Australian fashion brand retailers counter foreign invasion

MARK RITSON
August 22, 2016
The Australian
If you wanted to pinpoint the most important year in the history of Australian fashion you’d be hard pushed to look beyond 2011. It was a curious time. We emerged out of the global financial crisis in better shape than most developed countries and spent that year with our dollar trading slightly above or below parity with the US dollar.
But there was a price to be paid for our robust economy and strong currency. Many of the world’s biggest fashion retailers eyed our shopping centres with growing interest. Here was a market of 23 million fashion-savvy people, with travel retail to boot, cashed up and looking for fresh brands.
Local brands were overpriced and underserving the Australian shopper. And so the big foreign fashion brands arrived. In 2011, Zara opened its doors in April on Sydney’s Pitt Street to a line as long as the eye could see. Eight months later and its was Top Shop doing the same thing on Chapel Street in Melbourne.
Since then, Gap, H&M and Uniqlo have also arrived. Each has increased the number of stores it operates in Australia and, despite the dire warnings from local retailers about demanding consumers, alternate seasons and tough incumbents, each has seen profits grow incrementally.
The big question for Australian fashion retailers was what would they actually do about it? Would Australia become simply a relatively small, but valuable international market for foreign fast fashion brands? Or would the local players fight back?
Last Friday in Melbourne we saw further evidence that something of a fightback is now happening. The new Cotton On megastore on Bourke Street provides 1400sq m of proof that far from simply backing down, some Australian fashion retailers have learnt from their international rivals and are now serving it back to them. It’s a spectacular retail space and it impresses on more than just scale.
The store’s approach to visual merchandising, the presence of disruptive features like its own barber shop are a world away from the anodyne fashion caves selling discounted clothing that once made up much of the Australian fashion retail scene.
More than the megastore opening itself, it’s a sequence that tells you everything about Cotton On and its status as a genuine global player. It has already opened megastores in the US and South Africa. They are part of an international network of stores that spans 18 countries and more than 1400 stores.
And that is the key point. Because back in 2011 when all the foreign fashion brands began to enter Australia our own local players were left to sheepishly acknowledge that most, and in many cases, all of their revenues were derived from domestic customers only. Cotton On exemplifies not only evidence that Australian fashion retail is pushing back on local shores, but also that it can open and prosper at an international level too.
Stage one in the fightback began with more customer focus, better service and more innovation across Australia. The arrival of Sephora into Australia, for example, has seen Australian retailer Mecca respond with a genuinely distinctive retail experience that can rival, and occasionally trump, the global giant. For all of Mecca’s impressive achievements in recent years, international expansion is not yet one of them.
Stage two of any Australian response to international competition is to accept that if you can’t beat them, you can certainly join them and expand overseas. Armed with a new-found competitiveness and the knowledge that many large international markets have a genuine appetite for all things Aussie, the next big step for Australian retailers is to follow Cotton On’s lead and realise the incredible opportunities of international expansion.
It’s not the fact that the Cotton On Group has a big new megastore, or that it will push past the $2 billion mark this year in revenues, it’s that those revenues are coming from more than a dozen different countries.
The foreign invasion of these shores that began in earnest in 2011 will one day be seen as a positive development in the evolution of Australian retail brands. It has made our stores better, more competitive and ultimately more global.