Challenges faced by Australian fashion labels, including
Lisa Ho, Kirrily Johnstone and Alannah Hill, have left many
wondering whether Australian fashion retailers can compete with
international players like Zara, Topshop and GAP.
The entry of international competitors into the Australian
fashion market is posing challenges for domestic retailers. In the
last three years, Zara, Topshop, GAP and Hollister have all opened
flagship stores in Australia, and with the impending entry of
Swedish label H&M and Japanese label Uniqlo to the market, it
seems that international arrivals will only increase. But the
question is: can Australian labels compete?
Australia's geographical isolation has traditionally
discouraged international retailers from setting up shop here.
However, online shopping has allowed international retailers to
test the waters (online) and ascertain whether it would be
profitable to enter the Australian market in a bricks-and-mor tar
For some domestic retailers, the competitive advantages of
international retailers seem daunting. International retailers
generally have the benefit of economies of scope and scale, due to
the size of their operation and often to the efficiencies created
by vertical integration. This allows these retailers to offer a
wide variety of goods at a low price. International retailers'
significant profit margins also give them more bargaining power to
secure highly sought-after store locations. Disappointingly for
domestic retailers, Australian shoppers often associate
international fashion brands with a certain cachet and may be more
likely to purchase goods from an international retailer like Zara
than from a domestic retailer like Cue.
In order to remain profitable in this environment, domestic
retailers should use their knowledge of the local market to
differentiate themselves from international competitors. For
example, Australian brands might:
Offer distinctive in-store experiences
Produce unique designs that are not available from
international retailers and
Have an online presence to compete in the cloud.
A key to survival in today's market might be providing the
consumer with an exceptional online shopping experience –
perhaps offering an easy-to-use, customisable interface and local
services such as same-day delivery to customers within city CBDs.
Australian retailers could also use global consumer take-up of
online fashion retail to expand their customer base internationally
through online sales.
It is clear that a growing list of international retailers have
expansion into Australia on their radar. It is therefore vital that
domestic retailers devise effective methods of remaining afloat in
the turbulent waters that are surely ahead By Melinda Upton and
Carly Roberts (Sydney) .
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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