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The Australian Financial Review reported that retailers are set to face tougher competition as a new influx of foreign competitors prepares to enter the robust Australian retail market.
The presence of strong international interest to invest in Australia is due to:
- strong local retail growth
- revamped federal and state goverment laws to reduce barriers to entry to new players
Here’s the summary:
- US fashion chain Gap is expected to open its first Australian stores early in 2011, while rivals Abercrombie & Fitch and Forever 21 are believed to be researching suitable sites for stand-alone stores, according to the newspaper
- United Kingdom luxury goods retailer Harvey Nichols has been invited by Westfield to enter the local department store sector and open a store in the new $600 million Centrepoint development in Sydney, which is due to reopen in 2012.
- Zara is looking out for a store on George Street in Sydney
- Topshop and Topman have entered a deal with Incu which will see the entire second floor of the Incu store on Oxford Street in Paddington devoted to Topshop and Topman
- Rumours circulating that H&M are looking for locations in Australia
- Miu Miu opening first Australian store at Chadstone in November
- Fossil is searching for more locations Down Under
- Costco has submitted a DA for a new store near the M4 in Sydney. They hope to have the 14,000 square meter store open by late 2010 and will locate offices in the new operation. Ultimately, they hope to have 5 stores in the Sydney Metropolitan Region
- Other brands looking to Australia for expansion include:
- Henleys, French sports store Le Coq and Dutch clothing retailer Scotch and Soda
- food brands such as Pretzel Time, Great American Cookies and Shoebox New York
- Australia shopping centers are attempting to lure brands such as lingerie chain Victoria’s Secret, Top Shop and Swedish clothing store Hennes & Mauritz.
International retailers could be convinced to enter the market by recent retail sales. In November sales increased by a seasonally adjusted 1.4%, according to the Bureau of Statistics – the fastest rise in eight months.
Over the past year, sales rose by 7%. While this growth has been stunted by the aftermath of the financial crisis, many retailers expect sales to increase as the economy recovers.
Retail analyst Rob Lake says international retailers, especially those from the US, view Australia as a prime target due to its remarkable similarity.
“We speak English, we have a similar wealth profile and we’re easy to do business with. The only significant difference is the time gap between the two countries.”
However, says international retailers should think clearly about the reasons they are entering a market in order to avoid the mistakes of retailers in the past.
“There are examples of Americans who have come here and treated the Australian market as the same, such as the Disney Store. Very successful businesses in its country, but didn’t do well here because I think it was a misreading of our fascination with rodents. There just wasn’t enough business to sustain it.”
“I think Starbucks was the best example of that, they completely misread the Australian market and tried to impose American taste for coffee on Australia. They opened a Starbucks on Lygon Street where you can get good coffee in every shop.”
However, he says American clothing retailers should already have enough customer recognition in Australia in order to establish a good initial following.
“They should do a lot better because of the customer recognition. As an example, I have a Gap t-shirt. I think they just need to do their homework on the Australian consumer first.”
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