“Mediocrity knows nothing higher than itself, but talent instantly recognises genius.” – Arthur Conan Doyle According to our colleagues at Deloitte (global power of retailing report) we currently enjoy the company of only 15 per cent of the world’s top 250 retailers, or perhaps another perspective is that we have least another 210 to 220 retailers to come (and we haven’t even mentioned the top 500). In 2014 we saw H&M open in Melbourne and Sydney, Japan’s Fast Ret
ailing (Uniqlo) with four stores, Forever 21 in Brisbane and Sydney, and perfume and cosmetics retailer, Sephora, as some of the key companies and retail brands to enter the market. We saw an increase of 20 per cent of new entrant retailers over the prior year.
In 2015 we have British department store, Marks & Spencer, rumoured to be interested, and US-based Ashley Furniture already announcing an expansion to Australia in 2015.
The lack of international diversification could leave Australian retailers vulnerable, as even more foreign players try to capitalise on one of the world’s healthiest developed economies at a time when Europe and Japan continue to stagnate.
“What should be of concern to Australian retailers is that 85 per cent of the top 250 retailers currently aren’t operating in Australia, meaning that competition is only likely to increase,” noted the Deloitte report.
Stuck in the middle with you is probably the most apt name for this blog as I visit retailers, view their results, contemplating that with even more global retailers entering Australia, who and what are the retailers most likely to make way?
Will it be our department store models, now under siege, or our long standing patriarchs and matriarchs of Australian retailing? How will some of our business models predicated on many years of relative isolation, underinvestment, low concept and product innovation, adapt and rapidly reorganise themselves to compete?
How many such as Lovisa, Lorna Jane, and Cotton On to name a few, will conversely recognise that the playground is now infinitely larger, reorganise, raise equity, customise their model and expand. Recognising that their crafted point of difference has an appetite well beyond our shores?
Now we will see the mind set of many of our retail leaders in play, faced with similar challenges, such as domestic marketshare and margins under attack, requiring insight, strategy and resourcing and urgently. Bringing advisors and planning through to implementation to ensure that their growth is not limited to the battlefield pending at home.
New entrants to our domestic market will have already garnished somewhere between 10 to 12 per cent of our national retail sales and we are really only at the tip of the iceberg.
Interestingly, our view is that this growth is at a higher ratio than online growth with the overall pie growing in our country at a lower rate than either of these two factors. In other words, it’s starting to get even more crowded for many of our retailers. Population growth will accommodate some of these changes although not in a substantial enough manner.
Technology, the opening of the world commercially, and the changes to consumer behaviour certainly accelerated in 2014 – watch the acceleration in 2015.
To grow your business fitness- contact Brian Walker at Retail Doctor Group on 02 9460 2882.