A butcher’s daughter whose family has been in the meat trade for more than 30 years, Diem Fuggersberger entered the plant-based space by accident. During a course on selling meat, she was shocked to learn how much grain a cow eats. “I thought: we shouldn’t be feeding eight tonnes of grains to a cow every year when there is so much poverty in the world.”

What followed was an epic tale of research, trial and error, persistence, and patience that led to the formation of Coco & Lucas​, a story she shares in the latest edition of the monthly podcast Women Transforming Food – brought to you by G100 and Inside FMCG – which explores the stories of inspiring women shaping the food industry today. Fuggersberger spoke with co-hosts Amie Larter, CEO of Inside FMCG’s publisher, Octomedia, and Angeline Achariya, Asia Pacific chair of G100’s food systems innovation and resilience wing. 

As Fuggersberger takes up her story, when she returned from the course, she did not want to sell meat anymore. Soon after, during a meeting with Woolworths over meat products, the buyer asked if her company was interested in plant-based alternative proteins. She had three and a half months to launch the five plant-based meals her brand was first built on. In the podcast, she recalls the immediate challenge of sourcing alternative plant-based proteins from Australia, where they were not available. After assembling a group of ingredient suppliers from the US, Europe and Asia, she built an in-house team of seven to research and develop recipes and products. 

“We used different technologies to help get the best texture, taste and colour. On top of that, we had to work with machinery and equipment on how to make shapes of things like strips of chicken and how to make mince.”

So her journey began, something of a baptism of fire, learning an entire sector and production process – and then Covid struck. Delivery of nearly $1 million dollars worth of manufacturing equipment ordered from Taiwan was delayed due to the pandemic’s effect on the supply chain. Without the machinery, the first product orders had to be created by hand. 

“We had to make 24,000 trays of spring rolls. There were nine spring rolls in each tray. So we’re talking about 250,000 spring rolls, each rolled by hand. I had an ace team, and we all worked day and night, and you have to imagine all the overtime I had to pay to get the products on the shelves.”

Fortunately, the machinery arrived before the team had to start delivering the brand’s alt-chicken nuggets. 

Make new products, don’t copy meat

A standout lesson from Fuggersberger’s start-up experience in the alt-protein space – one that has reshaped the entire product range since – is that, contrary to common misconception, consumers do not want their alt-meat products to replicate real meat. 

“My customers are always telling me, please, we don’t want you to imitate chicken or beef. We don’t want any bleeding burgers.”

Taste, texture and price are key qualities of plant-based alt-meat foods that resonate with consumers. So, instead of imitating meat products, Fuggersberger advocates returning to the core and making “delicious plant-based food” full of nutrients and competitively priced. “I don’t think people want us to replace anything.”

They also want ‘clean labelling’. “Consumers are not interested in these long ingredient declaration lists – they don’t like processed food – and we have to be really mindful of concentrating on people’s health. That’s the new emerging trend.”

Fuggersberger does not adhere to a vegan or vegetarian diet seven days a week, and she targets consumers with a similar outlook. “As a responsible entrepreneur, I want to send the message out that instead of having meat seven days a week, have two days of vegetarian: we are doing a favour to the environment, a favour to our health, and helping address climate change and animal welfare.”

Balancing brand and private label ranges

Fuggersberger is working with retailers, including Woolworths, to develop own-label, plant-based protein products. 

“Plant-based is a small industry and a small sector. It’s new, and I would rather work collaboratively with other people to strengthen the category. Secondly, I’m agile. I changed to the market’s response. Thirdly, I work very collaboratively with retailers. I ask them what they want, and they have all the data to help me know what works. Lastly, I believe having a factory that produces only one brand is really hard. The category is not big enough. So that’s why I’m open to working with prestigious, established brands … so I can fill up my factory.”

Private-label products produced by Fuggersberger are different to those she produces for sale under her own brand. “We work together as a team and say, okay, if you’re going to sell a butter chicken, I’m going to sell a red curry. It has to be a win-win for everyone.”

She concentrates on her best sellers because the volume allows economies of scale, lowering the retail price – a key consideration for her business, especially during a time when consumers are watching their spending. 

“Plant-based is not meant to be more expensive than meat. I need to put myself in the consumer’s shoes to know this is affordable, it is yummy, it is something I can have every day. I want to make food that is reasonably priced. You cannot charge $8 for a burger; you have to charge $2 or less,” she explains. 

“You can’t force yourself to eat something that doesn’t taste delicious. I’m always conscious of people’s time, convenience, price, taste and health. I think that’s probably why it’s worked for me.”

• Listen to the podcast to learn how Fuggersberger is exploring the use of AI in identifying ingredients and developing recipes, how she is breaking into the vegetarian category in schools, and her perspective on the importance of trust in business – with suppliers, retailers and end customers. “I have to work hard behind the scenes to get trust and loyalty”.

This article originally appeared on our sister publication, Inside FMCG.

The post How Coco & Lucas built a small business and a category simultaneously appeared first on Inside Small Business.

Two Australian women who have pioneered a tea beverage category in Australia plan to expand internationally – but not before they have helped make the world a better place.

Tania Stacey and Kym Cooper are the founders of East Forged Cold Brew Nitro Tea, a unique concept in which tea slowly brewed in cold water has nitrogen gas added at the canning stage – something not too dissimilar to canned Guinness Beer. After establishing the brand in Queensland in 2019 and successfully launching during the Covid pandemic using Australian-grown tea, the couple now aim for East Forged to become a leader in the global craft tea and liquid tea industry.

“We want to see it grow similar to the craft beer industry, and we want to see that grow globally because that will encourage people to value and appreciate tea,” Stacey told Amie Larter and Angeline Achariya during the second episode of the new podcast Women Transforming Food.

If people value the tea more, they will pay more for it, Stacey ventures. “And when they pay more for tea, the people that pick tea will have a better life. That’s our primary motivation: this beautiful industry with the perfect on-the-go tea that suits your lifestyle, that goes from lunch to dinner, from social events to taking time to yourself, and we’re helping the people that bring it to you along the way.

“So, globally, we have investigated expanding East Forged into East Asia, Southeast Asia, and the US, and we see big opportunities in the UK and Europe as well.”

Women Transforming Food is a monthly podcast produced by G100 and Inside FMCG that explores the stories of inspiring women shaping the food industry. Achariya is the Asia Pacific chair of G100’s food systems innovation & resilience wing. The mission focuses on empowering gender diversity and inclusion across the Australian Food System and industry, bringing together women leaders to transform the nation’s food system, creating influence and advocating to co-create thought leadership. Larter is CEO of Inside Small Business‘ publisher, Octomedia.

Beyond the passion for their product, Cooper and Stacey are committed to creating a better life for women who work in the tea industry around the world, an industry where the pair observe women bearing the hard work and the men generally sitting in management roles.

“It is really important to Kym and I,” Stacey shares. “Currently, we use tea sourced from Australia because we know it is grown ethically and sustainably. The only other white tea we source is from China. In countries like China, Taiwan and Japan, the tea workers are well treated. However, there are other parts of the world where the tea [plantation] workers don’t have a great lifestyle.” They are the ones making the tea consumers are paying two cents a tea bag for, she explains.

The pair have reached out to work with the International Alliance for Women in Tea (IAWT), which has a global focus on women in tea. Its mission is to unite, inspire and advance women at every level in the tea value chain and create a sustainable and equitable future for all.

East Forged is talking to IAWT about developing programs that can help women in these countries. Tea is a major contributor to the GDP in these countries, something Stacey says many tea shoppers do not understand.

“Those women are carrying the economy of many of those countries on their backs, and they need help, be it through education, needs for their children, sanitary needs, housing needs, all those things. There is so much work to do. But that is something that the women behind the IAWT can help with.”

Stacey says that while some larger tea companies have their own plantations and welfare or assistance programs, they do not always include the transparency and accountability she believes is necessary.

“Kym and I don’t have a huge background in countries like Kenya and India, and where these tea farms are growing in Indonesia. But the women at IAWT do, and they can guide us more in this area, so our future with East Forged is with them.”

On a local level, Stacey also recognises View Club (Voice, Interest and Education of Women), a female-led organisation established in 1960 whose focus is to raise funds for the Smith family for the education of disadvantaged children here in Australia.

“We both want to leave this world a little bit better. Those basic principles are very true to us, and that’s what binds us”.

Scepticism and doubt on the innovation path

Developing East Forged was something of a leap of faith for the pair. Stacey’s background was in sales with a major corporation, and she saw her passion for tea as an exit plan. Cooper was a chartered accountant specialising in risk and assessment with one of the Big Four accounting firms.

“Kym and I often laugh and say if we only knew what we were letting ourselves in for, we probably would never have started. So, naivety is actually a great asset to have at times. And then you get so far, and you go, well, I might as just keep going. I’ve gotten this far.”

When Stacey and Cooper were developing their product, they reached out to various mentors and Stacey recalls questioning whether they were doing things the right way.

“There are moments you do question yourself, and I shan’t name any, but in the early days, we went through different accelerators. The mentors often asked us where we came up with the concept – where had we seen the idea before? I thought it was interesting – that it was not possible that we had come up with the idea ourselves.

“I know there is a saying there’s never an original idea anywhere in the world; someone else has thought of it. And maybe other people have, but we are a world first in what we’re doing and how we’re doing it. There is cold brew tea and there is some nitro tea out there, but the way we’re doing it is unique.”

The pair drew motivation from consumer feedback when they took products to markets like Finders Keepers and Big Design and let people taste the beverage. “They automatically believed in us, which was really reassuring.”

East Forged has also enjoyed recognition and support from within the tea industry. It has already earned more than 20 awards – including in the UK – and drawn the attention and support of both the UK and the Canadian Tea Associations, which recognise the company’s innovation.

To help keep the business on track, Cooper and Stacey keep 90-day goal plans to map out a long-term strategy and their individual goals – a process they say keeps them accountable. They report monthly to each other on how they are progressing against their respective goals, a process Stacey says keeps the business going forward all the time.

A primary focus has always been customer experience and helping to build a brand that people will remember. If you don’t remember the name East Forged, Stacey and Cooper hope you will recall the brand’s tea pets – “our little nod to the idiosyncrasies of the tea world”.

If a consumer walks into a stockist – many IGA supermarkets nationwide carry the products, which are also sold directly to consumers online – they will spot the monkey, cat, and pig on cans. The anime characters appear on East Forged’s Australian Black Tea & Yuzu, White Tea & Calamani, and Australian Green Tea & Pitaya, respectively.

Listen to the podcast to learn more about how the pair succeeded in launching a brand at the height of the Covid pandemic, how Stacey developed a passion for tea that took her to multiple brewing awards, and why she and Kym believe they have “the best business partner in the world”.

This article originally appeared in our sister publication Inside FMCG.

The post East Forged is the trailblazing small business transforming tea appeared first on Inside Small Business.

The statistics come from the newly released Shopify Australian Retail Report 2024. The report is based on a survey of more than 1000 Australian consumers and 205 senior business decision-makers in Australian retail, along with qualitative interviews with top Australian retail leaders. Among its conclusions is that consumers are not just seeking lower prices; while that is important, 34 per cent are also looking for higher-quality products that last and 23 per cent are still looking to treat themselves every month or so.

“This suggests there is still space in the budget for life’s little luxuries, opening up opportunities for savvy retailers,” Shaun Broughton, MD for Asia Pacific and Japan at Shopify, said.

“There is a compelling imperative for retailers to focus on both online and offline channels to suit shopper needs,” Broughton added. “Unified commerce will be an irrefutable growth driver, empowering retailers to sell better across multiple channels, while offering the best customer experiences and gaining access to unified datasets for the strongest business decisions.”

Foot traffic is proving to be a key driver of omnichannel adoption. With consumers now expecting an excellent experience wherever they interact with a brand, the survey found that almost all (99 per cent) of Australian retailers are investing in customer experiences, with personalisation, digital experience, in-store and omnichannel experience being key focus areas.

During the past year, Shopify has observed marked changes in consumer shopping behaviours, which are driving a shift for retailers. From increased demand for value to a stronger preference for in-store shopping experiences, retailers have a renewed focus on efficiency and innovation. Although cost remains a key factor for consumers switching brands, it’s no surprise that retailers are choosing to compete on enhanced customer experience instead of slashing prices.

With the popularity of in-store shopping on the rise, consumers purchasing items in brick-and-mortar shops consider ample stock, knowledgeable staff, and attentive service as the top three must-have characteristics for retail brands.

This highlights the value of knowledgeable staff and how they bolster customer experience.

Mathew Walker, head of eCommerce and digital, ANZ at Petstock Group concurs.

“Knowledgeable and well-trained staff are a crucial part of our in-store customer experience. Online, we offer 8am-8pm customer support and seven-day social replies,” Walker said. “Our goal is that whatever experience we offer in-store, we also offer online.”

Customer loyalty is increasingly fragile

Consumers are also less loyal than ever before, the research shows. Ninety-two per cent of consumers say they have switched brands during the past year, often trying something new, with 57 per cent saying they switched for a better price or discount promotion – up from 49 per cent in last year’s edition of the survey.

The loyalty battle is not lost for retailers who want to go the extra mile. The survey found that 92 per cent of consumers would remain loyal to a brand if the brand offered them something in return.

The report concludes that even though pricing is the top factor driving consumer preferences and customer churn, retailers need to carefully assess the feasibility of competing purely on price and its impact on sustainable profitability.

It’s possible that other tactics, such as loyalty rewards, better quality goods, and a seamless customer experience make more sense as differentiating factors.

Those consumers cutting costs are eating out less (47 per cent), choosing cheaper options when it comes to discretionary spending (38 per cent), and buying private-label groceries (31 per cent). 

“We’ve had customers spending less, reflected in reduced conversion and in smaller basket size if not necessarily in traffic,” Richard Facioni, founder & executive chairman of Alquemie Group and chairman of Mosaic Brands, explained. “But what we have found is when they are presented with something they want or desire, they find the money for it. The money’s there, but it’s more discerning.”

New ways to drive value

The Shopify Australian Retail Report also reports how retail decision-makers can overcome the current challenges.

Retailers are responding to rising shopper expectations by demonstrating value in new ways and many are focused on customer retention (63 per cent), customer acquisition (62 per cent) and marketing and advertising (61 per cent).

Almost every retail executive (99 per cent) polled said they plan to invest in innovation during the coming year. They will focus on data and analytics that can power other technologies that support innovation aimed at efficiencies – such as automation and AI – while also supporting broader growth tactics, all aimed at achieving differentiation.

This story first appeared on our sister publication Internet Retailing.

The post As shoppers hunt for value, are retailers up to the task? appeared first on Inside Small Business.

Researchers from the Australian Centre for Gender Equality and Inclusion @ Work (ACGEIW) published by Australia’s National Research Organisation for Women’s Safety (Anrows) concludes sexual harassment is “pervasive and persistent” in retail work with physical contact, sexually suggestive comments and jokes, intrusive questions about their private life or appearance, and staring or leering commonplace.

The report – Just another day in retail: Understanding and addressing workplace sexual harassment in the Australian retail industry – found that women aged under 25 are the most at risk, often subjected to multiple forms of sexual harassment.

“These are not isolated incidents,” Professor Rae Cooper, director of the ACGEIW, explained. “This is happening every day across this large industry, and young people – especially young women – are copping the brunt of it.”

Cooper says employers are legally bound to prevent harm to workers from sexual harassment.

“The retail industry is a key national employer of young people, and these workplaces have a duty of care to protect their inexperienced workers who are often working their first job. Sexual harassment doesn’t just come from customers – peers and managers are often perpetrators,” Cooper said. “It is pervasive.”

Tessa Boyd-Caine, CEO of Anrows, describes sexual harassment in retail as “common, normalised, and harmful”.

“This is part of the broader social environment that enables violence against women and children and as such, sexual harassment needs to be understood clearly and taken seriously,” Boyd-Caine said.

She called on retailers to improve workplace reporting mechanisms, the collection of data relating to incidents, ramp up training of staff and management and communicate outcomes to staff.  

“There will be no one-size-fits-all solution to tackle this widespread problem, but as it stands, employers lack the necessary tools to action their responsibilities to keep their staff safe and free from sexual harassment,” Boyd-Caine added. “Enhanced reporting processes are imperative to ensure victim-survivors feel safe and empowered to come forward.”

Australian Retailers Association CEO Paul Zahra described sexual harassment in the workplace as “a significant, ongoing concern for retailers”.

“We acknowledge the independent research teams for providing a safe space to have an open dialogue. Now it’s up to the retail sector to take this report, build on it, and create an environment where our staff don’t have to come to work in fear of sexual harassment and violence,” Zahra said.

That research drew from four existing surveys, interviews with 15 experienced industry insiders and 12 focus groups including 56 retail workers and managers. The report found that many staff felt unsure about how to report sexual harassment – and those who do are often left dissatisfied with the process.

Gerard Dwyer, national secretary of the SDA, urged retail workers affected by sexual harassment to document it and use their company’s formal complaints process to report it, speak to their union, or speak to a government body such as the Fair Work Ombudsman.

Dwyer expressed consent that there is “significant variation” in employer policies and the quantity, frequency, and types of sexual harassment training provided.

“Solving this requires an industry-based approach with union engagement,” Dwyer averred.

This story first appeared on our sister publication Inside Retail

The post ‘Just another day in retail’: Study finds sexual harassment rife across industry appeared first on Inside Small Business.

Almost half – 46 per cent – want returns to be more sustainable, according to the survey by SAP Emarsys. And 47 per cent profess to being more loyal to a brand with a sustainable returns process, such as recycling returned items or using less packaging.

“Sustainability is no longer a nice to have for consumers, it’s now a key consideration when deciding which brand to purchase from and it’s something brands need to prioritise,” Thomas Harris, chief revenue officer at SAP Emarsys, said.

“For me, the key is tackling the cause of the problem – why customers are having to return items in the first place. And that’s where AI-powered personalisation comes in.”

In the survey, 69 per cent of respondents said they prefer not to return items, and 56 per cent want retailers to “get it right the first time”.

Harris says a key to achieving a more sustainable returns process is reducing the amount of products that customers reject. Using AI to personalise recommendations can achieve this, he says, by using sizing and previous purchase insights data to help shoppers buy the right thing the first time around. 

“Personalisation can transform customer experiences with deep customer insights, offering recommendations that are highly tailored to meet the needs of the consumer,” he said.

The research further found that 46 per cent agree that retailers should re-sell returned items at a lower price to improve sustainability, while 49 per cent would like to see retailers accept returns at local depots.

This story first appeared on our sister publication Internet Retailing

The post <strong>Sustainable returns build brand loyalty, survey finds</strong> appeared first on Inside Small Business.

A self-described “accidental digital native” Horn left a career in corporate law to join the early leadership teams at The Iconic and Uber Australia. Now at Country Road Group, he is one of the key leaders driving the company’s digital and technological transformation efforts.

You can download the full report here.

“Matthew has delivered projects that have led to wide commercial success across CRG’s five brands,” one of this year’s judges, eCommerce consultant Louisa Simpson, said. “Leveraging modern technologies has allowed Matthew to build the foundations for significant and sustainable business growth, and his focus on cultural change, accessibility and inclusion impressed the judges this year.”

Heather McIlvaine, managing editor, premium, at Inside Retail, said Horn impressed the judges with the sheer number of customer data and technology projects he has brought to life during the past year, as well as the enormous impact these initiatives have had on the business.

“Beyond these initiatives, Matthew has introduced a culture of innovation at CRG, which is easier said than done in a legacy retailer. This speaks to his strong leadership skills and reputation for delivering results.

“Matthew’s efforts to support accessibility and inclusion in the eCommerce industry and mentor the next generation of talent are also commendable. He is well-deserving of this year’s number one ranking,” she concluded.

This year, the Top 50 includes people working across many different categories of online retail, from fashion and lifestyle to personal care. As with every year, the scores were incredibly close, which McIlvaine said reflects the calibre of talent in Australia’s eCommerce industry.

Richard Thame, CEO at Couriers Please, the principal sponsor of this year’s Top 50, said the eCommerce and parcel industries have remained “forward-thinking, resilient and adaptable” during the challenges of the past year, and he hailed the success of many players shining through the competition and leading the industry in innovation.

“Many have succeeded in implementing new and innovative ways to enhance the customer experience to nurture sales, improve fulfilment processes and invest in ‘green’ initiatives to create a more sustainable footprint,” Thame said. “During the past year, a plethora of leaders have emerged within the industry – individuals who continue to provide increasing value to their customers and teams and meet higher customer expectations.”

Joining McIlvaine, Thame and Simpson on the judging panel were Mal Chia, MD at Ecom Nation, Mark Baartse, an e-commerce and marketing consultant, Nicola Clement, an eCommerce consultant and advisor at the time of judging, who has now stepped into the role of chief experience officer at Adore Beauty, Shanthi Murugan, director of strategy at One Moon Australia and Shannon Ingrey, VP and GM, Apac, at BigCommerce.

This story first appeared on our sister publication Inside Retail

The post <strong>Australia’s Top 50 People in eCommerce for 2024 revealed</strong> appeared first on Inside Small Business.

ChannelAdvisor commissioned Dynata to quiz 6000 people in six countries, including 1000 in Australia about their online shopping habits. The result: 73 per cent of consumers prioritise delivery in fewer than two days when buying online.

Gordana Redzovski, MD Apac at ChannelAdvisor’s parent CommerceHub, said the result shows retailers who are lagging on speedy delivery options need to reprioritise.

“The popularity of near-instant shipping from Amazon has fundamentally shifted consumer expectations around convenience. Quick logistics is no longer a nice-to-have but a baseline necessity that shoppers expect,” Redzovski said.

The study also found that few consumers are willing to pay for returns with 54 per cent saying they felt it was “unfair” to be charged for returning something bought online. Furthermore, 65 per cent said they would only buy from sites that offer free returns, and the same percentage said they had given up on returning an item if it was too time-consuming or complicated.

“The impact of the returns process is also underappreciated,” Redzovski said. “With two-thirds of consumers now insisting on buying from sites that offer free returns, brands must consider their approach. Retailers need to find a balance between satisfying consumer demands and profitability.

“Having a complex returns process may stop some from completing the return, which is good for the sale, but ultimately bad for the relationship with the customer,” he added. “As we enter peak season, a period typically associated with increased promotions to drive sales and as such a higher number of returns, retailers should monitor the effectiveness of promotions and the impact on returns processing.”

The survey also found that 60 per cent considered a click-and-collect option as an important factor when buying online.

“The growing trend of omnichannel shopping is becoming more appealing for consumers. Failing to provide these services could put online sellers at a disadvantage among their competitors,” Redzovski said. “To remain relevant and gain an edge, brands and retailers must fully embrace a fast, flexible and consumer-centric approach.”

Unsurprisingly, perhaps, 98 per cent of shoppers said price was the ultimate decision driver when buying online.

This story first appeared on our sister publication Internet Retailing

The post <strong>Speedy shipping a core driver of online sales</strong> appeared first on Inside Small Business.

The Reserve Bank on Tuesday raised the rate by another quarter of a per cent to 4.35 per cent, the highest level since 2011, which mainstream media analysts calculate will add another $78 to monthly mortgage repayments on a typical $500,000, 25-year home loan. The increase follows 12 between May last year and June this year, which combined have added $1210 to the cost of servicing a loan that size.

Australian Retailers Association CEO Paul Zahra said previous rate rises had already left retailers reeling, describing the rise as “a significant blow” for the industry heading into the Christmas and holiday trading period and dampening the sector’s cautious optimism.

“Christmas and the holiday season are when discretionary retailers make up to two-thirds of their profits to sustain them during the winter months and hence, they will be devastated by today’s decision,” Zahra said. “Retailers and Australians are already under significant pressure, and Melbourne Cup Day’s rate increase will only pile on further pressure,” he added. “This rate increase will have a significant impact on discretionary spending, at a time when many retailers are struggling to remain sustainable due to the rising cost of doing business.”

Is stunting retail growth the only solution?, asks NRA

National Retail Association director Rob Godwin said retailers were hopeful the RBA would hold the cash rate at 4.1 per cent, but are now reeling from today’s decision.

“Retailers and consumers feel they’ve been backing the wrong horse as the Reserve Bank looks to take even more money out of our pockets ahead of the biggest sales period of the year,” Godwin said. “According to the ABS, retail sales volumes are down 1.7 per cent compared to the September quarter last year, proving the 12 previous consecutive rate hikes have been more than effective at curbing consumer spending.

“It begs the question, does the RBA see stunting retail growth as the only solution to easing high inflation even though consumer spending isn’t a key contributing factor?” he added. “Taking money out of the pockets of business owners every time retailers experience a small win isn’t a fair solution to the rising cost of living.”

Rate rise will “decimate” homebuyer activity

Zippy Financial director and principal broker Louisa Sanghera said today’s rise will “decimate homebuyer and investor activity, which has already fallen off a cliff since May last year”. 

Sanghera said the increase – the first by newly appointed Reserve Bank governor Michelle Bullock –  made no sense given the steadily decreasing inflation over the past nine months as well as the “significant and prolonged fall in homebuyer and investor activity over the same period”.

“Many of the new or existing borrowers we speak with have absolutely no chance of refinancing, with a lot of them technically not servicing their current debt levels,” Sanghera said. “Over the past two months in particular, borrowers are becoming more desperate with many homeowners turning to interest-only repayments as the only way they can continue to hold on to their homes.

“Unfortunately, their current lenders don’t necessarily offer interest only to owner occupiers – and they can’t refinance – so they may need to sell or opt for a repayment pause to keep the roof over their heads,” she added.

Sanghera said ABS Lending Indicators for September showed the number of new loans for owner occupiers has fallen 28 per cent since May last year, while the number of new investor loans has fallen 25 per cent over the same period.

She called on “all levels of government” to start showing some fiscal constraint rather than expecting everyday borrowers to shoulder the inflation burden.

This story first appeared on our sister publication Inside Retail

The post <strong>Shock rate rise deals a “devastating” blow to retailers</strong> appeared first on Inside Small Business.

“Last year, Christmas spending was bolstered by a record freedom spending phenomenon with delayed overseas travel, whereas this year – shoppers are expected to be much more conservative with their budgets,” ARA CEO, Paul Zahra, said.

“This year we anticipate a bargain-driven Christmas shopper, who will actively seek out the best deals and look for value purchases.”

Zahra said the marginal 0.1 per cent increase in spending forecast this year is being inflated by supply chain price rises and a net increase in Australia’s population.

“If you exclude these factors, overall Christmas spending is in decline.”

Zahra was commenting on forecasts prepared in partnership with Roy Morgan, which predicts $66.8 billion will be spent in the November to December 24 Christmas trading period – just $74,000 more than last year.

And that prediction is subject to future monetary decisions by the Reserve Bank of Australia which has kept the cash rate stable for four consecutive months but – dependent on petrol price movements – may raise it further on Melbourne Cup Day, when the November decision is revealed.

The research shows spending on food will account for the largest share of spending in the Christmas lead-up, accounting for $26.7 billion. That will represent a 2.4 per cent increase on last year, driven by inflation.

Hospitality spending is predicted to fall by 4.2 per cent, household goods by 3.2 per cent and apparel by 0.8 per cent.

However, department stores are expected to see a 2.9 per cent improvement and other general retailing – including books, cosmetics and recreational goods – by 1.7 per cent.

By state, SA and ACT are expected to record a 1.2 per cent increase in retail sales, Tasmania up by 0.7 per cent, WA by 0.5 per cent, the NT by 0.3 per cent and Victoria by 0.2 per cent. Spending in Queensland and NSW is predicted to fall marginally – by 0.3 per cent and 0.2 per cent respectively.  

Anticipating a “mixed holiday season for retailers” Zahra said the consumers will be end winners.

“With increased competition and reduced spending across discretionary categories, retailers will be motivated to entice the budget shopper,” Zahra said. “For many discretionary retailers, up to two-thirds of their profit is made during the all-important Christmas trading period, so it is shaping up to be a period of business uncertainty this year.”

This story first appeared on our sister publication Inside Retail

The post <strong>No Christmas spending boom, warns ARA</strong> appeared first on Inside Small Business.

Volume data excludes the impact of inflation on retail sales, which have been trending up for much of this year. 

The last time there were three consecutive quarters of declining retail volume sales was in 2008 – at the time of the Global Financial Crisis. 

ABS figures show a sales decline of 0.5 per cent for the June quarter, which followed declines of 0.8 per cent in the preceding quarter and 0.4 per cent in the three months to December 31. 

ARA CEO Paul Zahra said the decline demonstrates a continued slowdown in consumer spending – and adds to the pressure retailers are already under as the cost of doing business skyrockets.  

“Retailers are seeing less demand at a time where wages, rents, insurance, utilities, supply chain and materials are all increasing in cost,” said Zahra. 

“Sales volumes are a good indicator of the health of retail as sales revenue numbers can mask pricing and hence, profitability.” 

Zahra used the data as the reason why the Reserve Bank should continue to show restraint in future interest rate decisions following this week’s decision to hold the base rate.  

For the month of June, volume sales fell by 1.2 per cent year on year. By category, food retailing sales volume was down 0.7 per cent and for the first time since September 2021’s pandemic lockdowns, sales at cafes, restaurants, and takeaway food services dropped, albeit by a modest 0.1 per cent. 

Sales of household goods were down by 1.5 per cent by volume, and in department stores by 1.4 per cent. 

“Clothing and apparel sales received a sugar-hit due to increased promotional activity with heavy discounting heading into winter clearance sales events,” Zahra noted, with volume sales up by 1.1 per cent and the only category to show growth for the quarter.  

“Most other categories suffered as a result of consumers prioritising essentials like food and cutting back on discretionary spending.”

This story first appeared on our sister publication Inside Retail

The post Australia’s retail ‘recession’ runs to three consecutive quarters appeared first on Inside Small Business.