The Eck Effect, page-6

Dennis Eck, a former chief executive of the Coles retail conglomerate, says the rise of e-commerce giants such as Amazon has reshaped the retail landscape and paved the way for the rise of micro-brands in consumer goods that are able to build a presence very quickly.

Mr Eck, who is based in California but is in Sydney for meetings with ASX-listed company Cellmid in which he has a $2 million investment and is also a director, said Amazon and its fellow e-commerce behemoths had overturned the retail rules in a short space of time.

But the new retail environment where social media and digital communication had a large influence on consumer behaviour and buying patterns, meant new consumer brands could gain traction very fast in their particular segments, and they didn't necessarily have to become ubiquitous global brands.

"Because of the digital nature of communications and the speed at which things happen, there is the real possibility of micro-brands," Mr Eck told The Australian Financial Review on Monday.

"You can build a brand very quickly because you don't have to go through the traditional brand-building that you did 20 years ago."

Mr Eck – who from 1997 to 2001 ran the Coles supermarkets, Target, Kmart and Myer businesses when they were all under the Coles Myer umbrella – became a director of Cellmid in March. He invested an extra $1 million as part of a placement to investors at 38¢ a share six weeks ago to take his shareholding in the anti hair-loss and anti-wrinkle creams group to a stake worth $2 million.

He returned to the United States after his departure from Coles Myer when the non-supermarket businesses suffered a profit slide. But he still keeps an eye on the Australian retail market.

Not nimble enough
Mr Eck said he was too far removed to make any astute observations about whether the demerger of the Coles supermarkets group onto the ASX as a stand-alone group would be a success. "I'd rather not comment on that," he said.

One global theme that would accelerate was the dominance of Amazon in many sectors. "I think there is a great possibility it is going to feed off the weak," Mr Eck said.

Retail businesses that had been mainly bricks and mortar-based had been too slow to pick the shifts and had been left with a legacy of large store networks that weren't as nimble as they needed to be.

But it was relevance to the end customer that was the most important thing in the new retail landscape. "I think any retailer can stay relevant as long as they continue to adapt," Mr Eck said. He said traversing social media and building brands through the power of word of mouth and recommendations was crucial.

Mr Eck said the health and wellness category was growing strongly as cashed-up Baby Boomers wanted to age gracefully.

"First of all you have a population that is ageing," he said. "People have a bit more money to spend to look and feel good and to maintain their health. Vanity is a human trait. There's no doubt".

Cellmid has ambitious plans for its Evolis anti-hair-loss lotions and shampoos, which have begun selling in the US in department stores including Neiman Marcus and Bloomingdales.