Interview with Paul Zahra, CEO of the Australian Retailers Association (ARA)
This month we sat down with Paul Zahra, the CEO of the Australian Retailers Association (ARA) to discuss some of the key issues facing the retail sector.
Paul has held the role since April 2020 and before that was the CEO and Managing Director of David Jones. ARA is Australia’s largest retail industry association with around 7,500 independent and national retail members, of which 95 per cent are small and medium sized businesses.
Q1. What do you see are the biggest challenge(s) for you and the ARA over the next 12 months?
The top challenge for everyone, is getting to the other side of the COVID-19 pandemic with a full reopening of the economy. I don’t believe that when it began, anyone thought it would be so protracted and have such an impact – not just on our nation’s economy, but on our psyche and mental health. From an economic and social point of view, our federal and state governments have been navigating uncharted waters, and one of my imperatives is to weigh in on policy directives to get the best outcome for our retailers and the retail workforce. Continued collaboration between industry, government and the public will get us through, and in fact I believe, make us stronger.
Q2. We have heard there some real differences between retailers in metro and regions what are your members experiencing?
COVID has put the spotlight on the many different categories within the retail community and their different needs and performance challenges.
There have been fluctuating fortunes between metro and regional. What is playing out in Victoria is a very pronounced example of this with regional communities hit with the double force of bushfire impacts and then visitor communities drying up due to the pandemic.
What is now happening is we are witnessing the strength of regional communities when it comes to containing infection rates and maintaining more of a bubble – and those communities are reaping the benefits of that with early release from restrictions. Some regional communities will also benefit from an increase in domestic tourism spending.
There’s no question however that there are deep pockets of impacts within regional areas such as border communities where visitation is at almost a standstill.
Within metropolitan areas, CBDs have been decimated on a retail front and are bearing the full impact of declining shopper numbers with the disappearance of the worker community and the tourist shoppers. Once again, the situation in Victoria and Melbourne, is an example of how badly this pandemic can impact an entire city’s economy.
A linking theme across all these categories is discretionary retail – for example fashion and footwear – spend is down across most regions. This is mainly due to the lack of need as people remain cocooned at home.
Q3. COVID-19 has forced many businesses to adapt and change their business models. What are some of the best examples you have seen?
It is heartening to see how adaptive and creative our businesses can be in the face of a crisis. Retailers across the country have shown resilience and ingenuity after COVID hit. From the big retailers, we saw bricks and mortar-based companies quickly adapt to online delivery and click & collect services – the impacts of this will be long lasting. Cafes and restaurants – where allowed – became takeaway hubs overnight. Amazon and Australia Post have taken their delivery offering to new heights under extraordinary lockdown conditions. Many fashion and beauty brands were very swift to adapt – which is not surprising given fashion is all about leading change. We saw this in the way cosmetic companies pivoted to COVID products like hand sanitiser, fashion brands rapidly brought out stunning fashion masks and pivoted to casual wear to suit the new work from home lifestyle. Fashion brands wooed and wowed new audiences with their virtual fashion shows and beauty brands shifted to online tutorials and created instore beauty appointments and personalised services that really took shopping to the next level. Many of these trends are likely to become an extra special part of the new customer experience.
Q4. Tips for retailers who are looking to make changes to their operations in light of COVID-19?
Change has been constant within retail for decades however, COVID has really accelerated this. I have been in retail for nearly four decades and it is my estimation that we will see a decade’s worth of change in the next 18 months.
If you need to re-think your business model, now is the time - don’t waste a crisis.
For many retailers there is support in place for the coming months via the federal JobKeeper 2.0 scheme, as well as some state-based rental relief protecting commercial tenants from eviction and allowing them to renegotiate terms. There are very favourable loans on offer and some strong tax incentives which may help some retailers who are confident in their business model to explore longer-term growth concepts.
We are encouraging retailers to make sure they have strong omnichannel presence – online, social, mobile - and to reduce their retail physical footprint whilst investing heavily in digital. Take this time to reskill your staff and teams and ideally take advantage of the state and federal programs that are going to be pouring hundreds of millions of dollars into the training effort.
Q5. What is your key message to retailers in the current environment?
This is the rebirth of retail - not the death of retail. Retailers have been operating in challenging conditions for many years. An acceleration of structural change has occurred which requires investment to return the Australian retail sector to health.
The COVID-19 pandemic has highlighted the need for retailers to upskill their employees and adapt to new ways of doing business. This crisis is a chance for retail to rebuild and adapt to the post-Covid-19 economy which will ultimately translate into significant job opportunities and economic growth.