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You can’t apply for the role of muse in the fashion industry. It is never advertised and calling yourself one is tackier than a fake handbag. You simply know one when you see them.

Along with Jackie Kennedy, the Duchess of Windsor, socialite Babe Paley, performer Josephine Baker and actor Audrey Hepburn, Jane Birkin, who died on Sunday aged 76, was immediately recognisable as a muse.

She wore the title so well that even lending her name to the ultimate luxury handbag, the Hermès Birkin, failed to eclipse her style spirit.

“Having a Hermès bag named after you says it all,” says celebrity stylist Jess Pecoraro, who has worked with Jesinta Franklin and Pip Edwards. “My first thought when she died was that the bag is going to go up in price again. I have my eye on a vintage one and now I’ll never get it.”

The coveted handbag was created in the mid-eighties, after Birkin found herself upgraded on an Air France flight to a seat beside Jean-Louis Dumas, chief executive and artistic director of his family’s brand Hermès. After hearing how Birkin’s husband filmmaker Jacques Doillon had deliberately run over her signature wicker basket in his car, Dumas designed a practical, streamlined bag for the working mother.

Today, customers can pay thousands and wait years for a Birkin handbag in their preferred style to arrive at a Hermès boutique. A crocodile Birkin bag is currently available on luxury auction site 1stDibs for $US575,000 ($857,581).

In a statement on Sunday, Hermès paid tribute to Birkin’s influence. “We discovered and appreciated the extent to which Jane Birkin’s soft elegance revealed an artist in her own right, committed, open-minded, with a natural curiosity of the world and others.”

“She looked just as good carrying the bag as a basket,” says Naomi Smith, fashion director at Marie Claire.

For Smith, Birkin’s appeal stems from a commitment to simple pieces worn with a casual disregard for trends, labels and price tags.

“It helps that she was incredibly beautiful, but there are plenty of pretty women out there,” Smith says. “She had incredible style, and it was all her own.”

“When she was younger she wore provocative, sheer pieces with complete confidence that made them appealing rather than shocking. Girls today are still copying that look in sheer dresses, but she made it look so effortless.”

Muse was just one of Birkin’s titles. She first found fame as an actor in London and then Paris, where she became the epitome of French chic, after being paired professionally and romantically with controversial cultural figure Serge Gainsbourg.

“I think it’s fabulous that a British woman came to define French style,” says designer Bianca Spender. “She brought that British street style to Paris, which had been stuffy and done-up.”

“With her outfits, there was always a block heel that you could run in or a look that could go to a picnic or a nightclub.”

Birkin was also a singer, first recording the scandalous breathy duet Je T’Aime . . . Moi Non Plus with Gainsbourg in 1969. Despite (or because of) reported condemnation from the Pope, the song was an international hit with Abigail, from the groundbreaking television series Number 96, recording an Australian cover version in 1973.

Birkin’s daughters Charlotte Gainsbourg and Lou Doillon (her eldest daughter, photographer Kate Barry, died in 2013) continue her creative legacy, acting and singing.

“I saw Jane Birkin perform twice in concert,” says Rachel Wayman, fashion director at In Style. “She had the same magic on the stage and on the street.”

“I was at a café in Paris when I saw her walk past years ago. I had to get up from my seat just to watch her walk away. It was a moment,”

Of course, Wayman remembers the outfit: a T-shirt, military jacket, jeans and scuffed sneakers.

“Anyone could wear that outfit but no one could wear it like her. That’s what makes someone a fashion icon.”

Outdoor apparel retailer KMD Brands says all three brands contributed “strong sales growth” in the first three quarters of the financial year.

In a trading update, the company said group sales are expected to exceed $1 billion for the first time for the year to July 31. Underlying EBITDA is expected to be in the range of $105 million to $110 million.

A warmer-than-usual start to winter in Australia and dampening consumer sentiment have seen sales and retail footfall fall.

Despite slower winter trading, Kathmandu cycled its “best-ever” winter season performance last year.

Group CEO & MD, Michael Daly, said: “With three weeks of trade still to come, we remain focused on delivering our key Kathmandu winter and Rip Curl Northern Hemisphere summer results while continuing to moderate our cost base for the year ahead.”

For the fourth quarter, the business flagged trading continues will be more “challenging” as cost-of-living pressures and softening consumer sentiment persist.

Local investment firm Glow Capital Partners will acquire 51% of Australian uniform business Cargo Crew in a bid to grow the apparel brand globally.

Under the agreement, the Cargo Crew executive team will retain full management control and three members of Glow Capital Partners will join the board.

Launched in Melbourne in 2002, Cargo Crew is a major tailor predominately in the hospitality space. Founder Felicity Rodgers said the family-owned business is preparing for further global expansion.

“Our obsession with making the best product has led to strong international demand,” Rodgers said. “Already 25% of our online sales are from international customers who have sought us out and continued to buy.

“Last week we had a sale from South America with a note saying they couldn’t find another brand that brings together fashion and function like Cargo Crew.”

Rodgers said the partnership with Glow Capital was the natural next step for the business.

“We have an incredible growth opportunity ahead of us, so we welcome the expertise in scaling up and building a global brand that the Glow team brings,” Rodgers said. “Including Kate Morris, Justin Ryan and Alex Downie on to our board to guide us as we expand into other markets will be a huge asset and help us grow Cargo Crew to its full potential.

“Cargo Crew’s uniforms cater to hospitality, retail, transport, banking, health and government industries, and as our customers' businesses grow, their relationship with us deepens because we work with them to tailor a uniform fit for their changing needs.”

According to Glow co-founder Justin Ryan, it was a strategic decision to invest in Cargo Crew.

“Cargo Crew is a great Australian business with the opportunity to be a global brand,” Ryan said. “They have a proven track record with 21 years in business already and with an excellent founder and executive team, they are primed for growth that Glow can help accelerate.

“Having worked with the team for the last few months, we know we are values-aligned and have the same vision for the business's next phase of growth.”

Glow Capital Partners associate director Alex Downie said Cargo Crew plays a role for small and medium businesses across the country.

“In any service industry, the way your team presents themselves and moves about the space is a huge brand element,” Downie said.

Cargo Crew operates a 4,500 sqm headquarters in Bundoora, Melbourne, and ships uniforms to over 80 countries. It holds contracts with major local and international businesses includes Levi's, Stocklands, IGA and Birkenstock.

Australian apparel retailer Lowes has processed and recycled seven tonnes of old schoolwear through textile recovery organisation BlockTexx.

According to the brand’s Modern Slavery Statement 2023, Lowes committed nine tonnes of obsolete product to BlockTexx this year. Lowes confirmed 85% of its schoolwear items contain polyester cotton, which were deemed fit for resource, recycling and re-raw material handling.

Lowes head of product development and procurement manager Debra Vo has also reviewed the design and development process to prioritise highly recyclable materials. The first iteration looked at substituting nylon buttons for polyester buttons, with negotiations underway for sublimated polos to use recycled ranges moving forward.

BlockTexx owns proprietary technology that separates polyester and cotton materials such as clothes, sheets and towels of any colour of condition back into high-value raw materials of PET and Cellulose for reuse as new products across all industries.

According to Lowes’ statement, the brand is aiming to reduce resource waste associated with its schoolwear.

“Through this sustainable approach, Lowes is not only minimizing the environmental impact of discarded school uniforms but also promoting a circular economy by ensuring the resources are given a second life.”

Lowes is a family-owned apparel brand that operates 180 stores across Australia and has apparel contracts with 727 schools in the country. The company's annual turnover ranges between $230 million to $260 million with on average six million transactions per year.

Australian fashion spending surpassed other retail categories to grow 17.4% during the 'Click Frenzy' sales period, according to the latest research. 

Australia Post's latest quarterly Inside Australian Online Shopping Report showed online spend in May grew 9.7% month-on-month (MoM) and 0.6% year-on-year (YoY), with basket sizes for fashion hitting $151 on average.

This was despite an overall drop in average basket size in 2023 by 6% YoY to just $105.

During the end-of-financial-year (EOFY) sales event, fashion hit second place in overall popularity at 10.2%, behind home and garden at 12.4%. Overall, EOFY sales were up 4.3% on last year.

In the fourth quarter of FY23 online purchases in fashion were down 3% on the YoY, but up 9.5% QoQ, with an overall market share of 26%. Fashion is the second-highest category in market share behind variety stores at 36%, with that category up 18% YoY in Q4 FY23, and up 13% QoQ.

Despite the gains in fashion, the report found there is an overall softening overall in online purchases, with 9.4 million households (or 82% of the Australian population) making an online purchase during the 2023 financial year.

An average 5.5 million households made an online purchase each month in Q4 FY23 - an increase of 3.9% compared to the equivalent quarter last year. However, online spend is down 3.1% compared to last year.

With consumer buying confidence at low levels, Australia Post claimed consumers across the country, particularly younger generations, are becoming ‘strategic shoppers’ — looking for ways to maximise the value of their dollar and increasingly take advantage of key sales events.

Australia Post executive general manager of parcel, post and eCommerce services Gary Starr said that while an increasing number of households made an online purchase in the fourth quarter (compared to the last year), it’s clear that cost-of-living pressures are taking effect.

“Aussies are now more cautious and selective with where and when they spend their money, which is why online shopping carts are averaging smaller than last year,” Starr said. “Our love affair with online shopping hasn’t waned, however cost-of-living pressures are creating short-term headwinds.

“This is an opportunity for retailers to entice customers via sales events, subscriptions or other forms of rewards that create loyalty and repeat purchases.”

An Australia Post consumer survey conducted this year revealed that 85% of Australians aged 18-34 plan to shop (or have shopped) during dedicated sales events.

Meanwhile, customer loyalty programs and bundling services are proving popular with online shoppers, with 1 in 4 consumers turning to online retail subscriptions as part of their cost-saving practices.

Regional Australia saw a year-on-year (YoY) growth of 4.2% in the last quarter, compared to just 0.7% YoY in metro areas. The Northern Territory led in this last quarter, with an increase of 9.3 % YoY in online sales compared to last year.

In 2021, French Connection United Kingdom underwent an ownership change. Following that, Brandbank Group’s Australian distribution license with French Connection went up for renewal.

But Brandbank decided - after careful consideration - that it was going to end the agreement with the UK-based brand and reimagine the existing assets into a new vertical brand called ‘Unison’ - owned and operated in Australia.

As part of the rebrand, Brandbank will transition the same core team of 25 people who looked after French Connection Australia - across design, human resources and operations - and will refit its 11 standalone stores, 48 David Jones concessions and 57 Myer concessions into Unison. The website will also be updated to suit the new brand name.

Brandbank CEO Peter Halkett, who just joined the company two weeks ago, told Ragtrader that this large-scale brand launch was both timely and desired.

“[Brandbank] wanted to have something much more specific for the Australian market,” Halkett says. “Much more flexibility… So an Australian-focused brand with attributes that appeal to the Australian customer, and to really design a range that has all the products that we had in French Connection, but also has some more fashion products and slightly more premium.

“By reviewing and deciding to relaunch a new brand basically allowed the business to position it precisely and exactly how it wanted to rather than necessarily operate within the restrictions under a license agreement.”

French Connection first launched in Australia in 1998 through Brandbank, with Halkett saying the agreement originally involved shipping over all the product from the UK. Over time, Brandbank began overseeing and controlling the manufacturing and designing process in Australia

“In simple terms, controlling all facets of the brand from the manufacturer through to how it's presented at point of sale, flexibility is what it's all about now,” he says. “Distributing and licensing is quite different from being vertical. Brandbank made a very good decision by establishing its own brand now.

“It's been a successful business, but there are times when you've got to make a decision whether you want to continue. Because remember, when you have a license, a lot of the value of that business can be in the brand itself. We don't own brands. So when we have our own brand, we're creating more value by having that as our own brand name.”

As part of the transition, Unison will utilise the same sourcing channels that Brandbank uses for its other fashion brands, including Seed and Commonry. It will also continue producing many of the core product lines that were successful with French Connection Australia, while adding on new product styles.

“This is not like establishing a brand new business where we're starting with a blank piece of paper; we know what our customers like,” Halkett says. “When they go to the stores, and when they go to David Jones and Myer to our pads, our job is to set out exactly what Unison does compared to French Connection.

“We're hoping a lot of French Connection customers will like what we're doing with Unison, and, in many ways, we'll be designing many of exactly the same products with the same fabrics in the same fit and same style.”

Halkett says there will be no immediate changes to price points, with current lines averaging between $50 to $350, nor any major changes to its production output. French Connection Australia sold a core range with seasonal core and monthly drops. All of its styles will be designed in Australia, with manufacturing centred in Asia.

“What we're starting with is what we have today,” Halkett says. “There is definitely a lot of space for a lot more concept stores, because we only have a limited amount - compared to over 100 Seed stores, for example.

“In the future, once we transition customers, and we're satisfied that that's going well, we believe we can probably expand the size of the pads in time as we grow the range and as the brand gets more and more traction. Beyond that, I'm a New Zealander, so we'll have New Zealand in our sights at some point in time as well.”

Halket says when the brand does venture into New Zealand, it will likely open more owned stores than department store concessions.

Speaking on the entire Unison venture, Halkett says it will be the first large-scale launch of a new brand in Australia.

“It's a very unique situation,” Halkett says. “It's not for the faint-hearted. But one thing I appreciate about this business is they take a long-term view in their decision-making. This is definitely the right long-term decision.

“For me to join a new company and to immediately have such a significant brand launch is very exciting.”

BB Retail Capital (BBRC) has issued a compulsory acquisition notice in relation to its takeover bid for discount fashion retail brand Best & Less Group (BLG).

In an ASX announcement, BBRC advised BLG shareholders to accept the takeover offer at $1.89 per share and has extended the offer acceptance period until July 14.

“The bidder has advised that the compulsory acquisition will be on the same terms as the offer, including the offer price of $1.89 per BLG Share.”

In an effort to encourage a fast uptake, BBRC has told BLG shareholders that if they accept the offer now, they will be paid within seven days of their acceptance, but if they wait for the compulsory acquisition process, payment will be in at least six weeks’ time.

Meanwhile, BLG’s independent directors – Stephen Heath, Melinda Snowden and Colleen Callander – have all resigned.

BLG’s board has appointed Tim Dodd as a non-executive director of BLG with immediate effect. He is the global CFO of BBRC business across investments and operations.

Borrowers are gloomier than they have been since the global financial crisis and economists warn the pain will get even worse for households and retailers if interest rates keep rising as expected.

The Reserve Bank of Australia’s decision last week to keep the cash rate on hold at 4.1 per cent appears not to have improved the mood, with consumer sentiment falling 0.8 points over the past week, according to the latest ANZ-Roy Morgan survey, released on Tuesday.

The decline was driven by a deterioration in sentiment among people paying off their homes, which fell to its lowest level since the survey began in 2008.

The figures are the latest sign that households are feeling the heat from the most rapid interest rate tightening cycle in a generation as the RBA battles the most acute inflation outbreak in decades. The RBA has lifted its benchmark cash rate at 12 of its past 14 meetings.

Market pricing implies a 54 per cent chance the RBA will increase the cash rate to 4.35 per cent at its August 1 meeting, and puts the probability of an increase by September at 86 per cent.

The proportion of consumers who said now was a good time to buy a major household item was mired around the record low levels witnessed at the start of the COVID-19 pandemic, according to the survey.

The collapse in sentiment has translated to lower discretionary spending. Retail trade volumes declined in both the December and March quarters – the first back-to-back fall since 2011 – as consumers cut back on non-essential purchases such as appliances, clothes and electronics.

Spending on discretionary items fell by 0.6 per cent over the past 12 months, driven by a 4.8 per cent fall for furnishings and a 3.4 per cent drop for clothing, data released on Tuesday by the Australian Bureau of Statistics shows.

Non-discretionary spending, by contrast, increased by 6.9 per cent over the past year.

Commonwealth Bank economist Harry Ottley said consumers were trimming spending on items such as travel and entertainment, but spending more on childcare.

“We expect these trends to continue and for the consumer to further curtail spending over coming months as the fixed rate mortgage reset hits its peak,” Mr Ottley said.

Australians are spending on average almost $600 less online than they were a year ago, Airwallex’s digital economy index shows.

The data, released on Tuesday, is based on a representative sample of 1000 of the Australian fintech’s customers.

Airwallex director of strategy Amelia Hamer said Australians were easing up on non-essential spending.

“As interest rates have climbed and cost-of-living pressures have increased, it’s no surprise Australians are being more selective about where they spend online,” Ms Hamer said.

Retailers feel the heat

Sentiment among retailers has fallen sharply as a result of fewer sales, with the NAB business survey for June revealing conditions weakened further in the sector last month.

Confidence among retail businesses was weaker than any other industry, declining nine index points, according to data released on Tuesday.

Other consumer-exposed industries including wholesale trade and personal services also experienced falling confidence, meaning there were more pessimists than optimists.

JP Morgan economist Jack Stinson said the NAB survey indicated a near-term increase in the jobless rate was likely, after surveyed capacity utilisation fell to 83.5 per cent, its lowest level since April 2022.

“Capacity utilisation is a fairly good leading indicator of the unemployment rate, and the current level is consistent with a three-month ahead unemployment rate above 4 per cent,” Mr Stinson said.

“The metric has now declined in each month since January and like other leading indicators ... points to an increase in the jobless rate over the second half of the year.”

Consumers are also pessimistic about the outlook for jobs. The Westpac-Melbourne Institute sentiment survey, also released on Tuesday, showed household unemployment expectations up 32 per cent since the RBA started lifting interest rates in May 2022.

NAB head of market economics Tapas Strickland said the unemployment expectations index had correlated highly with the unemployment rate.

“Overall, that suggests a rising probability the unemployment rate could rise, though other signals such as job vacancies still suggest a tight labour market,” Mr Strickland said.

Australian consumer electronics giant JB Hi-Fi announced a major expansion of its New Zealand operations last week, unveiling plans to double its store count in the next three to five years. 

Managing director of JB Hi-Fi New Zealand Tim Edwards told Inside Retail that he plans to grow the business from 14 stores to 38 in the next few years, and has identified a total of 60 locations that could work as bricks-and-mortar sites. 

Whether JB Hi-Fi expands into all of these locations will depend on the success of Edwards’ five-year strategy for the business, which he has been honing since joining JB Hi-Fi New Zealand 12 months ago.

Based on his 14 years’ experience in New Zealand retail, including at Noel Leeming and The Warehouse Group, Edwards sees a massive opportunity for JB Hi-Fi to expand physically and digitally in the coming years. He revealed that JB Hi-Fi also plans to move its e-commerce site to the Shopify platform in the future.

“I’ve seen a lot of the nooks and crannies of the New Zealand market, and one of the things I always noticed [from the outside] was that JB Hi-Fi was underperforming on its potential,” Edwards told Inside Retail. 

“That always worried me as a competitor, but I joined the business just over a year ago and [now get to] help to realise that potential.”

That underperformance isn’t a reflection on the team, Edwards said, but rather, the lack of a clear strategy on how to take JB Hi-Fi New Zealand to the next level. This is something the business now has, and the team has rallied behind it.

Gut and experience

According to Edwards, the New Zealand business had been in a state of “hibernation” for the last five to seven years, as its Australian owner, JB Hi-Fi Group, tried to work out what to do with it.

The group eventually decided to “double down” on the New Zealand market, and invest in building it up as the broader retail market recovered. Edwards was brought on in 2022 after the former New Zealand MD Cherie Kerrison exited the business, and he immediately started working on the next phase of JB’s local growth.

According to Edwards, the New Zealand market could potentially handle double or triple the size of JB Hi-Fi’s current store network, but he is working hard to make sure that each store location is right. For reference, JB Hi-Fi currently has 14 stores across New Zealand, whereas Noel Leeming has closer to 90.

“We use multiple triangulations [to make those decisions], such as population density, and income per household, etcetera, but we also use a lot of gut and experience,” Edwards explained.

“We see a clear line to 38 stores, but the key is to make sure that we resist the temptation to just put stores wherever, whenever the sites become available. We want them in the right size, in the right location, and to complement what we’ve already got.”

Part of the expansion involves relocating at least two stores to more desirable locations. JB’s Hamilton store on New Zealand’s North Island, for example, has been relocated from the CBD to a shopping centre. It drew 15,000 customers through its doors on opening weekend. 

“This calendar year we’ll be launching on Moorhouse Avenue in Christchurch. It’s New Zealand’s second largest city, and we’ve only got one store there — that catchment can handle three, four, or five stores over time,” Edwards explained.

“Next after that will be Invercargill, at the very bottom of the South Island, which is a very high socio-economic growth area. And then the other two stores we’ll be launching before Christmas [2023] are in Christchurch and Auckland International Airport.”

As it stands, JB isn’t the biggest consumer electronics business in New Zealand, but one of its advantages is that it caters to multiple types of customers. 

Edwards noted that while JB’s consumer electronics customers – those coming in for televisions, monitors, laptops, and phones – shop on average 3.5 times a year, the retailer also caters to media customers, who shop for music, movies and video games around once a month.

Having a higher volume of customers – around 100,000 people a week – enables JB Hi-Fi to capture more spend than its competitors.

Retail at the end of the world

There are inherent difficulties in trading in New Zealand, however. The country is split across two major islands (although the country is technically made up of more than six hundred islands), and has just a few large cities, surrounded by smaller towns and rural areas. 

This can make getting stock into stores difficult. Getting it to customers can be even harder. 

“We’re at the end of the world here, so we’ve got to get stock here, and then get it to the right island, and then get it to the customer,” Edwards explained. 

“On the surface you think, ‘how the hell are you going to do it’, and it’s not without its challenges, but there’s a pretty tight infrastructure behind it, and our customers know that if they’re in a remote South or North Island town, they’re going to have to wait another day.”

Bigger sales and better discounts are on the way between now and Christmas, as retail experts predict brands will have to work harder to court shoppers as spending continues to slow.

National retail turnover jumped by 0.7 per cent in May, according to Australian Bureau of Statistics figures released last week, though much of that spending growth came from consumers taking advantage of larger-than-usual sales before the end of the financial year.

Spending on household goods peaked last November and has been in decline since, dropping by 4.4 per cent over the past year.

Industry experts say there are plenty more sales and promotional campaigns to come over the next few months as retailers fight for a shrinking pool of discretionary income.

Retailers say there is evidence consumers are “trading down” to more budget-friendly options in the face of surging inflation in essential categories such as food, while the 12 interest rate rises since May last year have left families grappling with rising mortgage repayments.

Australian Retailers Association chief executive Paul Zahra said he expected more promotional activity across the sector given the current conditions.

“You can expect, when sales are in decline, retailers will have to sharpen their pencils,” he said.

“It’s a good story for consumers ... It’s a great time for shoppers, if you’ve got the money.”

Pessimism about the outlook for non-essential spending grew further last week after consumer electronics giant Harvey Norman flagged a profit slump of as much as 25 per cent for the 2023 financial year.

Mid-market retailers including Best & Less, Baby Bunting and Michael Hill International have also updated the market over the past month to reveal that they are facing a softening spending environment.

The director of retail strategy consultancy Retail Oasis, Trent Rigby, said many retailers appeared to be preparing to ramp up discounting towards the latter half of this year.

“Smaller wallets mean that retailers have to work harder to take an increased share of this spend, which often results in a lot of short-term sales promotion activity,” he said.

This means shoppers can expect big sales well before the Christmas trading season, which these days kicks off as early as October.

Customer experience expert and founder of data consultancy Fifth Dimension, Lyndall Spooner, said the rising costs for business would also play a role in the frequency of sales for the rest of the 2023 calendar year.

“The cost of warehousing is increasing, so businesses are moving to try and reduce their stock volumes to cut expenses. As a result of ongoing and more regular sales, consumers know they can wait for a sale before they need to buy.”

Analysts believe that consumers’ increasing focus on price in these conditions could deliver further advantages to the company many believe is the biggest threat to legacy retailers: Amazon Australia.

In a note to clients on Harvey Norman’s sales update last week, Morningstar retail analyst Johannes Faul noted that electronics retailers were facing increasing competition on price from overseas competitors.

“Consumers show little distributor loyalty as they seek the lowest price. Over time, we think a few major online distributor channels, such as Amazon Australia, could take the largest share of the Australian online retail market,” he said.

Amazon is upbeat about the role of sales in the current environment and will kick off its Prime Day event for members later this month.

“Aussies are a bargain-oriented bunch,” Amazon Australia country manager Janet Menzies said in June. “That adrenaline feeling that you get from treating yourself to something at a price that you perhaps didn’t imagine is definitely part of making sure that people receive our offer as valuable.”

Household spending may be under serious pressure, but the boss of online retailer Pet Circle says consumers aren’t trading down when it comes to meeting the needs of their four-legged friends.

“With most of our customers, it looks like they try very hard not to downgrade the quality of food for their animals,” said Mike Frizell, the company’s co-founder and chief executive.

Pets are hot property in Australian retail, with giants like Bunnings and Woolworths making significant investments into pet supplies over the past year despite fears of a broader discretionary spending slowdown.

Woolworths made a $586 million investment to take a majority stake in Ballarat-founded pet supplies business PETStock last December, while Bunnings executed a major expansion of its pet goods category in March.

Frizell says it’s no surprise that the retail conglomerates want exposure to the sector, which was growing strongly even before the pandemic prompted a puppy boom.

“It’s a great sector. They are seeing the same macro dynamics that I do – it’s still early in its evolution,” he said.

Pet Circle, which was founded in Sydney in 2011, has started the new financial year with a fresh $75 million funding boost from existing investor, Prysm Capital, helping Pet Circle maintain its billion-dollar valuation.

Prysm’s co-founder and partner Matt Roberts says the Australian market is still in the early stages of the “humanisation of pets” trend.

“The investment and entry by other players are evidence of this trend and a signal of the health and growth potential of the pet vertical,” he said.

Frizell says two thirds of Pet Circle’s consumer base use its subscription model and have set up regular automatic deliveries of supplies for their animals. “They rely on us month in, month out,” he says.

Other pet services businesses have also been bullish over the past month. ASX-listed pet services firm Mad Paws has seen its shares jump by 11 per cent over the past five days after telling investors the company is edging towards profitability.

Mad Paws is expecting revenue growth of up to 147 per cent for the 2023 financial year. Chief executive Justus Hammer said the company was adding thousands of new customers every quarter, despite tough economic conditions.

Retail analysts are forecasting a further slowdown in spending over the next six months, but everyday household spending like groceries and pet goods are not predicted to be at the front of the firing line.

Instead, electronics, home goods and fashion are predicted to bear the brunt of the slowdown.

Frizell said Pet Circle has been able to perform strongly during periods of strong economic growth as well as during turbulent conditions.

“That is what makes the pet industry so attractive and why you’re seeing a lot of interest,” he said.

Pureplay books retailer Booktopia has raised $8.1 million in capital raising to fund the completion of its Next Gen customer fulfilment centre and enhance its capital position.

The raise comprises a $6.5 million two-tranche placement – which is subject to the board’s discretion – and a $1.6 million debt-to-equity conversion, subject to shareholder approval. The loan facility ($5 million) was secured from AFSG Asset Management.

Booktopia chairman Peter George said: “After two years of losses, completing the Next Gen CFC and with the other business improvement initiatives already announced will reset the cost base of the business.

“The raise will enable BKG to complete the Next Gen CFC by late August this year. With the benefits of these initiatives, we expect a return to EBITDA growth from the next financial year.”

In a trading update, the retailer said “challenging” trading conditions were observed throughout the second half of the financial year compounded by increased labour costs and other disruptions associated with the transition to the CFC.

“Looking ahead to FY24, with the annualising benefits of the initiatives previously announced, and the realisation of the operating efficiencies and increased capacities of the Next Gen CFC, BKG forecasts an underlying EBITDA profit of $13.5 million,” the business said in a statement.

For this financial year, the business expects an unaudited underlying loss of about $5 million.

Meanwhile, the company has advised that the short-term consultancy agreement between BKG and Tachyon Ventures, an entity associated with founder and former CEO Tony Nash, will end on August 31.

Nash will reman a non-executive director of Booktopia.

Sky News host Caleb Bond says that luxury retail sales in Australia, which have nearly doubled to $5.3 billion in the past ten years, could offer alternative strategies to curb inflation besides raising interest rates.

Bond highlighted that the contribution of the luxury retail sector to Australia’s GDP is growing at a faster pace than the overall economy, with the luxury market forecast to reach $6.1 billion by 2027/28.

Best & Less Group (BLG) and its new majority shareholder BB Retail Capital (BBRC) have appointed Ray Itaoui as the permanent CEO.

Itaoui is the former owner of Sanity alongside its founder Brett Blundy, with both owning capital market firm BBRC.

Consequently, the recently proposed CEO appointment of Erica Berchtold, who currently leads The Iconic, will no longer go ahead. Berchtold was expected to start as CEO of BLG on September 4.

Itaoui has operated and invested in Australian and global retail businesses for over 20 years, including Sanity, Bras N Things, Honey Birdette, Mr Vitamins, MakeUp Cartel and Universal Store.

He also served as the Chairman of Sanity, Bras N Things, Honey Birdette, Mr Vitamins and as an independent non-executive director of ASX-listed Aventus Group.

“I am excited to lead BLG and committed to taking the decisive action necessary to position the company for the current challenging trading conditions,” Itaoui said.

“I believe strongly in BLG’s potential to extend our leadership position in the value segment, leveraging our unique offer, privileged relationship with our customers, and the capability of BBRC.”

Itaoui was initially appointed as interim CEO of the company after it passed the main hurdle of BBRC's takeover process. The now former BLG directors associated with Bignor and Allegro - now former majority shareholders - resigned from their positions, with Jason Murray resigning from his position as Executive Chair.

BBRC now holds a voting power of approximately 71.54% in the company as of June 21, with existing minority shareholders still able to sell off their shares until June 30 next week. 

In a recent update, BLG downgraded its net profit expectations to $3.6-$4.2 million, significantly down from its $18-20 million prediction earlier this year. .

Chair of the BLG Independent Board Committee Stephen Heath told shareholders that this decrease in net profit will have an adverse impact on the quantum of any final dividend for FY23. 

“In light of the deterioration in BLG’s trading performance, as well as the likely reduced trading liquidity of BLG shares given the Bidder's increased Voting Power as a result of acceptances received under the Offer, the BLG Independent Board Committee (comprising of Stephen Heath, Melinda Snowden and Colleen Callander) (IBC) believes that the BLG share price may fall materially following the close of the Offer.

“Accordingly, the IBC recommends that those shareholders who have a shorter-term horizon for their investment in BLG or who have concerns about their future ability to exit their holdings should 'accept now'.

“Shareholders who have a longer-term investment horizon and are comfortable in remaining a minority shareholder in BLG may consider ‘taking no action’.”

IBC encouraged existing shareholders to read the risks of remaining a minority shareholder outlined in BLG’s Original Target’s Statement last month. 

In a statement released today (June 22), BLG said if BBRC’s voting power exceeds 75% of total shares on issue, “it may be able to delist the company from ASX following the fulfilment of certain requirements set by the ASX.”

As of its 2022 annual report, BLG operate 182 Best & Less stores across Australia. The Group also owns New Zealand value apparel brand Postie, which operates 61 stores across NZ.

The company's revenue for FY22 was $622.2 million.

When the post-Mother’s Day consumer spending slump hit large areas of the retail community, the initial reaction from many retailers was that surely this was an aberration.

Sadly, my task today is to follow up my May 31 alert of the downturn with a further alert that not only has the post Mother’s Day downturn become entrenched, but the downward sales slope has got steeper.

Discretionary retailers are looking at a slump in sales of well over 10 per cent and sometimes reaching the high teens.

As I will describe below, we are also looking at a potential fundamental change in the attitude of Australians to the economic conditions in which they live.

This change in economy will test the increasing view of younger staff members that lifestyle is more important than financial success obtained from longer working hours, which drove their parents and grandparents.

Many listed retailers are now alerting shareholders to the seriousness of the dip.

While a similar fall took place in the early weeks of the pandemic in 2020, sales then recovered quickly and a three-year boom replaced initial despondency.

But this time there is no boom on the horizon and many retailers are starting the financial year overstocked and overstaffed.

To make matters worse, the government’s inflation boosting policies mean the cost of doing business continues to escalate rapidly because inflation is entrenched in areas like energy, labour and in many cases rent.

It’s a perfect storm for those retail sectors that depend on discretionary spending. And for food retailers, consumers are switching to lower cost and lower margin products at an unprecedented rate.

As I discussed on Wednesday, if the government had applied the economic brakes to help the Reserve Bank control inflation, we would now not expect further interest rate rises and be looking forward to a rate fall.

Instead, as I pointed out, governments (including states) stimulated and moved to lower productivity, so the central bank is confronted with low unemployment and entrenched inflation and is under pressure to keep increasing interest rates, thus compounding the sales falls and community misery.

Remember that the misery is being applied to only some two thirds of the population — those with sizeable mortgages and who are renting.

I am not calling an Australian recession because the overall economy is boosted by minerals and agriculture, plus the spending of those whose finances make them immune from the misery.

But for the two thirds of the population in the eye of the storm it will be a severe recession and fear of what is ahead is now changing the attitude of Australians to the national outlook.

The ANZ-Roy Morgan Consumer Confidence index has now spent 16 straight weeks below the mark of 80, the longest stretch at that level since the index began on a weekly basis in 2008.

But ANZ senior economist Adelaide Timbrell believes that hidden in those figures is a more fundamental change in the Australian community. I have reached similar conclusions based on the experience of retailers.

Timbrell points out that confidence about “current financial conditions” has slumped 10.6 points in the past four weeks.

Last week was the third consecutive week with ‘future financial conditions’ below 90, the longest it has been this low on record.

It’s that four-week slump in “current financial conditions” outlook that has been translated into consumer spending.

And it will get worse because the attack on contract labour by the current government is also an attack on those with a second income to pay their mortgages.

Watch out banks.

When companies set their budgets for 2023-24 around March, sales were a little soft but holding well, and so there was no panic.

Boards and chief executives over a wide area now suddenly find their budgets, plus the incentives that go with them, are totally wrong. This can create a sense of hopelessness among staff.

A whole new set of realistic financial forecasts need to be established along with very different strategies to cope with the new environment.

For most CEOs this will be the first time they have had to rewrite budgets and not all will be good at the sudden implementation of new strategies.

And while debate rages on the contracting front what should have been a nation uplifting referendum on recognising the role of Aboriginal and Torres Strait Islanders in our history, the referendum has been hijacked by the wording of the proposed constitutional measures. Many leaders of the indigenous communities believe a “Yes” vote will be result in a dramatic shift in power away from non-indigenous people.

The debate will be ferocious and just what the nation did not need at this time.

Strong spending on cafe, restaurant and takeaway food is driving retail turnover growth, but food inflation and rising prices overall are clouding the figures.

Retail spending data from the Australian Bureau of Statistics released on Thursday showed a 0.7 per cent jump in turnover in May across as shoppers looked for bargains at mid-year sales.

Spending on food and eating out also helped lift May’s numbers, with cafes, restaurants and takeaway food services up 1.4 per cent to hit a record level of $5.4 billion for the month.

Industry experts were cautious about the numbers, however, observing that inflationary pressures and price increases were having an impact on monthly turnover figures for food and dining.

“It’s an essential item, we all have to eat... but there is no doubt that unavoidable price increases are having a part to play in that sector,” Australian Retailers Association chief executive Paul Zahra said.

Monthly consumer price index data released on Wednesday showed inflation had flattened slightly to an annual reading rise of 5.6 per cent in May, though food and non-alcoholic beverage prices had jumped by 7.9 per cent in the past 12 months.

Quick service food retail operators have been upbeat about trading conditions despite consumer spending concerns.

Shares in major local KFC franchisor Collins Foods have surged by close to 16 per cent so far this week, after the company reported a better-than-expected full-year financial result. Its network of more than 200 Australian KFC restaurants hit $1 billion in annual revenues for the first time.

Collins Foods boss Drew O’Malley said the business had been trying to minimise product price increases wherever possible to show diners that its restaurants remained good value.

“We think the decision not to seek a full offset to short-term cost pressures via menu pricing has been the right decision for the consumer,” he said.

Zahra said takeaway food options were well-placed as consumers “traded down” to more affordable eating-out options.

“In quick-service restaurants, what we are seeing is they are doing well [as] we are seeing consumers going down the price hierarchy,” he said.

But the retailers’ association is cautious about the spending outlook overall as sales continue to slow across household goods, clothing and in department stores.

Turnover among household goods retailers jumped by 0.7 per cent to $5.7 billion in May, but it’s down by 4.4 per cent since May 2022.

On Wednesday, electronics retailer Harvey Norman flagged a pre-tax profit slump of at least 25 per cent for the 2023 financial year, prompting retail analysts to warn the worst is yet to come.

Citi’s equities team said the outlook for further interest rate rises had worsened since the beginning of the year, making the spending outlook tougher.

“We expect conditions to worsen given the further roll-off of fixed rate mortgages and further interest rate hikes,” Citi said in a note to clients.

Australian retail turnover rose 0.7% in May 2023 to $35.5 billion, Australian Bureau of Statistics (ABS) data revealed.

This follows a flat result in April 2023 and a 0.4% rise in March 2023, with year-on-year retail spending up 4.2%.

Despite the 0.7% rise from April, clothing, footwear and accessory sales dropped alongside department store sales at 0.6% and 0.5% respectively. Marking the only drops across all retail, the two sectors slipped by $28.8 million (-$18.5 million for fashion and -$10.3 million for department stores).

This follows a rise in April for both sectors when sales were boosted by increased spending on clothing items due to cooler and wetter-than-average weather.

According to ABS head of retail statistics Ben Dorber, the overall rise in sales was buoyed by lifts in discretionary spending and food retail, including eating out.

“This latest rise reflected some resilience in spending with consumers taking advantage of larger than usual promotional activity and sales events for May,” Dorber said.

Other retailing recorded the largest rise at 2.2%, ABS reported, with turnover growing strongly across a variety of businesses, including online-only retailers, florists, and pharmaceutical and cosmetics retailers. An early start to some end-of-financial-year sales events boosted turnover along with Mother’s Day and the ‘Click Frenzy Mayhem’ sales event.

“Just as we saw during the November Black Friday sales last year, consumers appeared to take extra advantage of discounting during large sales events in May in response to cost-of-living pressures,” Dorber said.

National Retail Association CEO Greg Griffith said despite an overall tightening on discretionary spending, Australians seem ready to splurge when the occasion arises or during sales promotions.

However, the good news may soon end as Griffith warned the 5.75% payroll cost increase that goes into effect on 1 July could push inflation higher and weaken retail trade in the coming months.

“The wage increase has dampened any hope of the Reserve Bank pausing interest rates next month, which will further injure consumer confidence,’’ Griffith said.

Meanwhile, Australian Retailers Association (ARA) CEO Paul Zahra noted that household goods sales have experienced a decline over the last six months. The sector is currently down 4.4% year-on-year compared to May 2022, despite a 0.6% rise on April 2023.

Zahra said he expects this to be a bellwether for most consumer spending in the months ahead.

“It’s important to remember that cost-of-living pressures typically have a lag effect on retail – which is why we’re seeing a gradual softening in spending,” he said.

“Clothing and department stores are still showing modest growth, but this is mostly driven by early promotional activity and cooler than average temperatures.”

Zahra said cost-of-living and cost-of-doing-business pressures remain the greatest concern for retailers.

“While we’re seeing a softening in spending, retailers are simultaneously feeling the pressure from increasing operating costs across the board,” Zahra said. “We are now experiencing a collision between the cost-of-living crisis and a cost-of-doing business crisis”

Across the states and territories, retail was up in all states and territories except Tasmania, which was down 0.1% on the prior month. The Northern Territory recorded the largest rise of 1.6% and is now its highest level

“Conditions for small businesses are less favourable than their larger counterparts,’’ Griffith said.

“The recent Federal Budget has delivered on some cost-relief measures such as the Small Business Energy Incentive and the continuation of the instant asset write-off. However, there is still a need for ongoing government support for the retail sector.”

Mecca Brands, the cosmetics empire run by Jo Horgan and Peter Wetenhall, recorded revenues of $688.9 million in the 12 months to the end of December 2021, accounts filed with the regulator this week show.

That revenue figure was more than 20 per cent higher than the previous year, and suggests they are significantly higher today, given Mecca’s aggressive overseas expansion and a new flagship store set to open in Melbourne this year.

The growth of Mecca, founded in Melbourne in 1997, has underpinned the wealth of Ms Horgan and Mr Wetenhall. The Financial Review Rich List put the pair’s fortune this year at $778 million, up 7 per cent. Ms Horgan and Mr Wetenhall were each paid $10 million in dividends in 2021.

As a private company, Mecca does not regularly disclose its earnings. But accounts filed with the Australian Securities and Investments Commission on Wednesday show the company recorded a $23.5 million profit in 2021, down marginally from a $25.7 million profit a year earlier.

That was because costs rose along with the higher revenues.

Mecca also had debts of $185.9 million, down from $197.4 million in 2020.

The accounts reflect the impact of the COVID-19 pandemic, and Mecca said it had closed some of its stores during the year.

“As a result of temporary closures within the retail network, management has been working closely with landlords to manage rental agreements and related rental costs,” Mr Wetenhall wrote in the filings.

“Further, the business experienced a significant shift to the online channel, which has contributed to the underlying financial performance”.

Mecca has more than 100 stores in Australia and New Zealand, a Chinese retail presence on TMall and a Sydney CBD flagship store that opened in 2020. It is developing a two-storey Melbourne CBD outlet, which is expected to be the largest beauty store in the Southern Hemisphere when opened.

Ms Horgan has previously distanced herself from suggestions that the retailer could one day list on the ASX.

“I think having a private business allows you to have one focus, and that is the customer,” she told The Australian Financial Review in April. “I think as soon as you become a publicly listed business, you have a responsibility to shareholders, of which there are usually many. And I think that takes up a lot of headspace and time.”

Customers faced with the rising cost of living and higher interest rates are spending less at bedding and furniture group Adairs, which warned its annual profits will be hurt after sales eased this quarter.

Adairs, which is due to release its annual results on August 21, is the latest retailer to flag on Friday that consumer spending is drying up, following Wesfarmers chief executive Rob Scott’s warning this week that “the honeymoon is very much over”.

Jeweller Michael Hill International suffered a 3.5 per cent drop in sales over the half-to-date, blaming a softening in consumer sentiment in Wednesday’s after-market confession.

In late May, youth apparel group Universal Store warned subdued trading will persist into fiscal 2024 as its customers battled rent increases and student debt, triggering a 25 per cent plunge in its share price.

“After a solid sales performance in the first half of fiscal 2023, the impact of rising interest rates and higher cost of living has created a more subdued trading environment since April with lower traffic observed both in stores and online,” Adairs’ trading update said.

The company declined to comment further as its shares hit a fresh three-year low and tumbled as much as 18 per cent in Friday’s session. They lost 16 per cent to $1.58.

Adairs has three brands – namesake bedding chain Adairs; Furniture on Focus, which it acquired in December 2021; and online-only homewares brand Mocka.

The group pared back its guidance for annual earnings before interest and tax to between $62 million and $65 million, compared to its earlier guidance of between $70 million and $80 million.

Sales forecasts for the financial year have fallen to between $616 million and $622 million, from its previous range of between $625 million and $665 million. Even its revised range will put the group on track to beat the record $564.5 million achieved in 2022.

Adairs also pulled back its capital expenditure guidance to between $12 million and $13 million, from up to $15 million previously flagged. Group gross margin is still expected to be ahead of the second half of financial year 2022, and group inventory will finish below December 31 levels.

Morgans head of research Alexander Mees said Adairs just started its mid-year sale and “we suspect the early indications are not positive”.

Sales fell 3.4 per cent from the previous year over weeks 27 to 48. Year-to-date sales growth is 5.2 per cent measured from weeks 1 to 48.

Focus on Furniture was down 10.9 per cent on the previous year’s sales for weeks 27 to 48. Its year-to-date sales are still in growth territory: up 5.4 per cent on the previous year.

Sales for online furniture shop Mocka slumped 23.8 per cent since April compared to the previous year, but the division hadn’t been performing as strongly – its year-to-date sales growth is down 25.5 per cent on the previous year. The company had said earlier that the online-only homewares business was normalising as shoppers return to its bricks and mortar stores.