JobKeeper too little, too late to save retail, says The Iconic boss

The head of online shopping giant The Iconic has criticised the federal government for not providing enough support to the country's ailing retail sector during the coronavirus pandemic, echoing warnings of an industry collapse come September.

Erica Berchtold, the recently appointed head of the $422 million retailer, said JobKeeper's requirement for companies to record a 30 or 50 per cent revenue slump to qualify for the scheme would mean by the time the stimulus kicked in, it would already be too late for many.

The government's JobKeeper stimulus was too little too late, The Iconic boss Erica Berchtold believes.

"If a retailer is down 30 per cent or down 50 per cent [in sales], JobKeeper is not going to be enough to save that retailer," she told The Age and The Sydney Morning Herald.

"For sales to be down that much, there is a huge amount of inventory you're not clearing, so then all of your future profits are going to be spent trying to clear that inventory."

"And while you're sitting on that inventory, you're not able to order new stock from suppliers. There's this domino effect, one thing is just leading to another."

Australia's retail sector has been battered through the coronavirus pandemic, with sales dropping 17.9 per cent throughout April. However, online trade has soared 16.2 per cent across the same period, according to business bank NAB.

It's just so disappointing there's not more they could do. Keeping people employed is one thing, but it's about keeping that whole ecosystem alive.

The Iconic CEO Erica Berchtold

The Iconic, a purely online fashion retailer, has been able to trade largely unhindered through the COVID-19 pandemic. The business is publicly listed on the Frankfurt stock exchange through its parent company Global Fashion Group, and in the 2019 calendar year reported $422 million in sales.

But despite doing a roaring trade in loungewear such as tracksuit pants and hoodies over the lockdown period, Ms Berchtold said The Iconic's sales haven't boomed as customer stopped spending in categories such as work and formal wear.

Sales have remained above the 30 per cent threshold required for JobKeeper, however, meaning the business did not get "one single iota" of assistance from the government, Ms Berchtold said.

"It's just so disappointing there's not more they could do. Keeping people employed is one thing, but it's about keeping that whole ecosystem alive," she said.

Ms Berchtold is working with the industry on a plan to help the retail sector through the virus recovery, focused on helping businesses migrate online. The Iconic has also launched its own fulfilment service and a digital factory outlet centre to help brands move out-of-season stock.

Retailers are preparing their businesses to pivot heavily towards online following the pandemic, while also looking to extract themselves from untenable or unprofitable store leases. Major department store David Jones announced last week it would accelerate its plans to axe 20 per cent of its floor space by 2025.

But the difficult discussions with landlords will be just the first challenge facing these companies as they move to online, Ms Berchtold said, noting traditional retailers were "not exactly experts" when it comes to internet shopping.

"How do they tell their shareholders that they're going to take a big provision to shut all of these stores down and shift into an online business that isn't their expertise and that's probably not as profitable?" she said.

"That's an interesting conversation they're going to need to have."