Small retailers set to compete with international brands

The National Retailers Association says local retailers will have to work even harder to retain customers as a raft of major foreign fashion brands prepare to launch in Australia.

According to the Herald Sun, a number of big retail names are showing interest in opening stores in Australia including Zara, H&M, Abercrombie & Fitch, Victoria’s Secret and Japanese label Uniqlo.

National Retailers Association spokesperson Michael Lonie says that international labels typically do well in Australia as they approach the market differently to local retailers.

“I have often been amazed when I see multiple stores, belonging to the same retail chain within two or three hundred metres of each other,” Lonie says.

“You’ll find that foreign retailers are less inclined to go along those lines and will most likely establish one or two flagship stores.”

“Look at the overheads – the rents, staffing and supervision required in multiple stores versus one flagship store in the CBD.”

Lonie says in addition to reducing overheads, flagship stores have become a destination in their own right, often boasting large spaces and elaborate interior.

“There’s quite clearly a following already [for international retailers], particularly among the younger generations who have travelled widely,” he says.

Japanese retailer Uniqlo, famous for its fast-fashion offerings in the way of T-shirts, denim and casual wear, has announced its intention to enter the Australian retail market by July 2011.

Katsumi Kubota, manager of international business development with Uniqlo, says Australia is a natural progression from its Asian, European and US rollouts.

Uniqlo flagship stores range from 1,500 square metres to 3,500 square metres. As the brand’s name and reputation grows, smaller stores are established.

Lonie says one of the downfalls of flagship stores is their inability to offer each customer a high level of service due to the size of the store, which is where smaller local retailers should focus their energy.

“If smaller retailers try and go mainstream, they will find it difficult. They should focus instead on meeting a niche market and looking after their clients,” he says.

“It’s far cheaper to retain your existing customers than try and find new ones, which is something people often overlook.”

Lonie says smaller retailers can offer customers a more personalised service by notifying them of new stock and giving them the opportunity to preview new items.

He believes more international names will start to enter the market given Australia’s strong economy and increasingly close ties with Asia

“Our economy is in a healthy state compared to other parts of the word that are still languishing, so I think there’s going to be more of focus on this part of the world,” he says.