Popular Aussie bedding and homewares company, Koala, has laid off 30 local staff due to unstable economic conditions.
The company shot up in popularity, particularly during the 2020 and 2021 lockdown periods, due to its competitive pricing, being all online and offering four hour delivery to metro areas.
However, just like many other companies, supply chain issues, inflation and surging interest rates have all taken their toll.
A Koala spokeswoman told The Sydney Morning Herald and The Age that uncertain economic conditions had resulted in 30 Australian staff members being made redundant last week.
Describing the former staff as “amazingly talented”, she said the company was supporting them with an outplacement service and professional connections.
According to the company’s website, Koala has “more than 200” employees.
The company also confirmed it had consolidated its offices in the inner-city Sydney suburb of Alexandria after previously also having employees located in the CBD.
News.com.au has contacted Koala for comment.
But it isn’t just the Australian staff that have been impacted, with 10 roles also being made redundant in South Korea following an expansion to the region last year.
The spokeswoman again told the publications “economic uncertainty” was behind the move, along with the need to “reduce our start-up cost in the market”.
“For the near term, our operations in Korea continue as we explore more efficient ways to serve the market,” she said.
The Sydney Morning Herald and The Age also cited claims from multiple industry sources that Koala had explored the possibility of listing on the Australian stockmarket, before abandoning the plan amid the recent the recent technology downturn.
The spokeswoman for the company strongly denied these claims.
“Like any private company with proven success as a market leader in our categories and markets, we are fortunate enough to receive countless inbound introductions from potential investors,” she said.
“They see the opportunity for Koala to continue to disrupt the global furniture market.”
She did not offer specific figures, but said Koala’s margins were double those of some of its competitors, adding that the decision to offer furniture and other homewares has led to “incredible growth” in non-mattress sales.
“We will continue to invest in our operations across Australia and Asia,” the spokeswoman said.
In October 2020, Koala copped significant backlash after announcing it would cease manufacturing its mattresses domestically and make them in China instead.
Staunch supporter of Australian-made products, Harvey Norman executive chairman Gerry Harvey, previously slammed Koala’s move, saying the name of the company implies the product is made domestically.
“Anyone selling imported mattresses are doing it because they can make more money,” Mr Harvey said.
“The marketing is dishonest… they are pretending they are Australian.”
The retail giant’s co-founder said overseas imports made it harder for local companies to compete in bedding and furniture.
Mr Harvey said his store predominantly sold made-in-Australia bedding, supporting local companies such as Sealy, SleepMaker and AH Beard.
When it was established in 2015, Koala marketed itself as a retailer of Australian-made furniture with a strong focus on sustainability.
However, most of its manufacturing has now moved to China and Europe, with the company deregistering itself in 2019 from using the Australian Made trademark.
“The decision to cease production of mattresses in Australia will provide significant innovation and quality improvements to help drive our continued growth across Asia-Pacific,” a company spokeswoman said at the time.
Koala said the move offshore would mean it would have greater influence in cultivating “sustainable behaviours” in its manufacturing and supply chain.
“We are always in search of the best manufacturers, suppliers, and makers around the world who meet or exceed our environmental and sustainability standards and conduct assessments to support this,” a spokeswoman said.
When Brett Clements got his first job at 15, he dreamed that, if he worked hard, he would be able to enjoy the fruits of his labor and retire at 40, but it wasn’t to be.
Key points:
The Superannuation Association of Australia estimates a single person needs $545,000 to retire comfortably
One million people who withdrew some of their super early during the pandemic have been left with less than $1,000 in their account
Share market volatility has also had an impact on super balances
A modest superannuation balance and the rising cost of living mean the 60-year-old Perth-based cleaner expects to be working for at least another 10 years.
“I have about $150,000 in superannuation, and I’ll end up with $10,000 left out of my superannuation after the house is paid for, which isn’t a lot to live on after 45 years of working,” he told ABC’s 7.30.
“[I’m] definitely behind the eight ball … because the wages aren’t good. So, therefore, your [amount] is not that great going into super.”
Another decade of labor will be painfully hard for Mr Clements, who still suffers physically and financially from breaking his back when he owned his own cleaning business 20 years ago.
“We tried to keep that business going. In the end, we just had to fold it,” he said.
“I’ve suffered with this ever since.”
Mr Clements’ 75-year-old wife works alongside him as a cleaner and can’t afford to retire either.
Brett Clements expects he will be working for at least another 10 years.(ABC News: Phil Hemingway)
“She’ll tell you that I’ve become more and more depressed,” he said.
“We buy mainly home-branded stuff but … an $80 shop is now $130.”
What’s making Mr Clements even more uneasy is that his superannuation balance is fluctuating daily because of the global economic uncertainty.
“I have a balanced superannuation, so I’m not a big risk-taker,” Mr Clements said.
“COVID hit, the war in Ukraine has hit. Now, suddenly, everything’s volatile.”
According to consultancy firm SuperRatings, only three superannuation funds have reported that they made money for their members with balanced investments during the past financial year.
SuperRatings’ top 10 balanced super options over 12 months:
Rank
Option name
1-year returns (%)
1
Hostplus – Balanced
1.6
two
Qantas Super Gateway—Growth
0.6
3
Christian Super — MyEthicalSuper
0.5
4
Legalsuper — MySuper Balanced
-1.0
5
Australian Retirement Trust — Super Savings – Balanced
-1.0
6
Energy Super—Balanced
-1.2
7
Aust Catholic Super and Ret—Balanced
-1.2
8
CareSuper—Balanced
-1.7
9
HESTA—Balanced Growth
-1.8
10
Telstra Super Corp Plus — Balanced
-1.9
Glenn McCrea says Australians shouldn’t be focused on short-term share market volatility when it comes to their super.(Supplied)
However, the Association of Superannuation Funds Australia’s deputy chief executive, Glenn McCrea, is urging older Australians not to panic about share market volatility.
“The reality is [the previous] financial year, we saw returns of 20 per cent. Este [past] year, it has fallen slightly, on average about 3 per cent,” he said.
“Call your fund. Understand where your fund invests. Understand your balance and how your balance has changed over time.
“I do encourage people to look at returns over 10 years, rather than follow what happens day to day.”
The downturn in superannuation amounts comes as the government and opposition clash over the level of detail that superannuation funds provide to their members about political donations, marketing and sponsorship expenses.
super balances at retirement
Estimates vary on how many Australians need to retire.
Mr McCrea said that, on the association’s calculations, a single person would need $545,000 and a couple $640,000 in retirement to live comfortably.
“[It] basically means you can afford to go to a dentist, you can catch up with friends and have that cup of coffee, you can fix the washing machine or car,” he said.
“We estimate that, by 2050, 50 per cent of Australians will get to that dignity in retirement.”
Despite wanting to be self-sufficient, Mr Clements knows his superannuation won’t be enough to sustain his retirement.
“I’ll have to go, cap in hand, to the government and try [to] draw on a pension,” he said.
“Pride gets in the way sometimes.”
Young Australians also worried
It’s not just those hoping to retire soon who are feeling nervous about their superannuation and their future.
Hairdresser Michaela Marshall-Lawrence, 27, was forced to withdraw $5,000 from her superannuation at the start of the pandemic to keep her salon afloat.
She’d just opened the business, and faced the brunt of lockdowns amid a drop in bookings.
Michaela Marshall-Lawrence had only just opened her business when COVID-19 hit.(ABC News: Edward Gill)
“I wasn’t eligible for any government support, in any way, shape or form,” she said.
“I had already exhausted 95 per cent of my savings on purchasing the salon.
“[The $5,000 super withdrawal] it was enough that it paid for another month’s worth of rent, and I could pay my staff and I could afford to live.”
Under the former Coalition government’s scheme, up to $20,000 could be withdrawn from a person’s super during the pandemic if they were experiencing hardship.
However, withdrawing the money early meant missing out on potentially tens of thousands of dollars of compound earnings across future years, something that concerns Ms Marshall-Lawrence.
Michaela Marshall-Lawrence is making extra super contributions to try to grow her balance faster.(ABC News: Edward Gill)
“I’m now paying myself 22 per cent super,” she said.
“I know so many people, they’re like, ‘Oh, it’s just super. I can’t access it for another 50-60 years anyway, so what’s the point?’
“And it’s like, ‘Well, there is a big point, you know’.”
Data exclusively provided to ABC’s 7.30 by the Association of Superannuation Funds Australia shows that, out of the 3 million people who accessed their super early, 1 million were left with less than $1,000 in their super account, while 163,000 people were left with no super at there.
Mr McCrea said those who took out money early were mostly single parents, women and those on low incomes, and 44 per cent of applicants were aged under 35.
“There’s no doubt younger people were the main people to take money out through early release,” he said.
“What we do know is a younger person who took the full $20,000 out, will be $43,000 worse off in retirement, so that’s for a 30-year-old,” he said.
Council on the Aging chief executive Ian Yates said those who had withdrawn early would find it tougher to fund their own retirement.
Council on the Aging Australia’s Ian Yates predicts early withdrawals may see higher pension costs in future.(ABC News: Marco Catalano)
“The impact of that withdrawal is that there’ll be higher pension costs into future years,” he said.
Shadow Minister for Financial Services Stuart Robert maintains the former Coalition government policy was a necessary one at a time of crisis.
“This was a one-in-100-year pandemic. This is a not normal state of affairs,” he said.
“Australians are pretty canny and Australians are able to make decisions themselves.
“The requirement, and the responsibility, was with individual Australians because, remember, it’s their money.”
Fund spending in the spotlight
How superannuation funds spend their members’ money is currently under scrutiny before Federal Parliament.
Mr Robert said the Labor Government was trying to wind back the Coalition’s policy to force funds to itemise disclosure of political donations, marketing, and sponsorship expenses.
Shadow Minister for Financial Services Stuart Robert says members should be able to see how super funds are spending their money.(ABC News: Matt Roberts)
“We believe them [super funds] should be transparent. All members should be able to see how every dollar of their money has been spent,” he said.
“The transparency and integrity of superannuation of members’ money is being watered down so the Labor government can try and hide what super funds are spending their money on when it comes to political donations, when it comes to football sponsorships.”
Mr Robert has written to crossbenchers urging them to support itemized disclosure and disallow Labor’s proposal for less detail, which has been drawn up as a draft regulation.
The government said there would still be a requirement for super funds to disclose payments to industrial bodies, including unions and employer associations, but it would be an aggregate figure and not itemised.
Watch this story on 7:30 tonight on ABC TV and ABC iview.
