Monthly Archives: August 2016

Australia is scary business for retail

download-55Australians will spend scary amounts this Halloween as retailers cash in on the spooky celebration to drive spending in the soft-spot between the football finals and Christmas.

What was once considered a gauche American tradition is fast becoming an annual event for many Australian households and it’s not just kids taking advantage of the scary, pagan imagery to binge on sweet treats.

The rising popularity of Halloween is reflected in big sales increases at all the major retail chains, including craft and costume specialist Spotlight, which enjoyed a 100 per cent jump in Halloween sales last year alone

“Last year we doubled our sales and we are hoping to hit those numbers again this year … so it’s absolutely huge for us,” Spotlight Retail Group creative content manager Nick Casey said.

“We target two main demographics, the mums who are shopping for kids, as more and more kids are getting out there and the other customer is the hard core party planner and they go all out, getting everything from costumes to decorations and face paints.

“There’s something about Halloween that really resonates with our core do-it-yourself customer, who wants to make a really personal and exciting experience and Halloween allows them to think outside of the box.”

Mr Casey said Halloween sales were growing “exponentially” from year to year, driven in part by social media and the sharing of Halloween costume and decorating ideas from mature markets like the US and the UK.

Spotlight expects to sell 40,000 fake spider webs as well as more than 30,000 costumes for kids and adults in the lead up to the big night.

Coles supermarkets are preparing for one of their biggest Halloween seasons yet after watching demand for traditional favourite, the pumpkin treble in the past six years.

“This year we’re expecting to sell more than 270 tonnes of pumpkins in the lead up to October 31,” a Coles spokesman said.

The Wesfarmers-owned supermarket chain has doubled its range of Halloween merchandise, including costumes, decorations, party suppliers and trick or treat accessories and this year for the first time it’s introduced Halloween-themed baking accessories.

Target has already sold out of its creepy butler figure, an almost life-sized, and unnervingly life-like talking Halloween figure, and the chain’s general manager of hardgoods, Nick Chilcott said the pagan celebration was now an important event in the retail calendar.

“It’s definitely growing year on year,” Mr Chilcott said.

“It’s one of those events that started out with a kid focus but gradually it’s morphed into an opportunity for adults to dress up as well.”

Major events are now also part of the Halloween tradition, with Luna Park hosting a four-night Halloscream event  in Sydney and Luna Dark over three nights in Melbourne.

Retail analyst Brian Walker said research suggested one in five Australians planned to celebrate Halloween and he said Australia was developing its own, unique take on the festival.

“Australian kids are definitely more into super heroes or fairies and princesses than the scary characters you see in the US and I think it’s all about the treats here than the tricks.”

He said many communities hosted family-friendly events and street parties for Halloween and this was driving kids’ interest in the festival and a lot of the retail spending.

Woolworths experienced double-digit sales growth for its Halloween range last year and its discount department store Big W has expanded its range of costumes and wigs to meet rising demand from both kids and adults.

Woolies has already had its own Halloween scare after it was forced to recall its Halloween Ghost and Pumpkin LED spinning wands over concerns kids might gain access to the potentially dangerous button-cell batteries.

Retailer Pumpkin Patch

Struggling children’s clothing retailer Pumpkin Patch, which has dozens of stores in Australia, is fighting for survival.

The New Zealand-based company has entered a trading halt after informing the market that it was “highly unlikely that there is any residual value in the company’s equity.”

After years of declining sales Pumpkin Patch has seen its market capitalisation dwindle to just $10.1 million from a valuation of $NZ231 million ($216 million) in 2013.

Its second-biggest shareholder is Jan Cameron, the co-founder of NZ adventure-wear retailer Kathmandu.

On Friday, Pumpkin Patch told shareholders that “substantial uncertainty” remained regarding its future and it would put forward proposals to its bank by October 31.

“Shareholders should note that it is highly unlikely that there is any residual value in the company’s equity.”

The news comes as rival Baby Bunting, Australia’s biggest baby goods chain, plans to ramp up store openings. Baby Bunting’s first year on the sharemarket was helped by the collapse of its major competitor, My Baby Warehouse, which gave Baby Bunting a dominant position in the highly fragmented $2.4 billion baby goods market.

Other baby-focused retailers to have collapsed in recent years are Babyco and the Australian arm of British giant Mothercare, thanks to slowing sales, tough trading conditions, writedowns and restructuring costs.

Early last year Pumpkin Patch put itself up for sale.

But that sale did not proceed, and the company instead planned a four-year turnaround program, which includes store closures and focusing on online sales.

Reporting a deeper loss of $15.5 million for the year to July 31, 2016, Pumpkin Patch said it was at a “very early stage of its recovery journey” and “apparel retailing continues to be highly competitive and challenging.”

It said declining sales were due to store closures, and a decline in its international wholesale business and northern hemisphere online business. The rise of the New Zealand dollar against the Australian dollar was also a “major headwind for the business and if sustained represents a material risk to earnings.”

“The business remains significantly over-leveraged and capital constrained,” it said last month. “Our ability to move forward from here is impacted by the lack of available capital for debt reduction and reinvestment. This represents a material risk to the ongoing viability of the business.”

Ringwood in a bid to take on Dan Murphy’s

Liquor Market’s positioning line “Low Cost and So Much More” could set the scene for a pre-Christmas booze barney as Australia’s two major supermarket giants slug it out over cut-price drinks.

It’s already caught the attention of Martin Smith, the boss of Woolworths’ $8 billion liquor retailing business, who fired the first salvo with a warning that liquor was far more competitive than grocery.

He said competition was concentrated on a small number of lines or brands, which represented the lion’s share of sales in key sectors such as beer.

Mr Smith wouldn’t chat about Liquor Market, except to say that Woolies’ Endeavour Drinks Group kept a “constant eye” on the competition.

The Wesfarmers-owned Coles has made hard work of liquor, failing to make any real dent in Dan Murphy’s’ domination of the sector with its rival big-box chain First Choice and before that its Liquorland Warehouse chain.

It’s no surprise they’ve tried to run Liquor Market under the radar and pass it off as an intelligence-gathering exercise and an opportunity to hear “what customers think” rather than the start of a new national chain.

Coles liquor boss Greg Davis said the Liquor Market test store was part of the “ongoing turnaround of the Coles liquor business”.

But he admits Coles has already collected a “huge amount of customers research” and shoppers have told it what they want.

All that’s left is for the good people of Ringwood to prove up its concept and then it can hit go.

However, Coles hasn’t provided any details on how long it will be in this testing phase or how quickly it would move to roll out the new brand and whether it would replace First Choice.

Liquor insiders have already drawn comparisons between Coles’ booze ambitions and Woolworths’ failed assault on Wesfarmers’ hardware giant Bunnings with its disastrous Masters chain.

Market watchers suggest this is why Coles wants to start small and talk down its ambitions for Liquor Market until it can prove up the concept.

Sources close to the new business suggest its aesthetic will be more like Bunnings than Masters with product ranged in boxes on pallets rather than slick display units and hipster sales staff.

“It appears to be all about bulk booze and presenting it in a cheap way that gives the impression or perception of value,” one liquor insider said.

“But the issue is, they are going to try and do a ‘me too’ when the incumbent already has the buying scale and the best sites, which makes it really hard.”

Analysts are sceptical about Coles’ latest attempt to chip away at Dan Murphy’s’ dominance.

“They’ve had trials before and we are generally sceptical on the efforts of Coles in liquor given the false starts in the past and the competitive advantage or lead that Dan Murphy’s and the broader Woolworths liquor business has,” one analyst said.

“While we don’t think Woolworths’ liquor business is as good as Bunnings, the lead they have from a competitive standpoint is quite significant.