Inside Retail: First of all, congratulations on your new role. What are some of the major changes we can expect to see at this year’s Melbourne Fashion Festival?
Launa Inman: Going forward, I think it’s going to be more of an evolution than a revolution. As you can see, Melbourne Fashion Festival is not just live runway shows, we’re also doing digital shows, and we made that call recognising that the future was a little uncertain, and you never know when you could potentially go back into a lockdown. Our thinking was [to] just be prepared. The digital shows are sensational. They’ve been filmed in the countryside of Victoria and they look wonderful.
We’ve come a long way from where we were a year ago, and if we look forward to next year, I’m not sure that we will ever go back to what we were doing two years ago. People always talk about when we will go back to normal. I don’t think that pure normal is ever going to reoccur; the world has moved on and it wasn’t necessarily always perfect. You need to transform businesses, and the wonderful thing is that we’ve been able to transform our direction very rapidly.
IR: What are some of your top priorities for Melbourne Fashion Festival going forward?
LI: We’re going to continue to evolve and adapt the fashion festival experience. We’re going to become more global, and by that, I mean the very fact that we’ve done digital runway shows. It is going to enable people wherever they are in the world to log on and actually have access to Australian designers. That is absolutely fantastic. And we’re really going to be growing ‘see now, buy now’. I really think that is the future. I think that livestreaming and immediate gratification where you can go in and buy the product thereafter is very much here to stay. And I think that that is going to be our biggest opportunity.
I was listening to a retail conference in America last month, and they were talking about how so many retailers have really taken to livestreaming, particularly in Asia and China. They were quoting figures like 500 million people are engaged in livestreaming in Asia versus five million people in America. They were talking about how Estee Lauder, for example, does one-on-one livestreaming, and how celebrities and influencers are actually in their bathrooms showing how they take off their makeup, how they put on new makeup and people go in and purchase. I think that those learnings are really here to stay. We’ve already started doing some of that with ‘see now, buy now’, and I think it’s going to be much more and much bigger.
But having said that, there is still going to be the need for the fashion shows because it’s not just about the shows, it’s about people coming together, enjoying the whole ambience, having meetings beforehand, having some drinks and chatting with friends and then actually seeing the live event. It’s the whole experience, and we could never lose that.
IR: Some of the biggest names in luxury fashion wrote an open letter last year that called for a major rethink of the global fashion calendar and a move to seasonless fashion. What are your thoughts on it?
LI: I totally agree with it. I think it’s much better if you have smaller ranges but more frequent ranges. Gone are the days when people are going to have enormous ranges. People are going to be far more selective in their buying. I really do believe that. We are all very aware of the landfill wastage that can happen with clothing that doesn’t get sold and gets marked down. And how much of it gets bought and then just thrown away?
I think that there’s an awareness of sustainability, and we’ve been talking about it for a long time, but I really do feel it’s come. We’ve seen that even with our National Designer Award, which was announced last week. The young couple that do the swimwear range [Commas] has very much focused on sustainability and making sure they buy fabrics from local, family-owned businesses both in Europe and Asia and so on. I think people are really trying to help small businesses, help them do the right thing and just generally be more aware of our whole environment. Gone are the days [of] buying changing fashions the whole time and buying, buying and buying. I just feel that there’s some moderation on that. People are now buying more sensibly.
IR: Do you think fashion brands today need to have some sort of sustainable element in order to be competitive?
LI: I totally think they need to differentiate themselves in various ways, but also the customer is just going to expect them to be doing things that take sustainability into consideration. Probably five or six years ago, companies that did it were deemed to be more unusual, but I think it’s almost become the norm now. Whether you’re in the fashion game or whether you’re a big business, you have to report on your environmental social governance. You have to do that for financial reports now, so there’s just a worldwide trend of sustainability, whether it be in your packaging, wastage, or fabrication, or whether you’re able to recycle your fabrics. It doesn’t really matter what line of business you are in, there is a focus on it today. And I think if companies, and particularly retailers and designers, don’t consider those things, they will just be pushed aside by the consumers. It’s going to be considered a normal part of doing business.
IR: What about when businesses say that it’s too costly to be sustainable?
LI: I can tell you that when I was running Target over 10 years ago, we had already put our mind to it then. It’s not just about sustainability, it also makes good practical business sense.
I’ll give you an example. Ten years ago, when we used to get shoes shipped from China, each shoe was wrapped in plastic with stuffing in it and so on. We made the decision to do them in distribution packs of six, so there would be one piece of plastic going around six pairs of shoes. So immediately, we were saving a lot on packaging, and the impact was both financial and environmental. One of the challenges a lot of retailers have is they have a huge amount of boxing and packaging coming into the back of their stores that they have to unpack and have taken away to be recycled. So [less packaging] made business sense. It took up less room when we were unpacking it coming out of China and it weighed less so the freight costs were less. We could get more into a container and it was quicker to unpack at the back of the store so we could get the product onto the floor straightaway. The big thing is we weren’t left with so much packaging to dispense with.
Everyone is looking at how they can contribute, and small things like that add up to an enormous amount. But I think that it’s evolved over the last 10 years. Now, it really has become very much about the fabric and recycling yarns, etc.
IR: Besides sustainability, what are some of the other major issues that retailers really need to have top of mind at the moment?
LI: I think supply chain is really important today – where you’re sourcing your products. Certainly more people are looking to do it locally, but it does come with a cost. I think we need to be realistic and really understand where our supply chain can be most effective.
When you are a retailer, the most expensive cost of that last mile that everyone talks about is after the product arrives, how do you get it to stores quickly and get it to customers quickly without having to handle it too many times? The big thing is flexibility. I just had a board meeting with a retailer last week and we were talking about how you can’t just have one process anymore when you’re importing products. You have to have flexibility to either do major drops or direct-to-store. You need to be able to immediately spring to various scenarios depending on what the circumstances are. You have to be agile and say, ‘OK, that’s not working, how do we quickly change the direction of where this is going?’
I think people are going to have to be very aware of what’s happening globally at all times. Shipping costs have gone up dramatically in the last few months. To get a container out of Asia is so expensive. You really need to have people that are looking at that and understanding what’s driving it, what the implications are and what you can do to try and mitigate some of the challenges.
You have to have learnings from the past, but you’ve always got to be looking forward and saying, what’s around the corner, what’s happening? Not just in retail, but what’s happening globally, politically, financially and all sorts of things.
IR: Given the fact you led one of Australia’s major department store businesses, Target, I’d love to hear what you think about the department store sector. The latest earnings from Myer in Australia and Macy’s and Nordstrom in the US suggest the category is really struggling.
LI: I think that they have been very slow to react, but I think certain ones have responded very quickly and quite well. If you look at Kohl’s in the US, they’re a mid-tier department store, but their share price has increased dramatically and their sales have done well. They seem to move quite rapidly.
[As for] Macy’s and them, I think that one of their biggest challenges is that they have very long-term leases for very large buildings and they haven’t been able to reduce their space sufficiently, and that has certainly been a challenge.
It’s a question now about how they can utilise their space better. I also think they’ve had legacies of very cumbersome computer systems as well, and haven’t been agile enough. But Target US has had phenomenal growth in the last year, so I think it’s those stores that have really recognised that their stores are not just about stores anymore, they’re also becoming a form of a very small distribution centre.
A lot of retailers were amazed at how quickly kerbside pickup evolved with lockdown, and they responded quickly by going into the technology where people could buy online, but then still drive to the nearest store, book a time for it to be brought out to the pavement or into the parking area and then pick it up and go. If you look at any of the major retailers in America, that is actually the biggest growth area, the kerbside pickup.
I think it’s really about understanding how you still give [customers] the experience of the products, but you also the convenience. They are going to have to get much smarter in their technology so customers can understand where the stock is. Is it available at their local store that is nearby, or does it have to be transferred over, or does it have to come out of their major distribution centre? All these things are going to have to be very transparent, not only to the stores and the sales assistants, but in fact, the customer. They need to be able to look at real-time stock inventory, and I think that’s going to be the future of any retailer that has stores and online.
The customer needs to have the chance to decide how they want to shop. Do they want to go in store and browse? Do they want to have the store bring it out to the kerb and pick it up, or do they want to buy the whole thing online and have it delivered? There have got to be many different options now.