Description
Introduction
Australia avoided recession aiding its position as a hot spot for international expansion of clothing retailers. In 2010 clothing specialists experienced a decline in sales due to falling consumer confidence and heightened online competition from foreign retailers. The clothing market is projected to shrink in 2011, returning to growth in 2012 as foreign entrants revitalize apparel spending.
Features And Benefits
• Benchmark your firm' s performance by accessing profiles of 12 leading specialist retailers in Australia as well as other key players in the sector.
• Make informed investment decisions based on market analysis and forecasted expenditure by product category to 2013.
• Assess the recent performance and developments across different channels, comprising specialists, department stores, discounters and online.
• Ensure marketing and distribution strategies are up-to-date by uncovering competitor activity in areas such as e-commerce and social networking.
• Make informed pitches to potential clients interested in entering Australia by gaining insight into market and competitor dynamics.
Highlights
The outlook for the Australian and clothing market for 2011 is poor, as consumer confidence has dived after a series of interest rate rises in 2010 and several natural disasters at the beginning of 2011. A levy is coming into effect in July 2011 in Australia to help finance rebuilding and this will further depress discretionary income.
International retailers, previously put off entering the market due to the supply chain and logistical issues, now have more of a presence in the Asia Pacific region, and have the capability to effectively serve the Australian market. H&M, Uniqlo, Forever 21 and Arcadia' s Topshop are expected to follow Inditex into the market.
An increasing number of international retailers are offering online shopping to Australia. The strength of the local currencies, the fact that consumers can avoid the 10% GST buying online and a wider range of products offered by foreign companies are driving demand for international online shopping and further threatening domestic players.
Your Key Questions Answered
• Who are the key competitors within the clothing market? How do they perform relative to my company and what distribution methods do they use?
• Which incumbents sell online and what does the influx of international players and adoption of e-commerce mean for the market and my business?
• What was overall demand for womenswear, menswear and childrenswear across Australia and New Zealand in 2010 and how is this going to develop to 2013?
• What consumer trends, marketing developments and channel opportunities should I be aware of to maximise my performance in the market?
• What are the key developments for players such as Just Group, Colarado Group, Cotton On, Country Road, Noni B, Oroton, Sussan, David Jones and Myer?
Table of Contents
OVERVIEW
Introduction
Summary
KEY FINDINGS
Australia' s economy avoided recession, but low consumer confidence is damaging the domestic retail industry
Clothing retail in Australia slumped in 2010
The Australian clothing market will record a CAGR of 0.7% over the next three years
The landscape of the Australian clothing market is about to be radically redrawn
Mid-market retailers will struggle to maintain profit margins
International online retailers are a major threat
The New Zealand clothing market will record a CAGR of 1.7% over the next three years
New Zealand is also threatened by international online sales
Global clothing chains have not yet targeted New Zealand
MARKET CONTEXT AND OUTLOOK
Overall retail spending in Australia rose in 2010, while the sales achieved by clothing specialists declined
Overall retail sales increased by 2.5% in 2010
The Australian clothing market shrank by 0.4% in 2010
Verdict estimates the size of the Australian clothing market to be worth A$17.2bn in 2010
Verdict forecasts that the Australian clothing market will record a CAGR of 0.51% from 2010-13e
The Australian economy weathered the global economic downturn better than other developed countries
Australia experienced GDP growth despite the economic recession
The economy' s dependence on commodity exports helped Australia to weather the downturn
Rising inflation is pushing up interest rates
Recent interest rate rises have increased the cost of borrowing and reduced consumer buying power
Multiple interest rate rises reflect confidence in the economy
Interest rate rises made trading conditions in Australia very challenging for retailers
The 2010 federal election had a further negative impact on consumer confidence
Unusually bad weather impacted upon sales of new collections
The Australian clothing market is fragmented and dominated by local firms
The Australian clothing market is highly fragmented
The menswear segment is dominated by many small retailers
The Australian clothing retail sector is dominated by national players
Specialist clothing retail sales declined in 2010
Westfield is a powerful shopping mall operator in Australia
Sales through department stores fell in 2010, while online sales continued to grow
Department store sales declined in 2010
Grocery stores do not play an important role in the Australian clothing market
Online sales are booming, particularly for foreign retailers
Retail sales in Australia have had a weak start to 2011
Total retail sales have been flat in 2011
Clothing and footwear retail sales had a particularly weak start to 2011
The Queensland clothing market grew by 11.0% in Q1 2011
Retail sales in Australia are unlikely to recover until 2012
On average, Australian retail stores employ twice as many employees as stores in New Zealand
In 2010 retail spending in New Zealand was stronger than it was in Australia
The overall retail market in New Zealand grew by 2.3% in 2010
The New Zealand clothing market grew by 1.3% in 2010
Verdict estimates that the New Zealand clothing market will record a CAGR of 2.4% between 2010 and 2013
Specialist sales in New Zealand increased by 7.0% in 2010
New Zealand' s economy is in a vulnerable recovery
Specialists performed better than department stores in 2010
Specialists sales rose in 2010 and were affected by the Christchurch earthquakes in 2011
Department store sales fell in 2010
International retailers are increasingly shipping products to New Zealand
In New Zealand, clothing outlets are proliferating
STRATEGIC ISSUES
Australian retailers have been hurt by the strong local currency, online shipping from foreign retailers, and high rents
The strength of the Australian dollar has made international brands cheaper to purchase for Australian consumers
Potential legislation changes in e-commerce could protect local retailers
Retail rents in Australia are among the most expensive globally
Population in Australia and New Zealand is growing and concentrated in several metropolitan areas
Australia' s population is growing and is concentrated in three major regions
Australia has a multicultural society, and further immigration will drive population growth
New Zealand' s population is growing, and one in three people lives in Auckland
Changing consumer demographics will significantly affect the retail environment in Australia and New Zealand
Clothing retailers need to prepare for Australia' s and New Zealand' s aging population
The growing number of plus-size consumers requires further considerations and offers opportunities
Australian consumers are increasingly interested in online shopping
The online channel has grown rapidly in Australia
There are a number of reasons consumers choose online shopping
Retailers have not yet fulfilled consumer expectations online
M-commerce has significant potential in Australia
Only a small number of Australian clothing retailers have international operations
The majority of Australian clothing retailers have a limited presence beyond Australia and New Zealand
South Africa and Singapore are the most popular markets for Australian retailers looking to expand internationally
An increasing number of Australian retailers are launching e-commerce websites
In menswear mid-market is crowded but there is a gap in the market for formalwear
Australian retailers have shown an interest in expanding their accessory ranges
A number of Australian clothing retailers have tried pop-up shops before launching permanent stores
Australian retailers have been slow to utilize social networking as a means of building closer relationships with their customers
Australian retailers are making use of designer and high street collaborations
International clothing retailers are changing the landscape of the Australian clothing market
A growing number of foreign retailers are shipping to Australia
In New Zealand, international online sales are also threatening domestic retailers
Australia has recently become a hotspot for international expansion
New Zealand is usually missed by foreign retailers, or considered as an extension to the Australian market
COMPANY COMPARISONS
Key operating statistics
COLORADO GROUP
Company overview: Colorado Group is a major retailer that has recently gone into administration
Recent key developments: the Colorado chain is being eliminated
Trading record: Colorado debts are estimated to amount to A$400
Store portfolio: Colorado Group is undergoing a major restructuring
COTTON ON
Company overview: Cotton On is an Australian clothing retailer with an international presence
Recent key developments: Cotton On has launched an e-shop for Australia
Store portfolio: approximately 190 Cotton On stores are located outside of Australia
COUNTRY ROAD
Company overview: Country Road is owned by a South African company
Recent key developments: Country Road launched the Trenery brand and an e-commerce site
Trading record: despite the launch of Trenery, revenue growth has been unimpressive
Store portfolio: Country Road has been aggressively rolling out new stores
GLORIOUS SUN ENTERPRISES
Company overview: Glorious Sun Enterprises owns Australian label Jeanswest
Trading record: the group focuses on retail and has recorded a strong financial performance
Store portfolio: Jeanswest has been expanding internationally
JUST GROUP
Company overview: Just Group has six clothing retail chains in Australia
Recent key developments: Just Group is on the lookout for further acquisitions
Trading record: Just Group' s financial performance deteriorated in H1 2011
Store portfolio: Just Group has been closing down marginal stores
NONI B
Company overview: Noni B focuses on mature women
Recent key developments: Noni B focuses on strengthening its Liz Jordan brand
Trading record: Noni B announced a weak performance for H1 2011
Store portfolio: after periods of contraction, Noni B' s retail network expanded in H1 2011
OROTON
Company overview: Oroton is an Australian luxury apparel and accessories retailer
Recent key developments: Oroton has expanded internationally
Trading record: Oroton has been experiencing healthy growth since 2007
Store portfolio: Oroton' s retail network has been growing steadily
THE PAS GROUP
Company overview: The PAS Group has a number of smaller Australian labels
Recent key developments: The PAS Group is set to double its retail network
Trading record: the group' s sales revenue rose slightly in FY2010
Store portfolio: The PAS Group has an ambitious expansion plan for the next two years
PRETTY GIRL FASHION GROUP
Company overview: Pretty Girl Fashion Group retails womenswear
Recent key developments: the company recently opened two new stores in Brisbane
Trading record: the group has recovered from a period of revenue decline
Store portfolio: all of the group' s stores are located in Australia
SPECIALTY FASHION GROUP
Company overview: Specialty Fashion Group has a number of retail chains aimed at mature women
Recent key developments: SFG sold one of its brands and became a licensee for La Senza
Trading record: in H1 2011 SFG' s trading performance deteriorated significantly
Store portfolio: the group' s store network contracted in FY2010 and FY2011
SUSSAN GROUP
Company overview: Sussan Group sells womenswear for all ages
Recent key developments: Sportsgirl is expanding its accessories range
Trading record: Sussan Group reported bumper profits on flat sales in 2010
Store portfolio: Suzanne Grae has the largest retail network
WITCHERY
Company overview: Witchery is an Australian success story based on Zara' s principles
Recent key developments: Witchery is set to go public
Trading record: Witchery is privately owned, meaning that available financial data are limited
Store portfolio: Witchery has a rapidly expanding retail store network
OTHER AUSTRALIAN SPECIALISTS
Cue Clothing
Webster Holdings
Lowes-Manhattan
Apparel Group
NON-SPECIALISTS: DEPARTMENT STORES AND DISCOUNTERS IN AUSTRALIA
Department stores: Australia' s two major department store retailers are in fierce competition
Myer and David Jones are aggressively competing over labels
Individual labels can benefit from department store rivalry
Myer is the largest department store in Australia and is rapidly growing its store network
David Jones is to exit a number of locations, but has added a range of new brands to its portfolio
Discounters: Target and Kmart are the leading discounters in Australia
Target has two formats in Australia, Target and Target Country
Kmart' s retail network spans across Australia and New Zealand
The third player in the Australian discounters market is Adelaide-based Harris Scarfe
WESTFIELD GROUP
Individual retailers can significantly benefit from co-operation with the Westfield Group
Retailers can benefit from Westfield' s retail locations and international presence
Retailers can also benefit from Westfield' s online shopping mall
Westfield operates shopping malls across four countries, with Australia being its largest market
Westfield made a strong net income recovery in 2010
Westfield underwent capital restructuring in 2010
Westfield has a number of shopping malls under construction
NEW ZEALAND: HALLENSTEIN GLASSON HOLDINGS
Company overview: Hallenstein Glasson runs three clothing retail chains
Recent key developments: a new CEO has recently been appointed
Trading record: the group' s financial performance has been volatile
Store portfolio: the group has been expanding its Glassons and Storm retail chains
NEW ZEALAND: PUMPKIN PATCH
Company overview: Pumpkin Patch has retail operations in five markets
Recent key developments: Pumpkin Patch has been focused on international expansion
Trading record: Pumpkin Patch has recently been hurt by its expansion in the US
Store portfolio: Pumpkin Patch has been continuously expanding its retail presence
NON-SPECIALISTS: DEPARTMENT STORES AND DISCOUNTERS IN NEW ZEALAND
The most populous cities in New Zealand have high-end department stores which offer a range of brands
Farmers department stores retail mid-market products
The Warehouse is New Zealand' s largest discounter
Appendix
Exchange rates
Further reading
Ask the analyst
Global Retail FreeView
Verdict consulting
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