Local retailers struggle as international ‘fast-fashion’ powerhouses enter the Australian market
Australia is being bombarded with large overseas retail chains entering the market and are using a ‘fast-fashion’ model that has already made local retailers struggle to keep up.
Sweden’s H&M entered Melbourne’s GPO building with a bang last month, following the footsteps of global chains Zara and Topshop in the past few years. Australia’s fashionistas are squealing everywhere at the thought of on-trend, affordable clothing appearing on the racks just a few weeks after the trends are set on the global runways.
Large-scale brands like H&M, Topshop and Zara use a ‘fast-fashion’ business model. This involves mass-producing on-trend and affordable clothing that will suck away young adults’ disposable income time and time again. The stock is frequently overturned in these stores, making the new and cool thing always available every few weeks, a concept that has already startled executives in boardrooms Australia-wide.
With a strong emphasis on prime real estate, celebrity affiliation, affordable prices and strong supply chain management, these companies are operated very strategically and on such a large scale, forcing Australian retailers to wake up and attempt to catch up.
$62 million Australian company, Grace Fashion, has placed itself into administration this past year from the growing pressures of competition placed by these new international brands.
However, Chief Executive and Managing Director of Myer, Bernie Brookes, is ambitious and is using this international competition as a way to launch a new 5-point-plan to
‘reinvigorate the whole management team, bringing to the company new leaders who are energised and committed to the business’.
Some Australian retailers have been following the fast-fashion model for years. Valleygirl releases over 50 new styles of garments per week, and Witchery releases 400 new styles every month. Despite the changes in their model, the novelty of new international brands have steered young people towards the glamorous doors of businesses like Zara, where the prices are affordable and the customer service is ten times better.
Australia is seen as ‘unchartered territory’ for global brands, and with a market that spends $37 billion a year on fashion, it is obvious that the profit margins for them will be tremendous.
As well as focusing on the new trends, retail powerhouses focus on their customer service just as much. Sales assistants are almost overflowing in the stores of overseas brands such as Topshop, with highly skilled managers and excellent communication systems in place in each store.
H&M wanted to make such an appearance that they hired a team of highly desirable retail professionals and flew them, all expenses paid, to the United Kingdom in order to provide them with the best possible training for the Melbourne store. Great service is a must for international brands in Australia, as it is the make-or-break of any shopping trip and it really creates a lasting impression on the customers.
The experience is truly something different to the service Australians are accustomed to in department stores like Myer and David Jones, where they employ what often seems to be the least amount of people possible. This phenomenon, however, has definitely been improving over the past few years with the growing competition of international brands arriving at our shores and the expanding online presence of overseas businesses in the fashion industry.
An online store presence is also an highly important aspect of these international brands. Interestingly so, neither Zara nor Topshop have yet established an Australian-exclusive online store, like they have done in the rest of the world. H&M claims to be launching its online store very soon, as is Japanese global retailer Uniqlo – which just opened its doors at the elegant and sparkly new Melbourne Emporium.
It will be interesting to see whether these brands see the benefits of an online store exclusive to Australia. It could revolutionise the way that the rural areas of the country connect and relate to the fashion world.
Australian brands will have to improve their online store presence in order to compete with online-exclusive stores such as ASOS, offering free shipping from the UK, excellent customer service, a great returns policy, and no minimum spend limit on orders. Local businesses have an advantage over international players in that the shipping and overall administration costs of an online store will be lower, if operated from warehouses locally. Strengthening an online presence of local businesses could be all the difference between surviving and thriving in this industry after the international retail giants have settled in the market.
Australian fashion brands must reconsider and remodel their business to not only deal with this ‘invasion’, but to thrive in an environment full of growing, healthy competition. A creative and innovative approach is the only way for these businesses to keep up and compete with the experienced international powerhouses and their massive global brand presence.
A short news story by Channel 9 sums everything up perfectly: http://media.theage.com.au/business/businessday/fast-fashion-5325355.html
Story by Teni Sarris.