The Americans are coming. And the Japanese and Europeans.
Australia is being invaded by a swathe of foreign retailers, piling pressure on a local industry already battered by weak consumer spending and ruthless internet competition.
U.S. retail giant Williams-Sonoma Inc opens its first owner-operated stores outside of North America in Sydney early next year.
Japan’s Uniqlo and U.S. youth label Hollister are also scheduled to debut here in 2013, while womenswear store Zara , Britain’s youth label Topshop and U.S. lingerie chain Victoria’s Secret plan to expand after recent flagship launches. Sweden’s fast fashion chain H&M and makeup brand Sephora, owned by France’s LVMH , are also casting an eye Down Under.
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
The timing appears incongruous as Australians fret over the tail-off in a decade-long resources boom that made the country’s growth a standout among its OECD peers in the wake of the global financial crisis.
Spending has stalled in the A$260 billion retail sector, which accounts for around 18 percent of Australia’s economic output, and retailers are jittery about the Christmas season.
But the overseas entrants have their eyes on a longer-term prize in a country that has a relatively high per capita income and home ownership rate, and a love of shopping.
“There’s a plethora of retailers looking at Australia at the moment. They see the opportunity, they see that in the future there are great gains to be made and that’s why they’re setting themselves up now,” said Russell Zimmerman, executive director of the Australian Retailers’ Association.
Australia is the only developed country that did not fall into recession during the global financial crisis. Australian growth is expected to slow to 3 percent next year from a forecast 3.5 percent this year. That still puts the country ahead of its rich world peers – U.S. growth was pegged at 2 percent and euro-zone growth at just 0.3 percent.
That relative economic strength, along with the high Australian dollar, has spurred demand at foreign retailers’ online stores. Saks Inc , Macy’s Inc and Bloomingdales have all opened internet shops targeting Australia in time for Christmas.
But a number of foreign retailers are now focused on the next step – building up a physical presence in a nation where 85 percent of purchasing is still done in shopping malls.
THE ROAD TO OZ
Next up is Williams-Sonoma, the owner of furniture chain Pottery Barn, a brand that Australians recognize through namechecks on TV shows like “Friends.”
The company has signed a lease for 2040 square meters of retail space in Sydney to house all four of its brands – Williams-Sonoma, Pottery barn, Pottery Barn Kids and West Elm – the first time the quartet will sit side by side.
While Zimmerman bemoaned the lack of people laden with shopping bags just weeks out from Christmas in Sydney’s main retail strip, Pitt Street Mall, Williams-Sonoma isn’t concerned.
“We definitely look at it as a long term play,” Craig Nomura, senior vice-president of Williams-Sonoma, told Reuters in a telephone interview from San Francisco.
“The performance by country is all relative, so when you compare Australia against the U.K., it’s still doing well in the retail world.”
Williams-Sonoma was enticed to Australian shores after opening up e-commerce sites in 85 countries just over a year ago. To the company’s surprise, it was Australia, with its population of just 23 million, that was the standout revenue generator, beating out larger countries including Britain.
Nomura declined to divulge detailed figures but said the website provided key information on the demand for goods and seasonality factors.