivers and consciously nurture those
cultural elements that carried them through the pandemic, into
2022 and beyond.


_Source: Australian Bureau of Statistics Job Vacancies, August 2021_

Retention: ABS data shows that from February 2020 to
August 2021, job vacancies across the retail sector rose by

3

nearly 78 per cent. The retail sector has not been immune to the
skills shortage that is being felt across the economy and many
people leaders reported emerging signs of the so-called Great
Resignation, where employees have begun reassessing their
priorities and questioning their career ambitions.

This all makes a strong case for focusing on retaining

employees and keeping turnover as low as possible. Many
retailers are starting from a strong position, having reported
vastly increased engagement scores during 2020 – particularly
at the store manager level – that continued to rise through the
pandemic. Efforts to maintain this momentum have focused
on reward and recognition programs, with a trend towards
personalisation and wellbeing, even in large workforces.
For example, in place of generic gift cards, high-performing
individuals receive a voucher for their favourite local restaurant,
or a team receives a series of Friday afternoons off. This
generates maximum impact for comparably low cost.

Meanwhile, the tight labour market has led organisations to

focus increasingly on building their internal talent pipelines to
fill roles rather than recruit. They are seeking high-potential
individuals and carving out career and development pathways.
Not only does this fulfil a role requirement, it deepens loyalty
and engagement across the organisation.

For those organisations looking to recruit, competition

is fierce. Even retailers that have historically attracted
top candidates effortlessly are reporting difficulties. Many
organisations report being let down by their recruitment
processes. Candidates are awash with offers and
organisations are losing out to competitors with more
seamless processes that were able to make genuine offers
quicker. Retailers need to optimise and streamline every step
of their recruitment process to be competitive.

With a predicted rebound in the sector this year,

retailers should use this unique opportunity to shape
workforce outcomes deliberately and consciously for a
sustainable 2022.


-----

DOWNLOAD THE GUIDE

Strategies for
customer-centric
success in the year ahead.


**In our retail guide, you’ll gain**
**insight into:**

New customer segments to target

Data-informed predictions for the

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Our crawl-walk-run strategy to

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L E X E R

The Complete 2022 Guide


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## Profiles


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R E T A I L P R O F I L E

### Welcome home

It may be controversial, but Freedom CEO Blaine Callard believes the

pandemic has exposed the limitations of e-commerce, making way

for exceptional physical retail. Here, he reflects upon the strengths of

bricks-and-mortar and advocates for more government support for

local manufacturing.

By Stuart Ridley


_Australian Retail Outlook: How did_
COVID-19 change the way consumers
think about and interact with Freedom
and which changes will stay? Which
ones will go?
Blaine Callard: I think the pandemic has
meant both challenge and opportunity,
and that’s not only about the health and
readiness of any specific retailer, but also
about which vertical we are discussing.
Freedom is in the furniture and interiors
space where, in my view, we have seen a
structural and permanent shift in the way
we view our homes. Our homes have now
become our safe spaces, our sanctuaries,
our workplaces. We have re-centred
around our homes, making them even
more intrinsic to our identities.

That uncomfortable sofa we’ve put up

with for years now has to go. That dining
room also needs a refresh, every detail
of our homes has been magnified in


importance. Couple this with more spare
cash from less travel and entertainment,
and that’s driven a lot of furniture buying.

The other big shift, and this may be

somewhat contrarian, is that lockdowns
and the isolation of the pandemic have
shown us the limitations of e-commerce
and that it’s unlikely to ever really
replace bricks-and-mortar shopping. Of
course Freedom, like most omnichannel
retailers, saw triple-digit growth in
online sales.

But as locked-down consumers,

armed with iPads and every product at
our fingertips available via super-fast
delivery, what did we all crave? Going
to the shops. I can’t imagine a better
experiment to show the difference
between shopping and buying, to
highlight our need for human connection,
for social experiences out of the house,
for touching and feeling, and for the


event of shopping. Retailers and their
shareholders should heed this easy-tomiss pandemic learning.

ARO: How has the overall furniture
category evolved in the last couple of
years, since COVID-19 hit?
BC: Differentiated and design-led
assortments are now almost a hygiene
factor for survival, as we have all become
more discerning about our homes,
fussing to make beautiful spaces that
are uniquely ours. Web-savvy consumers
with endless choice will find the
cheapest price for that interiors piece
they love, so furniture retailers selling
someone else’s product, or the same
things that are everywhere else, will
continue to see painful margin erosion.
Freedom’s assortment is almost all our
own – designed by us, developed by us –

and we are, thankfully, DTC ►


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R E T A I L P R O F I L E

are shopping for furniture. It’s an
increasingly complex journey with no one
single path, a rich mix of online and
offline touchpoints. We are definitely
seeing the consideration and research
phase conducted more online – over 80
per cent of the time – where great
retailers have rich content, including
video, amazing photography, and enticing
copy. This also means fewer store visits
for, say, a sofa purchase. But then
customers are still predominantly testing,
touching, making the final selection, and
transacting in store. So higher in-store
conversion and basket size is a double
payoff for stronger digital capability!

This is about

“

creating scalable
emotional value,
more than just
product.”

ARO: What would you like to see change
in the Australian retail industry in 2022?
BC: My sense is that the pandemic has
been a wake-up for retail landlords, not
only because of disruption and shake-out
in terms of unviable tenants, but also an
abrupt end to 25 years of unsustainably
high rents, ever ratcheting upwards.
We are likely to see more equilibrium
in terms of negotiating power in future.
There are only so many nail bars,
massage services, gyms, and mobilephone shops you can jam into a shopping
centre before you permanently damage
the shopping vibe. Landlords will come
to understand that the only real value
of bricks-and-mortar is the economic
value generated by viable businesses
that operate within. It’s viable, thriving
tenants that underpin valuations; this
is well understood in other markets,
but a painful new reality for Australian
commercial landlords.

I’d also like to see more policy

support for Australian manufacturing.
The pandemic and ensuing supply chain
disruption have meant skyrocketing
interest in any domestic production of
furniture and interiors. But Australia
has almost no upholsterers, very few
furniture carpenters, and certainly no
apprentice pipeline. This is a moment in
time for government to support and even
subsidise local manufacturing, a sort of
JobKeeper for producers – let’s say a
JobMaker program. It makes sense that it
should be competitive to produce a sofa
in Australia versus ship it halfway across
the planet in a container, even allowing
for differences in labour costs. The
pandemic has given rise to a once-in-ageneration opportunity for correction.



[direct-to-consumer]. This is now where
you want to be in the furniture game;
we’ve seen it in the fashion industry, too.
But it takes more than a slick website,
you need deep capability in design,
product development, and sourcing.

The other trend we are seeing is

a subset of sustainability, in that
consumers are looking for things that
last. Quality has become more important.
Furniture from discount brands, which is
disposable after only two or three years,
is often ending up in landfill. So what
may look cheap at time of purchase is
a huge problem environmentally. I think
consumers are connecting the dots, plus
we’re seeing that customers are being
more considered and are wanting a sense
of permanence about their furniture, a
timelessness and craftsmanship, which
all helps give a home its soul.

We can’t talk furniture industry and

the pandemic without mentioning
supply chain disruption, port congestion,
factory lockdowns, container costs, and
availability issues, which have hit many
industries and retailers hard. What I
think is changing now, however, is that
customers are starting to get it and they
are more understanding of these factors.
They may have read about it or seen long
delays for cars or building materials and
so they are more prepared to wait if they
love a particular piece. This shift benefits
retailers like Freedom enormously, as we
do a lot of made-to-order, which is also
very working capital friendly.

ARO: In 2021, what were some of the
most remarkable insights you learned
about your customers? How will you
capitalise on this knowledge in 2022?
BC: Just prior to the pandemic, we
completely overhauled our loyalty and
customer analytics program. We now
have over half a million myFreedom
members, and that’s in just two years.
This has given us an unprecedented view
of our customers, who they are and how
they shop with us. We know, for example,
that club members spend almost
50 per cent more with us than nonmembers. Our focus now is on deepening
connection, turning customers into better
customers, strengthening cross-category
shopping, improving segmentation,
including by taste, and smarter bespoke
targeting.

But despite all this [customisation

from] big data, our customers
increasingly still want to interact with
humans, whether that’s via live-chat,
virtual interior design consultations, or
face-to-face browsing and seeking advice
in store. That has made our people our
most important competitive advantage
and capability. They are ambassadors
for our brand. I guess in some ways,
others may see that as low-tech, but
it’s a critical insight. Data becomes even
more powerful when you overlay it with
personal and immediate interactions.

The other insight is about how people


ARO: How are you feeling about
2022? What are the challenges and
opportunities coming up that you’re
preparing for?
BC: I am very bullish about 2022. The
biggest danger for any retailer is to
become boring and lose relevance.
It’s not digital that is killing physical
retail, it’s boring shops and consumers
spoiled for choice. Customers want
to be inspired by retailers and brands
and have remarkable experiences –
experiences worth remarking on. In that
sense, brands need to have emotional
resonance and be storytellers and
curators of surprise and delight. It’s
not about those New York flagships
with basketball courts or two-storey
digital screens, this is about creating
scalable emotional value, more than just
product value.

And obviously there is a question mark

about what happens to discretionary
spending as international travel
normalises, and who will win and who
will lose. Again, brands that made hay
during the pandemic need to be ready
and agile in terms of what comes next.

My firm view now is that great

omnichannel retail is now the dominant
species, and I think we will see
pureplay online retailers struggle with
runaway marketing and acquisition
costs, burgeoning return rates, and
shrinking margins. Never more than now
have great shops been the future of
successful retail.

Finally, I think we’re all watching

these volatile supply chain and shipping
conditions and whilst it feels like there
is more to play out, we might see costs
and congestion ease towards the end
of calendar 2022, but that won’t drop
to consumers’ pockets until at least
2023. Freedom has been working hard to
protect value for customers in what is a
chaotic supply environment.

ARO: What innovations and
exciting plans are coming up for
Freedom in 2022?
BC: Covid was not, ironically, the biggest
challenge facing Freedom over the last
two years. Rather we have been focused
on turnaround and reinvention of our
brand, assortment, digital, technology,
and store operations. That’s all being
driven by our people, and our talent
underpins everything for us now.
Reimaginging Freedom is an ambitious
change agenda that we are probably
only halfway through, so we have a
clear roadmap of what we need to
do in 2022. That includes continued
investment in digital, including new
digital channels, the opening of a trade
and commercial division, more design
and brand collaborations, including in
the fashion space, category expansion,
plus further expansion of our full-format
store network, and we’re exploring some
innovative smaller store concepts. We’re
going to be busy.


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R E T A I L P R O F I L E


InStitchu:

A good fit with

room to grow

Having established themselves as stars of tailored fashion for the digital age,

InStitchu’s James Wakefield and Robin McGowan have big plans for 2022.

By Stuart Ridley


INSTITCHU’S BUSINESS MODEL – AND ITS CLOTHES – HAVE
BEEN TURNING heads since James Wakefield and Robin
McGowan launched the brand in 2012. And as the custom-made
label heads into its second decade of business, the team is
getting ready for an initial public offering to rocket its
omnichannel customer experience:

“Our whole business model is in examining and challenging

the traditional pain points of retail: avoiding holding stock,
being too reliant on either in-person shopping or online
shopping, operating on a reliance on heavy sales periods,”
Wakefield explained.

“Through lockdowns, obviously that meant more of an online


suiting and workwear. It’s really clear from our sales that people
are keen to get back into a suit and out of their tracksuits.”

Plus, InStitchu has a two-year backlog of wedding parties to

suit up, along with fitting new suits for guests whose fashion
tastes or measurements have changed during lockdowns.

A well-tailored customer experience
Visitors to InStitchu’s physical showrooms get to experience the
visceral pleasures of a traditional tailoring experience, with what
Wakefield describes as a touch of technology.

“Flicking through beautiful fabrics you can touch, inspecting

the lapels on a mannequin, chatting with someone who knows
their trade, and doing it all with a whisky in your hand is part


model, where shoppers could use the measurements saved their trade, and doing it all with a whisky in your hand is part
to their profiles without a hiccup, and of our brand,” he said. “And our Perfect
we were able to push our casual ranges, Fit Guarantee empowers our staff to go
rather than formal suiting.” above and beyond for our customers –

Soon after lockdowns ended, InStitchu People they know they’re going to get something

re-opened all its Australian showrooms, they love, with no extra or hidden

“

boosted its staff levels, and got back into are keen to get expenses around tailoring.”
what it does best: helping customers Thanks to proprietary technology that
get the perfect fit in clothes made manages customer relationships offline

back into a suit

to measure and made to last with and online, when a customer visits a
sustainable materials. showroom, InStitchu’s stylists can review

“Everyone is now realising there are and out of their their digital and real-world interactions,

alternatives to fast fashion and through previous selections, and even which
brands like InStitchu you can purchase tracksuits.” fabrics they’ve checked out.
tailored clothing for the same price “Their measurements and shopping
as off-the-rack mass-produced garments – less clutter for follow them across the whole process,” McGowan said. “If
the customer, less waste for brands, and less impact on the you think about a wedding party, that’s a pretty rare service.
environment,” Wakefield said. Groomsmen can go to their local showroom together or by

themselves, or if they’re busy or in another city or country,

Post-COVID fashion trends they can do it all online with the click of a few buttons. If you
Even before the pandemic, many workplaces had adopted fairly come to a showroom, you get a dedicated stylist per customer
casual dress, though as the founders of InStitchu are quick to – that’s a pretty luxurious and personalised experience,
observe, casual doesn’t equate to careless. So those old T-shirt particularly considering our very reasonable pricing.”
and jeans combinations won’t cut it for professionals returning
to the office. Instead, they suggest the same focus on quality, 2022: Big stitches in store
materials, and fit people look for in a suit can be applied to InStitchu opened its second Perth showroom at Claremont in
chinos, blazers, or knits: 2021 during lockdowns, and remarkably, the whole launch was

“Performance fabrics – wool with a little stretch or a high- run entirely over Zoom:

quality knit – are proving to be really popular as an in-between “Our staff put in amazing work in executing the launch, and
option, because they’re comfortable, functional and versatile,” it’s pretty incredible they co-ordinated an amazing launch in the
McGowan said. “Having said that, by far our biggest focus is prestigious Claremont Quarter entirely remotely,” McGowan ►


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R E T A I L P R O F I L E


said. “It’s also a very public signal
we’re going to continue to service our
customers in person – and that we’re
going to continue to expand on the
other side of this pandemic.”

They’re also predicting the

big retail trends for 2022 will
include several things already in
their domain, including:

-  Customisation aided by sizing

technology, which they’ll bolster
with new ranges of customisable
products and many more design
and fabric choices

-  Sustainable fashion

-  Phygital (interactive experiences

across both the physical
and digital worlds), such as
augmented reality.

“We’re also incredibly excited about

the strategic partnerships we’ve got in
place ahead of an IPO round – we’re
really confident in our position and our
relationships,” Wakefield declared.

McGowan added: “The pandemic

definitely changed international
expansion plans for a lot of retailers.
We still see a lot of orders coming
from online, so we’ll look to add
more retail locations to service those
customers, but we still see a lot of
opportunity in Australia, so it’s fair to
say we’re going to continue to focus on
our national expansion.”


-----

S H I P P I T


-----

R E T A I L P R O F I L E

###### Elk rides the conscious consumerism wave

While other businesses may be playing catch-up in the sustainability

space, lifestyle retailer Elk has had ethical manufacturing at its

heart from the start. Founder Marnie Goding discusses the unique

challenges for sustainable brands and her plans for 2022.

Interview by Stuart Ridley

_Australian Retail Outlook: How did Elk_ for the Asylum Seeker Resource collaborations, introduce more
fare in 2021 – what were some of the Centre and Positive Change for Marine Australian cotton into the collections
challenges and highlights? Life raising funds through the sale of and produce more locally made
Marnie Goding: It was a year we dedicated product. product, as well as release our fourth
are proud to reflect on, because transparency report. There is a lot
despite its challenges and the ARO: How are you feeling about the going on, but we are acutely aware
industry taking hits we will never year ahead and what are you looking of the need for a slow and steady
recover from (such as months of forward to? pace because the last two years has
closures), we not only survived, but MG: The year ahead feels more taught us that we need to remain
actually kicked some huge goals. This positive and hopefully will see us nimble and should things change
is testament to the tenacity of our operating more normally, as long again, we need to be ready to pivot
team, a clear company vision and as our stores and our wholesale should we need to.
amazingly successful collections. stores stay open. The reality though
The challenges were numerous, is that the disruption seen in our ARO: How has business been in your
with products delayed, major retail supply chain will remain and our physical stores and what are your
disruptions, raw material pressures in team will continue to be affected as plans for it in the future? Has Covid
pricing and procurement, and seeing Covid spreads rapidly through the made you rethink bricks-and-mortar?
major projects stalling…again. community. What we have realised MG: The stores and our retail team

Equally, the highlights are worth though is that with collaboration, have been the hardest hit over the

celebrating: we joined as members communication, leadership and last 12 months. The resilience our
for 1% for the Planet, we welcomed planning we can get through anything! staff have shown is humbling and
many new staff into the business and Our mandate for this year is to it has been wonderful to see their
launched a profit-sharing initiative for keep our projects and plans on track energy back on the shopfloor with
our permanent employees. Through so we can see some of the stalled the beautiful hum that comes from
our paid volunteering initiative, vision come to life. We are mid- customers and staff interacting
our team cultivated and planted renovation of a purpose-built office again. Elk is a very customer-focused
thousands of seedlings for Tree space and design room, which is brand and the connection we have
Project, then funded the planting exciting after 17 years of working from with customers is increased by
of 31,000 more. We launched two makeshift space. the opportunity to have them in
beautiful collections which helped see This year, we’ll also submit our our space. We love the physical
good growth online and we opened B Corp application, open several connection that comes from seeing
a new store in Melbourne. We also new retail stores, achieve good products on different people,
launched two charity collaborations growth online, launch new charity discussing how things are made ►


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R E T A I L P R O F I L E


and seeing how they connect with our collections.

Our plan to open more retail doors has actually been

strengthened from the recent success of our latest site that
opened in Carlton in December.

Making fashion is not a one-way transaction. We want to

deliver products that people actually want to keep wearing
and which make them feel great. Retail lets us get a feel for
how people are thinking, it helps us hone our craft and make
better ranges. E-commerce relies on data and analytics which
helps us make decisions but there is nothing like having 100
people trying on your product and deciding why or why not to
buy something; this is powerful and influential ‘real’ data that
drives change.

ARO: This year, Elk launched the Jardin collection, which
went up to a size 20 and featured a diversity of models from
backgrounds and ages. What motivated this decision and how
will it play out in the future?
MG: We have always been proud of an incredibly diverse
customer demographic at Elk but I don’t think we have been
good enough at making the effort to represent this. Our
creative production schedules became a bit too routine, so
we are pushing to be more diverse as the feedback from our
customers has been overwhelmingly positive. We would like
this year to consult with a specialist to understand which of our
styles are suitable for less able-bodied customers – it would
be wonderful to illustrate which styles are adaptable. There
is so much more we can do to champion the diversity in our
community and among our own customers.

ARO: Elk has already done a lot in the sustainability space –
what new initiatives do you have coming up?
MG: We have set the business and our teams up with
processes and the structure to make decisions with
sustainability front of mind, so much of the change and
improvements we are seeing are business-as-usual for us;
always with our 2025 goals guiding us.


For the year ahead, one of our big projects is to get our B

Corp certification. The process to get the application ready is
huge and we have been working on it for months already in the
hope to have a submission in by the third quarter of 2022. This
will further our commitment to accountability and transparency
and help us measure our goals.

We have also made the decision to move to the Science

Based Targets Initiative (SBTi). Post COP26, it will be great for us
to demonstrate strong climate leadership by setting ambitious
targets and publicly supporting a net-zero approach.

ARO: What have been some of the ways Covid has changed you
as a leader for the long-term?
MG: The shock of the first lockdown in 2020 saw us go into
some sort of a reclusive state but we realised quickly we
needed to be more present than ever before. We have set our
business up with great managers and teams who keep the
wheels turning and help us realise our plans, but they still need
us as founders to keep the bigger picture in mind and to keep
the road ahead in sight. We recently introduced a profit-sharing
model which gives all permanent employees the opportunity to
share in the successes of the business. This has been a positive
way to improve team engagement and share the responsibility
of decision making and accountability. The pandemic and
the closures it brought have seen us as leaders give more of
ourselves and be more open and transparent in our thoughts
and decisions.

ARO: It seems like more businesses in retail are publicly
addressing sustainability. In your view, how much of it is
genuine, and how much of it is greenwashing?
MG: There is a lot of genuine, positive change but there is
a long way to go. We are seeing a generational change with
new designers and brands making sustainability core to their
businesses, younger consumers demand alternative options
such as second-hand, and larger businesses are being pressured
too. We are seeing a shift to more conscious consumerism as
the topic becomes more mainstream.

Sadly, there will always be an element of greenwashing,

but I think transparency is key to understanding a brand’s
position or work. Information is king for consumers to make
an educated decision and see through any shallow claims and
avoid greenwashing. Websites, instore information and product
labelling are all great ways for brands to share knowledge. While
greenwashing is an issue, the bigger concern is the pace of
change – it’s simply not fast enough and this scares us.

ARO: What are some of the big challenges for a brand that is
ethical and sustainable?
MG: Supply chain transparency is one of the biggest challenges.
The biggest impact we have as a brand comes from our
products and the materials we use. We are working hard still
after many years to map our supply chain back to the farm for
every fibre. It is a moving target, with seasonal material changes,
and pressures out of our control such as environmental
impacts. It’s somewhat less complicated to be ethical and
sustainable when you are making a product or operating a
business in Australia as you have direct connections to suppliers
and can access reliable information to verify. Elk has a hugely
diverse product range and manufacturing group, so getting to
the bottom of each material and maker is a huge challenge.

ARO: What are your plans for 2022?
MG: We have our plans mapped out and they include moving
into our new office, opening new retail stores, launching our
Re-New program in February with preloved Elk products,
running two new charity collaborations, the B Corp application
will be completed and we hope to be involved in Melbourne
Fashion Festival again. Along the way, we will continue to keep
the conversation around transparency and responsible business
alive, we will share our knowledge, voice our challenges and
celebrate our wins. We have a busy year ahead.


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R E T A I L P R O F I L E

###### Mirvac: Community and connection


Shopping centres have long been a meeting place for people from all

backgrounds, but now it’s time to up the ante as consumers are yearning for

human connection more than ever, says Kelly Miller, general manager of retail

at Mirvac and director at the Shopping Centre Council of Australia.

By Stuart Ridley


_Australian Retail Outlook: Mirvac_
has done some great work bringing
the community together in its centres.
What are some initiatives you’re most
proud of?
Kelly Miller: Our Mirvac Retail Voice of
Consumer Survey tells us that creating


a sense of belonging is the number one
attribute for satisfaction and at Mirvac
we’ve doubled down on our focus to be a
force for good:

-  Our portfolio contributed to Mirvac

becoming net carbon positive nine


years ahead of target, with all
shopping centres providing
renewable electricity

-  We’ve delivered more than 450

community programs and relaunched
our family and friends program,
Together & Co, to be more ►


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R E T A I L P R O F I L E

being a force for good. Sustainability
and governance enable our partners
and customers to align their
investments and spend to their
values, while providing a platform for
our retail partners to grow and do the
same.

-  Fun and learning: COVID has reignited

the love of fun and learning in our
communities. We launched WeMake
to support this very desire with a
wide variety of affordable, accessible
and fun workshops.

ARO: How are shopping centres helping
retailers in this challenging environment?
KM: For customers, we became a place
for essential services, medical and health
visits, and a place to simply get away from
home for the short period of time allowed.

Retailers were dramatically impacted,

so our role changed to become a financial
supporter, hygiene enforcer and provider
of critical information to support the
survival of their businesses.

A big priority was mental health, and

we extended our Employee Assistance
Program to our partners and their families.

With the support of the SCCA, our

industry played a significant role in
deciphering safety information and its
impacts on day-to-day operations of small
to medium sized businesses. Support
extended beyond business information
to facilitating complex state-based
government support legislation for
financial grants.

ARO: What are some of the ways Mirvac
is embracing omnichannel retail?
KM: We see omnichannel as an
extraordinary opportunity for business
owners in retail to grow and so we have
been undertaking the following initiatives:

1. Our retail and industrial arms offer

fulfillment by Mirvac

2. Central collection points and

parcel hubs in partnership with



-  inclusive of all modern Australian

families

-  Our Shelter@Mirvac program partners

with some of our country’s most
inspiring organisations to drive
change throughout our communities
– for example our partner SCR Group
provided 2700 items of culturally
appropriate clothing to 970 Afghan
refugees arriving in Australia

-  We provided space to OzHarvest for

volunteers to pack 13,275 hampers
containing 112 tonnes of food

-  In partnership with Reckitt

Benckiser we supported First Nation
communities in Western NSW
through the Dharriwaa Elders Group
by delivering 12,000 units of Dettol
hygiene products to help in mitigating
the spread of COVID-19

-  We’ve continued to respect and

love our LGBTQIA+ community with
our ‘Welcome Here’ partnership
in all centres, in cooperation with
Australia’s largest sexuality and
gender diverse health organisation,
ACON.

-  We announced a five-year

partnership with the Biennale
of Sydney, enabling invaluable
opportunities to connect and inspire
our communities by delivering more
than 60 culturally rich experiences.

Partnering with forward thinking
values-based organisations is critical
for our business. They push us to
contribute in new ways, provide more
meaningful support and inspire our local
communities, and we are honoured to
work alongside them.

ARO: What are some big trends in how
consumers interact with retail?
KM: We are all re-evaluating our lives,
how we spend our time and money,
where we want to live and our impact
on the planet. Real-life experiences are
valued, and our customers are prioritising
human interaction and genuine
connection without distraction. They
want a place to come and be inspired to
do good, while recharging in a safe and
easy way.

The key trends we’re seeing include:

-  Service: We are in the age of the

customer, which means great service,
a personalised experience, a quality
product, and human connection
are must haves. COVID fast tracked
the importance of service, from
contactless pickup to efficient
navigation and clear communication.
We also found our customers will
change loyalty for better service.

-  Choice: Sometimes we want to

take time to browse, touch and
feel, and other times we want to
pick something up quickly and
conveniently.

-  Purpose: We support inclusivity and


Australia Post

3. Dynamic storage options for partners
4. We offer rapid delivery design and

build solutions for stores, with smart
store support to provide critical data
and insights for our brand partners.

5. We launched WeShow, our flexible,

rapid turnaround and sustainable
retail model, which makes it easy for
small businesses with limited capital
and digital-only brands to overcome
traditional barriers to entering
physical retail.

ARO: What innovations are coming up for
Mirvac in 2022?
KM: Our ambition is to be more than a
property solution: we can share data,
insights and ideas; add value by
co-creating solutions; reimagine financial
contracts; bring partners together for the
betterment of the collective; develop new
business models; and offer solutions that
play to our cross-disciplined expertise.

We are all re
“evaluating our lives,
how we spend our
time and money.”

One of the movements we are

heavily investing in is fashion startups and social-commerce platforms
that connect brands with humans. We
recently invested in Mys Tyler, which is
an app building a community of body
empowered women across the globe
and creating a better fashion experience
for them, while also tackling the fashion
industry’s $1 trillion returns issue. We
truly believe the future of fashion will
integrate sustainability, convenience, and
physical and digital spaces.


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R E T A I L P R O F I L E

BQ Galore turns up the heat

With an award-winning new store design and a digital

transformation already in place, CEO Angus McDonald says the

brand has big plans for its customer experience in the year ahead.

By Stuart Ridley


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R E T A I L P R O F I L E


_Australian Retail Outlook: What_ in-store, we are seeing increased adoption
were some exciting developments of click-and-collect and digital interaction
at Barbeques Galore in 2021? before and after an instore purchase. The
Angus McDonald: During 2021 we integration of our digital channels and
continued the rollout of our new store physical store network allows us to make
format, which recently won Gold at the the best of both worlds in providing an
Sydney Design engaging customer
Awards. We have experience.
three new stores We have been The other trend
and several more we will see continue
being refurbished working to provide is more flexible

“

or relocated in the new design. better visibility around attitudes to work. For some, this

We also inventory availability.” will mean going

completed the fully remote or
implementation somewhere in
of Salesforce, which delivers significant between working from home one or two
improvements in our ecommerce days a week, which means people will
experience and supports our new loyalty spend less time commuting and have more
program: the BBQ Legends Club. time for leisure.

ARO: BBQ Galore revealed its new ARO: What were the main business
physical store concept recently. What are drivers for your digital transformation?
your plans for the store network in 2022? AM: Even before the accelerated
AM: We are really excited to continue adoption of ecommerce during COVID,
the rollout of our award winning new as a high-involvement, high-engagement
store design. As we look into 2022 we category, most of our customers were
already have plans in place to continue already researching online before visiting
refurbishing stores across our network, our stores.
delivering significant improvement in the It was a very high priority for us
inspiration, engagement and experience to deliver a seamless omnichannel
for our customers. We also have some experience and so we set out an
further new store locations in the pipeline ambitious agenda:
and look forward to bringing these to life
in 2022 and beyond. -  We completed the implementation of

our new ERP system in 2020;

ARO: What was the thinking behind -  In 2021 we deployed a new Order
your new loyalty program, the BBQ Management System, Salesforce
Legends Club? Marketing Cloud, Service Cloud and
AM: It’s all about encouraging the Commerce Cloud in 2021 and made
growth of a community for those who several changes to our fulfilment
are passionate about barbequing. processes;
Thousands of members are signing up -  In November, our first marketplace
each week and we’re looking forward to sellers went live on the Barbeques
building engagement with those who join, Galore website;
including through online cooking classes, -  We are trialling new in-store
in-person events, and member-only deals technology including touchscreens to
and competitions. give access to extended ranges, along

with online video consultations.

ARO: What were the biggest changes in
retail during the pandemic – and which In all, we are looking to deliver a more
trends will continue? seamless customer experience bringing
AM: Throughout COVID, we have seen together the best of our online and
a new wave of customers shopping in-store experience, while helping make
online for the first time, accelerating the in-store processes more efficient to
e-commerce share of retail sales. allow our team to spend more time with

Even as shoppers return to shopping our customers. While we have achieved


a lot in the last two years or so, we know
we still have much more to do and have
another busy year ahead.

ARO: What makes for a great digital
customer experience?
AM: We have been working to provide
better visibility around inventory
availability, while putting more efficient
fulfilment processes in place.

The aim is to provide a much better

experience for delivery and click-andcollect as well as for those simply
researching online before purchasing
in-store. This is particularly important as
we take a more sophisticated approach
to assortment planning: with more
localisation of ranges, we want customers
to see the options available on each
product. Our back-end processes need
to be sophisticated enough to route the
order to the most appropriate fulfilment
location in the network.

ARO: What did you learn about your
customers in 2021 and how will you
capitalise on this knowledge in 2022?
AM: While technology is a great enabler
our customers still really appreciate the
opportunity to get back into our stores
and speak with one of our experts.

When we look at our Net

Promoter Score results, the most
important factor continues to be the
knowledge and service provided by
our team. The expertise and passion of
our team remains our most important
asset and will continue to be at the
heart of the experience we aim to create
for our customers.

Even prior to Covid we’ve seen an

increase of our in-store customers doing
research on our website before travelling
instore, which I expect to continue
as customers become more and
more informed and have even greater
expectations of their retail experience.

At the same time, brands are

becoming more tribal. Those who can
build a highly engaged community of
enthusiasts around their brands will be
the winners. On the other hand, brands
which do not have any specialisation
or category expertise or are unable to
build an emotional connection with
their customers, will find it increasingly
difficult to differentiate themselves.


-----

R E T A I L P R O F I L E


Toys 'R' Us

makes an international play

After a major upgrade of its e-commerce operations, the toy

retailer is now planning its return to the UK.

By Stuart Ridley


TOYS BRING JOY FOR YOUNG AND
OLD ALIKE, SO IF YOU WANT TO
see true happiness on a kid’s face,
forget the candy store and let
them explore the cornucopia of
playful and educational delights in
a massive toy store.

In 2022, that experience is just as

likely to be online as physical, with
companies like Toys ‘R’ Us ANZ focusing
more and more on digital-first retail:

“With further shifts to e-commerce,

particularly in toys, competition will
become increasingly intense,” Toys


‘R’ Us ANZ CEO Dr Louis Mittoni
says. “Separate to technology needs,
and particularly as we emerge from
disruptions shaped by the pandemic,
we believe unique retail experiences
will form a very important part of how
children and families seek out and
engage with highly beloved brands such
as Toys ‘R’ Us.”

The iconic retailer went big on

e-commerce in 2021, following a merger
into a larger business that listed on the
Australian Stock Exchange with possibly
the cutest ASX listing code: TOY.


Mittoni reports support from

shareholders allowed the business to
capitalise and restructure its operations
across Toys ‘R’ Us, Babies ‘R’ Us and
Hobby Warehouse, including signing a
lease to design and build a 20,000sqm
e-commerce centre and headquarters,
which will incorporate the first Toys ‘R’
Us and Babies ‘R’ Us experience centres.

The business restructure was driven

by the brand’s desire to focus on directto-consumer sales and involved selling
assets such as its B2B confectionery
distribution business and the ►


-----

R E T A I L P R O F I L E

Robots for Christmas
Businesses with huge logistics centres
are increasingly bringing in robots to do
the heavy lifting of inventory between
warehouse and pick areas. Toys ‘R’ Us is
no exception.

Commissioning the first Toys ‘R’ Us

automated logistics hub before the
holiday peak period was one of the
most important, and certainly most
challenging, achievements for 2021,
Mittoni notes. The logistics team had
to adopt new engineering and robotic
approaches rapidly, while moving
inventory from four separate warehouses
into two centres.

“This achievement proved critical to

support the business during the peak
trading season just weeks later,” Mittoni
says. “And it has freed up team members
to concentrate on improving other
processes. With just a few well-trained
operators, we can already accommodate
a much greater variety of toys and toy
orders than we used to achieve with a
team four to five times larger.”

Big plans for 2022
Toys ‘R’ Us will open a new experiential
store in Victoria in 2022, which Mittoni
explains is being developed with some
of the world’s leading retail designers to
stimulate emotional connectivity through
interactive experiences.

Meanwhile, the business is also

focused on re-establishing the brand
as the market leader in the toy sector
and a top-two choice for consumers in
the baby sector. Babies ‘R’ Us will draw
on consumer feedback about which
categories are important to them,


intellectual property of Chill Factor.
Mittoni originally thought the process
would take at least a year, so he’s
chuffed most of the reorganisation was
completed in just six months.

“In August, Toys ‘R’ Us commissioned

its first state-of-the-art autonomous
mobile robot fulfilment warehouse – an
incredible milestone,” he says. “Shortly
thereafter, we proudly launched Babies
‘R’ Us as a separate e-commerce
website. The most significant initiative
for the year, and potentially one of
our greatest for years to come, was
to secure exclusive licensing rights to
operate Toys ‘R’ Us and Babies ‘R’ Us in
the UK, the largest toy market in Europe
and fourth largest in the world, with a
total addressable market of £3.3 billion
in 2020.”

Global supply chain challenges
Disruptions to the global supply chain
at the start of the pandemic, in 2020,
triggered a mass cancellation of orders
and forecasts by retailers and suppliers,
Mittoni observes. He says because the
business hasn’t fully trusted supply
since June 2020, the chief operating
officer and inventory planning team
have worked with partners to place
orders and forecasts for the 2021 holiday
peak season as early as October in some
categories.

“In the toy e-commerce industry, we

experienced increased demand,” he says.
“It inverted the switch on the supplydemand equation, creating huge deficits
in everything from puzzles, board games
and crayons, through to bicycles and
trampolines. Oh, and toilet paper.”


Mittoni says:

“We are patient, but still passionate,

and well capitalised. This allows all our
team shoppers and suppliers to grow
with us over the medium-term horizon.”

Mittoni says the business is well
placed to capitalise on the big toy retail
trends for 2022 and beyond, including:

-  E-commerce expansion to offer

‘almost endless aisles’ across the
whole market

-  Physical retail experience centres that

will become ‘must visit’ attractions

-  Extension of ‘phygital’ (customer

experiences that span the physical
and digital worlds) to offer “all
the range, price and practicality
of online, with the emotional
connection of a great in-store
customer experience”.

“Our edge is our passion for the sector

and focus on the shopper, supported
by innovative technology,” Mittoni says
about the return of Toys ‘R’ Us to the UK.
“The previous Toys ‘R’ Us businesses in
Australia and the UK achieved revenues
of almost $900 million across nearly
150 stores. The UK holds enormous
opportunity for Toys ‘R’ Us in 2022 and
beyond, and there are millions, if not
tens of millions, of former loyal shoppers
and fans that hold a deep affection
for the brand. The UK has one of the
most advanced e-commerce markets
globally and the retail environment is
also fiercely competitive. Consequently,
the technology and systems we employ,
plus the experiences we provide to our
shoppers, will be vital to our success.”


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R E T A I L P R O F I L E

How Every Human

is making fashion

for everyone

In 2021, the brand

expanded on its mission

to make fashion that

feels good accessible

for the 1 in 6 Australians

with disabilities, CEO

Matt Skerritt explains.

By Stuart Ridley


-----

R E T A I L P R O F I L E

EVERYHUMAN’S ONLINE PLATFORM HAS BECOME THE GO-TO
DESTINATION FOR PEOPLE WITH DISABILITIES LOOKING FOR
products that fit well and look good. The brand has also
grown a strong online community with its motto: “Fearless.
Optimistic. Candid. Humans.”

“It’s a space that allows people who are alike to connect and

for kids to see older versions of themselves,” EveryHuman CEO
Matt Skerritt said. “I’m extremely proud that the community we
created facilitates authentic and empowering conversations.”

Before EveryHuman was launched in November 2019, the

industry for adaptive products barely existed. People with
disabilities had to pay extra to get items altered or tailored if
they wanted something slightly better than tracksuits. Sure,
tracksuits can be comfortable, but they’re rarely stylish. And
frankly, as Skerritt noticed in the nursing homes his family
owned and managed, there’s no dignity in wearing daggy
trackies every day.

Now, thanks to the business networks and advocacy efforts

of Skerritt and the EveryHuman team, people with disabilities
can find clothing and footwear that makes the dressing
process easier – they can even save money if their NDIS plan
includes a low-cost assistive technology support budget.

“The sector is building momentum and there is significantly

more conversation now,” he said, adding that the US adaptive
product market is two years ahead, led by the likes of Tommy
Hilfiger Adaptive, Nike, and Hush Puppies in the fashion space
and L’Occitane in the beauty category with its Braille labelling.

“The work these brands are doing is incredibly important,

as people with disabilities are no different to anyone else on
this planet,” Skerritt said. “They want to wear clothes that
make them feel amazing, and facilitating that choice is the
inspiration for creating EveryHuman.”

challenges who find circular handles hard to grip. There were

Local brands catching up also wheelchair-attachable bags and other mobility aids that
Australia is quickly closing the gap on the US, Skerritt notes. are as fashionable as they are useful.
He points to boutique brands such as Jam The Label and Then, in September, EveryHuman launched Unpaired,
Christina Stephens, which are creating interesting pieces for Australia’s very first single and different shoe program, which
people with dexterity and mobility challenges. Skerritt said was born out of emails from loyal customers

“While we are still yet to see major Australian brands enter who’d previously had to buy two pairs of each shoe they

this space, I believe we are at a tipping point where brands liked because they have different sized feet, or they have one
are starting to realise the importance of an offering for prosthetic foot slightly different to their other.
people of all abilities,” he said. “It is not only the right thing to “They were pretty sick of buying shoes they couldn’t wear,”
do, but also good business, as 1 in 5 people around the world Skerritt recalled. “Our customers tend to be quite vocal, which
have a disability.” some businesses might find off-putting, but I love it – it’s how

Skerritt advises the best ways for brands to represent we improve and grow.”

people with disabilities authentically are: EveryHuman assigns an individual SKU to each shoe, which

not only indicates the size and style, but also whether it’s a

-  Employ people with lived experience who will be able to left or a right. Customers can then add a left shoe and a right

build strong connections with customers shoe to their shopping cart. To reduce the risk EveryHuman will

-  Consult people with disabilities as part of the process from end up with inventory that it will struggle to sell, the business

the beginning is focusing on shoes that won’t go out of style.

-  Include people with disabilities as part of your team behind In November 2021, EveryHuman partnered with Melbourne

the scenes Fashion Week to

-  Make accessibility a fundamental consideration for your bring an accessible

brand moving forward, not just for the one campaign. fashion show to

Greater the runway, which

“The first thing to acknowledge is that mistakes are going Skerritt declares

to happen from time to time,” he said. “I’m a believer that this “representation is an incredible win
is how we get better as a community and accessibility will for accessibility,
improve in the future.” diversity, and

how conversation

“Our aim in 2022 is to continually collaborate with inclusion.

mainstream brands to create designs that will cater for all. EveryHuman’s
Working with brands people recognise daily will go a long begins.” show featured
way to changing the mindset that making things accessible shirts with
is too hard.” magnets in place of buttons, pants with zips on both sides,

and laced shoes with hidden fasteners as examples of new

New product lines adaptive fashion.
In 2021, EveryHuman acted on conversations with “Greater representation is how conversation begins and
customers to source several new product lines and is the first step towards creating change,” Skerritt said. “The
launch a few fashion initiatives. new offering is there to improve choice and is designed to

First up were makeup brushes with straight edges, to change the way disability is perceived, making disability fun,

meet the needs of people with arthritis and other dexterity cool and sexy.”


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R E T A I L P R O F I L E

Re-purpose, recycle, repeat

Sustainability and the healthy foods trend will continue

to be huge focus areas for Harris Farm Markets as it

expands nationally, co-CEO Tristan Harris says.

By Stuart Ridley


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R E T A I L P R O F I L E


FAMILY-OWNED HARRIS FARM MARKETS
HAS ALWAYS BEEN ABOUT PROVIDING
providing premium quality food to
Australians who want the best-ofboth-worlds experience of a fruit and
vegetable market offering in-season
produce and their local providore’s
fine array of meat, cheese, and
accompaniments.

It’s also deeply committed to

sustainability across the business. In
early 2021, Harris Farm Markets ran
a Regenerative Agriculture campaign,
which educated customers about
environmentally aware food production,
while also encouraging farmers and
producers to adopt methods that
actively reduce carbon emissions.

“We believe strongly in doing – not

saying,” co-CEO Tristan Harris says.
“The Re-Purposeful Picks campaign is a
good example: instead of saying we are
going to reduce food waste, we’ve just
jumped in and done something about
food waste. This initiative, along with
Imperfect Picks, is part of an ongoing
program that has so far saved millions of
kilograms of food from going to waste.”

Introduced in late-Spring 2021,

Re-Purposeful Picks involves taking
products before they get to the end of
their shelf life and upcycling them into
longer-lasting food, such as garlic bread,
salsa verde, and kale chips.

An old market trend is back on top
The biggest food trend of 2021 and
beyond is actually an old one, which
Harris is particularly pleased to see still
going strong.

“It would seem the underlying

megatrend is health and wellness – that
has not changed for decades now. In
line with that, we have introduced much
more stringent health requirements on
every line that we range.”

The pandemic simply brought the

megatrend home, across three areas:

1. Cooking from scratch at home:

Harris Farm Markets substantially
increased its baking range and


experienced a good uptake in
alternative flours

2. Plant-based proteins: meat

alternatives continue to grow in
popularity

3. Snacking vegetables: fresh,

uncooked vegetables are definitely
“a thing” Harris noted, particularly
snacking carrots, beans and
tomatoes – all healthy options.

We believe

“
strongly in doing
– not saying.”

National expansion
In 2021, Harris Farm Markets launched
online into Victoria and physically into
Queensland, including opening a new
Gold Coast store just before Christmas.
In early 2022, it will open a store in
Sydney’s Lane Cove and it plans to set
up new locations later in the year.

Although a few major players have

been experimenting with smaller
footprints in CBDs, Harris says the
business doesn’t intend on joining them.
Instead, it’s more focused on local
communities outside CBDs.

“Our footprint is traditionally

smaller than an average full-line
supermarket (but some of our newer
stores are tending towards that size),”
he said. “The smaller footprint offers
the opportunity to be more embedded
in small local communities, which is
something we believe we’ve always
done pretty well. Our ultra-fresh offer
is also well suited to the top-up
shopping occasions that local stores
are great for.”

While food markets were among the

few essential businesses allowed to
stay open during pandemic restrictions,


opening new stores was a major
challenge, due to state border closures
and travel restrictions.

Every time there was an outbreak

in either Victoria or NSW, the borders
became tighter, some team members
found it challenging to get onsite and
the business lost some customers. To
mitigate the impact, Harris Farm set
up overstaffed rosters, to be ready for
the times when borders opened and
customers were free to travel again.

“For our store opening in Queensland,

we couldn’t have any CEOs or other
family members present because of
the border restrictions,” Harris recalled.
“Fortunately, the team on the ground in
Queensland has been sensational, a few
people have really stepped up and taken
control and we are confident they are
going to execute brilliantly.”

More expansions plans for 2022
One for Harris Farm Markets’ big insights
during 2021 was just how ‘sticky’
customers can be once they’re used to
something new.

“Whether it is online shopping

or new categories they engage in
during lockdown, those habits do not
disappear once the lockdowns ease up,”
Harris reported. “That gives us more
encouragement to try new things and
then do all the necessary work and
incur the cost of getting the customers
to participate.”

Harris says a key focus for the

business is to constantly enhance
its offer at each new location as it
continues to expand nationally, including
building on the Re-Purposeful Picks
range and in-store cooking facilities.

“We also have some exciting

concession partnerships in development
we hope our customers will love,” he
concludes. “In addition, we have just
started a ‘store of the future’ project,
where we get to really let our hair out.
Big omnichannel ideas and outrageous
category hero presentations are flying
around on Zoom. Let’s wait and see how
many make it all the way to reality.”


-----

R E T A I L P R O F I L E

# Style by design

After two years of riding a rollercoaster of challenges from delivery delays

to quickly pivoting to online initiatives, Witchery managing director Simon

Schofield is hopeful about the future of the business.

By Stuart Ridley


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R E T A I L P R O F I L E

the re-introduction of all major fashion
events and I personally am really excited
for that.

Sustainability is top of mind for all

major retailers at the moment and whilst
it is one of the biggest challenges for
our industry, it’s also one of the biggest
opportunities for brands to showcase
what they are doing in this space and
their plans well beyond 2022. For Witchery
in particular, we’ve been working on
some incredible Australian designer
collaborations for 2022, with our first-ever
designer collaboration launching early in
the new year, so stay tuned.

ARO: Now that WFH is likely to be a
permanent part of life, how has that
impacted Witchery’s store network? Are
you looking outside of the CBD and more
into suburban and regional areas?
SS: Witchery already had a vast store
network pre-Covid, covering all major
CBDs in Australia and New Zealand,
as well as larger outer suburbs and
regions; however, we have seen a shift
in the way our customers are shopping,
with less traffic in our CBD and airport
locations but increased footfall in bigger
suburban centres, such as Doncaster
in Victoria and Castle Hill in New South
Wales, strip sites like Camberwell and
Balmain, and our regional locations. This
is something we’re mindful of and taking
into consideration for future refurbs,
relocations, and closures.

ARO: What are some of the interesting
changes you’re seeing in your customers’
lifestyles and wardrobes, and how is
Witchery responding to
these changes?
SS: There has been a distinct shift since
lockdowns have eased. Her mindset has
changed and she’s definitely ready to
dress up again, so we reflected that in
the collections ahead of the Christmas
and party season. We’re embracing print
and colour and ensuring the key runway
trends are translated in a way that is
easy for her to replicate in her own
wardrobe. We are leaders in 24/7 style
and aim to have her entire day-to-night
wardrobe sorted, with versatility being
key. Whether she is heading to work, or
to brunch on the weekend with friends,
Witchery has her wardrobe covered and
she can rely on us for that.

ARO: Please share some insights into
new product categories Witchery is
exploring that you’re excited about –
what innovations will we see?
SS: Over the coming months, you’ll see
a shift into sustainable fabrics, with a
focus on recycled polyester and recycled
polyester blends. Swim is another
exciting category for us, where we see
the introduction of recycled nylon and
organic French linen in our resort pieces.


_Australian Retail Outlook: What are some_
of the things Witchery has worked on in
2021 that you’re most proud of?
Simon Schofield: Witchery has had an
incredible 2021. I’m most proud of our new
concept store design, which we premiered
in both Westfield Bondi and Westfield
Doncaster this year, designed by our
very own in-house teams. The feedback
from customers and media has been
phenomenal. They have absolutely loved
the new look and layout and we can’t wait
to roll this out even further in 2022.

Customers can also now shop

Witchery on The Iconic, which gives us
an opportunity to bring the brand to
even more customers through this
famous marketplace.

This year also marked our 13th-annual

White Shirt Campaign, in partnership with
the Ovarian Cancer Research Foundation.
Comedian and social-media sensation
Celeste Barber faced the campaign,
and Australian designer Toni Maticevski
designed the iconic White Shirt, raising
over $500,000. To date, Witchery has
raised over $14 million for the OCRF, with
all funds going directly to the charity
to fund vital research into finding an
early detection test for ovarian cancer,
something we are incredibly proud of.

ARO: What are some of the interesting
challenges Witchery is focusing on
for 2022?
SS: Witchery’s biggest focus has been
welcoming customers back into our
stores in the safest way possible. Our
retail team has co-ordinated a huge
piece of work here, ensuring team
members are educated and confident
about managing the ever-changing
regulations head on. It was a tricky
year with extended delays in delivery
schedules, which is no surprise, given
the shift in customers shopping online
more than ever.

In 2022, we’re hoping to put all the

shipping delay and delivery issues
from last year in the past and we’re
focusing on our online delivery
timeframes being quicker than ever.
With shipping lead times and availability
continuing to be a global challenge,
airfreight costs at an all-time high, we’re
also looking at our critical path to make
sure we have enough buffer to account
for this and still get our range months
into store on time.

ARO: What are three of the most exciting
opportunities for the Australian fashion
industry in 2022?
SS: The fashion industry has been very
quiet since this pandemic started and
we have really missed seeing those
large-scale consumer and media events.
Whilst we’ve seen some amazing
virtual events, particularly fashion
shows, I think 2022 is going to bring


It’s important that we empower our
customers to make informed choices
when it comes to the sustainability of
the garments they buy.

We want to re-shape her wardrobe as

she heads back out onto the social
scene post lockdown, so we’ve lined up
some incredible Australian designer
collaborations for 2022 and we’re also
looking at expanding our range to a size
20 next year. This is something our
customer has been asking for, so I think
she is going to be thrilled to see this
in-store and online for Spring
Summer 2022.

We’re hoping to

“
put all the shipping
delay and delivery
issues from 2021 in
the past.”

ARO: Diversity and inclusion are top of
mind for many people in the fashion
industry right now. We know Witchery
has been working on formalising its
Reconciliation Action Plan in 2021.
What are some insights into the work
the brand is doing to support the First
Nations community and ensure that
diversity and inclusion are a genuine
part of the business?
SS: We want to ensure that our customers
feel that our product, our stores, and our
community are accessible and inclusive.
As part of the Country Road Group, we
are currently developing a comprehensive
diversity, equity and inclusion strategy
that will guide our approach to how
we are inclusive of the diversity of our
employees, customers, and community.
We are also finalising our first ‘Reflect’
Reconciliation Action Plan, focused
initially on how we build our own cultural
awareness and competency around First
Nations knowledge and culture.

ARO: What are the key elements for
excellence in fashion retail in 2022?
SS: An impeccable customer service
approach for both online and in-store
is the most obvious. If we can ensure
her shopping experience is seamless
and enjoyable every time, then we know
she’s going to continue coming back. For
Witchery, it’s about staying true to who
we are. We are a brand who stands for
inspiring and quality-led design, with
the objective of empowering women to
look and feel confident every day. Being
a source of daily inspiration and dressing
women every day sits at the heart of
what we do.


-----

R E T A I L P R O F I L E

Superdry brings TikTok into

its comfort zone

The apparel brand settles into its core leisure offerings while

appealing to youth with strong social media and bold sustainability

plans, CEO Antony Hampson explains.

By Stuart Ridley


AUSTRALIANS SWITCHED UP THEIR
STREETWEAR DURING ROLLING
lockdowns in 2020-2021. It became more
about dressing for fitness and leisure in
the open air than casual socialising in the
city centres.

So it was beautifully serendipitous

that Superdry already had its
Performance Sport and athleisure
projects well under way.

“We are doubling down on the core of

the brand being our Original and Vintage
style choice, whereby we can present
the true DNA of Superdry,” Superdry
CEO Antony Hampson said. “That said,


there is always a requirement for brands
to attract and talk to a new, potentially
younger consumer. We see this
opportunity in the athleisure space,
with both our Performance Sport range
and our Superdry Code style choice,
which delivers a contemporary spin
on classic styles across jackets and
sweats – all crafted in a wider offering
of standout colours.”

In Autumn/Winter 2021, the iconic

streetwear brand ran an above-theline campaign called ‘The Jacket to
Own Winter’, showcasing a wide range
of jacket styles for any occasion on


billboards nationally, radio ads,
and stadium advertising during the
AFL season.

Then in October 2021, Superdry

launched its first Performance Sport
concept in Melbourne, as part of Myer’s
‘Movement’ rollout, which Hampson
explains features a mix of the brand’s
more technical products, as well as its
athleisure range:

“Given the comfort element to

Superdry’s product offering, we see
sport as an incremental opportunity to
continue our sales growth, tap into a new
customer, as well as offer something ►


-----

R E T A I L P R O F I L E

strategies to each platform and its
community without compromising its
own brand DNA or the integrity of the
platform’s community. The brand is now
experiencing a higher level of buying
intent among its customers since stores
reopened post-lockdown; consumers
have researched online and know what
they want before they enter the physical
store. As a result, in-store conversion
rates and transaction values are both up.

2022 and beyond: a sustainable future
Superdry’s goal is to become the most
sustainable listed fashion brand on the
planet, which Hampson says will be
helped by several initiatives, such as:

-  Changing all branded satchels

to either a recycled plastic or
biodegradable material by mid-2022

-  Lowering waste by using packaging

only when necessary and ensuring it
is 100 per cent reusable, recyclable,
or compostable by 2025

-  Sourcing only 100 per cent organic

cotton by 2030

-  Using recycled and low-impact

materials at scale across the
whole Superdry range, with a big
push during the brand’s AW22
jacket campaign

As Australia and the world emerge

from many months of lockdowns
and restrictions, Hampson anticipates
increased footfall in Superdry’s
physical retail stores and a slight
easing of online demand.


new for our existing customer. We are
really pleased with how we are presented
in this space alongside some other great
international brands.”

Trending on digital channels
Superdry’s digital presence across
e-commerce and social-media channels
was already expanding rapidly before
COVID-19 arrived – the pandemic simply
helped accelerate it, Hampson reports.

“I do expect there to be some levelling

off of online demand; however, I think
this shift in consumer behaviour has
forever changed the landscape of retail,”
he said.

Huge growth in digital media means

retailers are targeting consumers with
many more ads – so getting cut
through is quite the challenge, Hampson
admits. Therefore, Superdry is focused
on personalising its communications
so they’re relevant and welcome; the
brand is enjoying great success on social
media, especially on ultra-short video
platform TikTok.

“Across 2020-21, Superdry collaborated

with NZ music artists eleven7four and
Universal Music, with influencers sharing
viral dance routines on TikTok, generating
millions of views and engagements over
our key winter period,” Hampson said.
“The brand also saw 300 guests line up
for more than three hours at a store
opening in Melbourne’s eastern suburbs,
producing more than 1,200 pieces of
content and generating 2,000 followers
over the course of a single day.”

Superdry gets cut-through by localising


“We’re certainly seeing some strong

KPIs coming out of stores at the
moment,” he said. “And with borders
reopening over the next 3-6 months,
those locations that rely on both
domestic and international tourism
should see a good spike in shopping.”

Early in the new year, Superdry will

officially launch an athleisure installation
alongside Myer, accompanied by a
gift-with-purchase offer and plenty of
social-media coverage gained through
influencer gifting.

The brand is

“now experiencing a

higher level of buying
intent among its
customers.”

“We are also hopeful of having

some high-profile AFL players make
an appearance on the day,” Hampson
mentioned in passing, before announcing
the brand’s 2022 plans. “We’ll take the
lessons from last season and turn up the
dial for AW22. We will be talking more
about the sustainability of our jacket
collection, partnering with some exciting
local talent, continuing to look for new
store opportunities. And we’re looking to
roll out our Supercrew loyalty program in
early 2022!”


-----

**Why do Australian**
**Shoppers love**
**D2C Brands?**


C O M M E R C E T O O L S


-----

## Forecasts


-----

E X P E R T F O R E C A S T

Economic outlook 2022:

optimism, growth


The forecast for the year ahead largely depends on how the

pandemic evolves. If the nation’s economy and borders can

remain open, a surge ahead is on the cards.

Brendan Rynne, Partner and Chief Economist, KPMG


AUSTRALIA HAS WEATHERED THE GLOBAL PANDEMIC BETTER
THAN MOST OTHER COUNTRIES, IN TERMS OF BOTH HEALTH
and economic outcomes. The adoption of strict policy
measures aimed at curbing the spread of COVID-19, including
work-from-home orders, closure of all non-essential retail
shops, and severe limits on the flow of people into and out of
Australia, have helped minimise the devastating health effects
of the disease.

The government response during this period has also

been central to the minimising of economic harm. As the
Greek philosopher Hippocrates said, “Desperate times call
for desperate measures”, and the Australian government
adopted never-before-seen fiscal and monetary responses.
These included JobKeeper, JobSeeker, and cash rate settings
at the effective lower bound. All were aimed at keeping the
economic structure as whole as possible through this period
of great uncertainty.

Retail sales have had a rollercoaster ride during the

pandemic, with the biggest movements occurring in
discretionary spending areas, like clothing, footwear, and


personal accessories, and also in people-contact businesses,
such as cafes, restaurants, and take-away food services.

The labour market showed an initial decline of around

850,000 in the number of people employed, with a
corresponding increase in the unemployment rate from 5.1 per
cent at the start of 2020 to 7.4 per cent by the middle of the
year. While the economy is still in recovery mode, the labour
market strengthened through most of 2020 and 2021, with
total employment at the end of October 2021 just slightly shy
of the pre-COVID peak of nearly 13 million.

Compare that with the last economic downturn, when the

unemployment rate peaked at 11.2 per cent at the end of
1992. It took more than three years for total employment to
reach pre-recession levels again and nearly 10 years for the
unemployment rate to fall below 7 per cent.

What this has meant is that Australia’s labour market

has remained largely unscarred by the pandemic, and that
households and businesses, which have broadly held up in the
downturn, are now wanting to purchase a vast array of goods
and services. ►


-----

E X P E R T F O R E C A S T

The cost of pausing immigration to evolve into lower-mortality strains and eventually turns into
Unfortunately, there is one policy response that has been a an influenza-like endemic, or a higher-mortality strain emerges
strong factor in minimising the spread of COVID-19 in Australia to reverse the hard-fought health and economic gains achieved
but has also had the perverse effect of hurting the domestic to date.
labour market. Borders closed to foreign migrants and Assuming the optimistic scenario, or the least-worst case,
returning Australian residents, combined with foreign workers KPMG expects economic growth to power ahead throughout
returning to their home countries, brought net overseas 2022, albeit with a slight pause at the start of the year
migration down by nearly 100,000 people during the 12 months reflecting a break in spending following all the expenditure
to the end of March 2021. In comparison, brought forward by various stimulus
in the 12 months to the end of March packages, such as Homebuilder.
2020 there was net positive overseas KPMG is expecting consumption to
migration of nearly 240,000. Australia’s grow by 8 per cent in 2022 over 2021,

Australia has benefited from foreign with business investment also expected

workers migrating here since the post- “labour market has to increase by an above-trend rate of
European settlement. Skills, experiences, 5 per cent. Government expenditure
culture, and ideas have been exchanged is likely to moderate during the next

remained largely

between migrant groups and our resident 12 months, as stimulus and COVIDpopulation, lifting productivity, living specific spending starts to abate. Net

unscarred by the

standards, and ultimately wages. exports over the coming year are likely to

These benefits have been on pause for decrease, as growth in imports outpaces

pandemic.”

the last two years. And that pause is now exports – breaking from recent trends.
causing business leaders to scramble Overall, KPMG is forecasting real GDP
for the talent they need to fulfil the demand now coming from growth of about 4.0 per cent through 2022, which is about
domestic consumers and from foreigners seeking to import double the growth anticipated for 2021.
goods and services produced here.

_The information contained in this document is of a_

What lies ahead _general nature and is not intended to address the specific_
What does this all mean for the Australian economy and the _circumstances of any particular individual or entity._
retail sector in 2022? To a large degree, it depends on what _Appropriate professional advice should be obtained before_
happens with the coronavirus pandemic: whether it continues _acting on this information._


-----

E X P E R T F O R E C A S T

Three steps to shoring up

the supply chain

Global logistics may be in for another tough year, but

there are three major moves retailers can make to build

resilience into their supply chains this year.

Peter Liddell, Partner, Global Operations Centre of Excellence Lead, KPMG


IN 2022, AUSTRALIAN BRANDS WILL
NEED TO ADJUST THEIR supply chain
strategies and then revise their business
continuity plans.

Leading retailers will learn from past

events and define better strategies that
shore up supply and enhance customer
fulfilment. Each alternative strategy
should be evaluated to balance cost,
customer service, financial impacts, and
risk factors. This means understanding
what new capabilities will be required to
protect these elements into the future.


While strong headwinds still exist,

those who lean into these questions and
respond with agility will come out on top.

Global logistics disruptions stemming

from the COVID-19 pandemic continue
to challenge retailers, as the flow
of consumer goods into Australia is
restricted by shutdowns of major global
ports and airports, largely in China,
South Korea, and the US. Congestion at
key connecting ports along the US West
Coast has produced an unparalleled
backlog, with a record 65 cargo ships


forced to queue and wait in September
2021 (there were media reports that this
reached 80 ships by November).

Queuing at ports has increased wait

times, which now often exceed eight
days on average. This situation is far
more challenging than any pessimist
could have forecast 12 months ago,
when the pandemic was considered at
its peak, before the vaccines launched.

At the same time, US shipping freight

rates continue to rise and have hit
record highs. This has increased the ►


-----

E X P E R T F O R E C A S T

price of consumer goods and escalated fast-track store replenishment once expectations, as items requiring repairs
the risk of cancellations of Australia- items finally arrive at Australian ports? and maintenance will also be delayed in
bound freight, as global shipping lines Can the stevedores at key global and lengthy service queues.
are attracted to the more lucrative Australian ports accelerate unloading
China-US freight routes. and unpacking to get through the What retailers can do

These disruptions create a ripple impending backlog of ships arriving? Are So how should retailers seek to build

effect across global supply chains that there enough courier drivers available resilience into their supply chains in 2022?
ultimately causes goods to pile up in to deliver domestic and international
storage. Ships on their way to Australian e-commerce orders? These are just Refresh the domestic supply chain
ports are being diverted or slowed some of the questions keeping many One of the few benefits arising

1

down as they arrive at major transit retailers up at night. from the severe slowdown of regional
hubs, restricting global trade flows and Are we just one new COVID strain and global transport operations during
limiting access for retailers to products away from further supply chain COVID-19 was the growth of local
they need to refill their Australian stores. breakdowns? Global economists have businesses as consumers showed their

Putting further pressure on retailers raised real concerns that another support for domestic brands last year.

is the continued managing of the outbreak could further undermine the Companies will need to enhance their
deteriorating diplomatic relationship Chinese economy and add to the world’s operational performance to ensure that
between Australia and China, which supply chain problems. It’s not just customers don’t migrate back to global
many believe to be at its lowest point grocery, apparel, and personal items brands when transport volumes open
in decades. Any additional tension may that face disruption. Businesses will back up. Retailers must assist Australian
start to further disrupt trade flows also struggle to replenish spare parts, brands in harnessing the pivot to online,
into Australia because global shipping tools, electronics, and construction ensuring that their future network
companies use the South China Sea materials. Many households that need design supports the fulfilment of both
and neighbouring oceans to bring items repaired will also feel the impact physical stores and online channels
products from North America and of these shortages, as their damaged or and that they identify more flexible
Europe to Australia. idle cars, heaters, lawnmowers, tools, domestic partners that can support the

None of these problems are a televisions, entertainment devices and transport and logistics requirements of

revelation. In fact, media sources have more will potentially sit around the an omnichannel offering.
reported them frequently since as far house without repair for many months.
back as March 2021, but their effects Double down on technology
may persist for longer than previously investment

2

anticipated. For example, many reports The initial investments made in
highlighted the very high likelihood The challenge the last 24 months were aimed at
that the December 2021 and January automating key nodes within the supply
2022 festive season would be severely “for Australian chain, including stores, warehouses,
affected by restricted access to manufacturing facilities, and even
imported products. But the challenge corporate office buildings. This year, we

retailers may go

for Australian retailers may go well expect to see accelerated investment
beyond the next few months. There as businesses seek to enhance critical

well beyond the

is a likelihood emerging that these supply chain planning. This will be done
disruptions will continue well into 2022 by adopting more advanced digital

next few months.”

and possibly beyond. enablers, such as cognitive planning

At the end of last year, there were and AI-driven predictive analytics, and

numerous warnings made to Australian In the face of all this uncertainty, by adding more security and integrity
households to prepare early for many key Australian ports recently to supply chains with blockchain and
Christmas. The message was clear, if announced plans for significant advanced track-and-trace technology.
your family prefers imported products, investments in infrastructure Many supply chain managers are
buy early or potentially miss out. What development over the next five to 10 challenged by a lack of visibility,
will surprise many households is the years, such as new container facilities as there are so many nodes and
possibility that Australian retail shelves in Melbourne, expanded capacity of Port participants within the extended
may not return to normal now that the Kembla in Wollongong, and automation chain. Leading organisations are using
festive season has concluded. There are technologies for freight processing advanced technology to improve
so many participants and trade activities at Port Botany. Importers will need visibility and become far more
within regional and domestic supply to ensure they can capitalise on new responsive to major disruption and
chains that must get back to performing freight space, shipping availability, and variability within their domestic,
at peak volumes and high standards port infrastructure to shorten lead regional, and global supply chains.
before we start to see any normal trade times and securely deliver goods.
flow into and within Australia. But these enhancements are a way Test and validate business

Many economic, trade, and off, and even assuming disruptions continuity plans: many BCPs failed

3

operational issues across the region recede and access to sea and airfreight during the pandemic, as they were not
could become the next catalyst for reverts back to pre-pandemic levels, designed for such disruption. What
major trade disruption. Will China it will take some time before things caught many businesses out was that
work though its short-medium term simply return to normal. What we can some had no BCPs to cover major risks
energy challenges and be at peak expect in the meantime is higher prices and others hadn’t tested or understood
manufacturing capacity? Will Chinese (as excessive freight costs are passed the impact of their defined BCPs. During
ports have sufficient resources to load on to the consumer) and longer waits the pandemic, some were found to be
ships and export products to Australia? for retail shelves to be restocked, overly complex or costly to implement
Can the Australian transport and especially with imported, branded and others simply failed to support the
logistics industry ramp up capacity to product. Consumers will need to reset business adequately.


-----

Q U I N Y X

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**adding AI technology to your**
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and Automated Labour Scheduling to save time, generate efficiencies, improve

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Visit quinyx.com or get in touch at info@quinyx.com


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E X P E R T F O R E C A S T


Your guide to going public

in 2022


Here’s what you need to have in order if you’re considering

jumping on the IPO train in the coming year.

Cecily Conroy, Partner, Head of Equity Capital Markets Advisory Australia, KPMG


Camille Fauthous, Associate Director, Equity Capital Markets Advisory, KPMG


MANY BUSINESSES ARE CONSIDERING GOING PUBLIC AND
we think that strong trend will continue into 2022. Equity
market investors in Australia continue to support high-quality
retail businesses to IPO and list on the Australian Securities
Exchange (ASX) despite disruption from COVID-19 and other
macroeconomic factors. IPO activity in 2021 was strong, with
$6.7 billion raised in the half-year to 30 November 2021.

714

2,579 4,171 1,388 1,578 2,120 4,207 1,985 170 5,171 5,344 6,736

|H1 H2 2016|H1 H2 2017|H1 H2 2018|H1 H2 2019|H1 H2 2020|H1 H2* 2021|
|---|---|---|---|---|---|



_*Total issuance to 30 November 2021 (Source: Dealogic)_

We have been fortunate to work with a number of retail


attention. Businesses looking to IPO should determine, with
their advisers, the optimal time to commence the marketing
phase and launch their IPO having considered the company’s
objectives, readiness, and prevailing market conditions.

Early preparation is important to give you as much flexibility


around timing as possible.

Apply a capital-market lens to your business
As you are working through your IPO strategy, objectives and
indicative timing, management will benefit from looking at the
business through a capital-market lens. This means applying the
same level of scrutiny that the investment community (public
market investors, research analysts and investment banks) will.


Ask yourself:



-  What is your equity story?

-  How do you differentiate from your listed peers?

-  What are the key drivers of value (such as active customers

or average order value)?

-  To what level are you affected by seasonality and key sales

events, such as Black Friday?



-  How will you give investors confidence in your ability to

deliver on the growth strategy?



-  How will the strategic decisions you make today shape your

ability to list in the future?


businesses on their IPO journey over the last 18 months. We
believe there are five key considerations anyone should know
before embarking on their own IPO journey.

Know your objectives
Prior to commencing formal IPO preparations, it is critical to
begin by identifying your objectives and priorities to ensure they
are reflected in your overall IPO strategy.



-  Do you have a business plan and robust budgeting


process that can underpin the financial disclosure in
the prospectus?

Assess your IPO readiness
Companies often underestimate the timeframe required to
prepare for an IPO (up to 12 months). If you are thinking about
an IPO, you should evaluate your readiness to commence formal
IPO preparations and your ability to meet the obligations of
being a listed company.


Ask yourself:

1. What are your main reasons for listing? Brokers and


investors will almost certainly ask you this question and it is
important to have a compelling response.



-  Management team, board and governance – ensure there

are adequate resources and experience within the company
and Board to adapt to life in a listed environment and that
robust governance systems are in place.


2. How much capital is required and when? How will the

company use the proceeds raised at IPO and does this tie
into your equity story?


3. What is the optimal timing? Consider business performance

and outlook. Is the company undertaking any major strategic
initiatives?



-  Company structure and entity to be listed at IPO – complete

work on the sustainability of the current corporate
organisation and assess the need for a pre-IPO restructure.


4. What other factors are important to shareholders? Liquidity,

valuation, timing, escrow?



-  Develop your equity story – ensure your business plan is


updated and underpins the basis of your equity story and
that you have anticipated potential investor concerns, so
you have time to address them.

-  Financial information – availability of audited historical

financial information (usually three years’ worth) and
forecast financials, including a detailed financial model.


5. Should other alternatives to an IPO be considered? For


example, a pre-IPO placement or a dual-track sale process?

Timing is key
Traditional IPO windows of March to July and September to midDecember are often busy with companies battling for investor



-  Key value drivers and disclosure – consider which metrics ►


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E X P E R T F O R E C A S T

How do you

“
differentiate from
your listed peers?”



-  are relevant to investors and

will need to be disclosed in the
prospectus (for example, customer
acquisition costs, marketing spend,
conversion rate, like-for-like store
sales) and ensure you have
systems in place to report these
important metrics.

-  Appointing the right advisers –

choose an experienced team,
including an independent financial
adviser, broker, legal counsel,
investigating accountant, and tax
advisers, to help your company
prepare for an IPO. The right team of
advisers can have a direct bearing on
the success of your IPO.

Develop your equity story
Building a clear, differentiated and
compelling equity story, also known as


an investment thesis, will make a case
for why investors should invest in your
company. A strong equity story is
critical in maximising value, getting the
right level of attention and engagement
with investors, achieving a quality
shareholder register and ensuring a
healthy aftermarket. Investors will
continue to seek high-quality retail
and e-commerce businesses with the
following investment themes:

-  A large and growing addressable

market with opportunities for
product or geographic expansion

-  An attractive value proposition for

customers, such as quality products,
top-tier customer service, or bestin-class dispatch and delivery times

-  Ethical, environmental, and

social focus, such as products


with a minimum impact on the
environment, ethical manufacturing,
compostable bags, and ESG
certification

-  Solid and growing brand awareness

and a clearly articulated marketing
strategy

-  Favourable operating metrics, such as

high customer retention, increasing
revenue per repeat customer, and
increasing average order frequency

-  A demonstrated track record of

revenue and earnings growth over
time, plus a strong growth outlook

-  A strong management team with a

proven track record.

We hope this provides plenty to think

about if you are weighing up a sale or
IPO of your business in the near or
medium term.


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A D Y E N / N E O


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E X P E R T F O R E C A S T

How to combat

the rise of cyber fraud


As cyber criminals become more sophisticated and e-commerce continues

to grow, the need for top cyber protection and skills is on the rise.

Luke Eason, Partner, Technology Risk & Cyber, KPMG

Matthew Quick, Director, Technology Risk & Cyber, KPMG


CYBER SECURITY CONTINUES TO BE
ONE OF THE MOST CRITICAL BUSINESS
RISKS in Australia. As retail continues
the acceleration towards digital, and
the threat landscape continues to
change rapidly, retailers need to
consider how to build a cyber-resilient
organisation that is also able to deliver
great customer experiences.

Ransomware raises the risk
The Australian Cyber Security Centre
_Annual Cyber Threat Report 1 July_
_2020 to 30 June 2021 noted that,_
“Ransomware has grown in profile and
impact, and…recorded a 15 per cent
increase in ransomware cybercrime
reports in the 2020-21 financial year.”
As retailers are delivering more digital
and online services, the scope for a
ransomware attack to cause immediate
and critical business impacts continues
to grow.

Ransomware defence requires an

in-depth and multi-faceted response
across all aspects of the cyber lifecycle
– it requires significant investment in
user awareness, technical defences,
detection, and recovery. The retail
sector in Australia has often cited
smaller profit margins as a limiting
factor on their ability to invest in cyber
security to the same level as other
sectors, such as financial services.
However, the ACSC’s data reveals
that the retail and financial/insurance
sectors were responsible for the same
percentage of reported cyber security
incidents. This is food for thought as
retailers look to the year ahead.

The digital retailer
In the last two years, online presence
and services have grown rapidly,
and there have been huge rises in
transaction volumes. Whilst this has


provided great opportunities and
benefits for retailers and consumers
alike, it also introduces new cyber
security challenges.

To win the digital customer, agility

and speed to market are key. Traditional
development lifecycles are no longer
suitable for new web services and
features that are needed to engage
your customers before competitors do.
The time from idea to deployment is
rapidly reducing from months to days.
This almost continuous deployment of
new services (development operations
or ‘DevOps’) blurs traditional lines
between system development and
maintenance. Building security into
the solution from inception through to
deployment is critical. This requires
new ways of working – from the
moment of launch, embedding
security capability and supporting
software into systems development
is key to delivering a secure experience
for retailers and customers.

As the online customer base grows,

it is increasingly important to know
who your digital customers are, and
to offer them a secure, smooth,
and personalised digital experience.
Cumbersome sign-ons, password
resets, and lockouts can frustrate
your customers. Yet a perceived lack
of security will make your potential
customers look elsewhere. Deployment
of a customer identity platform is
increasingly essential to give your
customers the experience they want. It
will allow them to access your services
quickly and seamlessly using the
latest biometric technologies, such as
facial and fingerprint scans, which are
inherently more secure than passwords
and offer a far better user experience.

The unfortunate downside of rapid

acceleration of e-commerce is that it


has provided more opportunities for
online crooks to get creative and target
your customers through increasingly
sophisticated scams, such as phishing
and social engineering. This can be
unnerving for customers and can have a
negative impact on your brand. Effective
communication to your customers about
the risks and how to identify and report
suspicious activity are important to
maintaining their trust and engagement.

New retail, new skills
Greater reliance on digital capability
means retailers are increasingly required
to source new types of cyber skills to
ensure that services are secure and
resilient. Retailers are accelerating
the migration of their data processing
capabilities to the public cloud. This
requires contemporary skills in security
architecture and operations. The rise
in fully automated facilities such as
distribution centres and warehouses
increases the reliance on operational
technology to run equipment and
devices. Securing these facilities from
unauthorised interference requires
specialised skills.

Accessing modern cyber skills,

which are in high demand across the
globe, increasingly requires retailers
to compete with technology-intensive
industries such as financial services
and telcos. Retailers will need to think
creatively about their employee value
proposition to harness and retain these
skills, which will be key to their success.

As we head into 2022 and beyond,

retailers need to continually reassess
whether they understand the cyber
risks facing their business, how they
source and retain the necessary skills
to address these risks, and how they
manage the risks whilst improving the
customer experience.


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H O U S E A D


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H O U S E A D


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