It hasn’t been easy for Australian retailers to welcome the international big guns onto local shores.
With companies such as H&M, Zara and Uniqlo popping up all over the country, competition in the marketplace has intensified.
Commercially and physically.
A recent Knight Frank commercial leasing report revealed international retailers now occupy 36.9 per cent of Sydney CBD core retail space, with broader rollouts set to persist.
The tide is starting to swell in both directions however, as domestic retailers move to set up shop overseas. From Cotton On to Colette by Colette Hayman, Australian retailers are starting to march north of the border.
The question is: how?
Cotton On global general manager Felicity McGahan believes it starts with defining a clear identity bold enough to tackle an oversaturated market.
“The key challenge is defining our brand positioning and brand purpose. You need to be very clear on what your brand stands for so you’re clear on what you’re exporting. We’ve learned you have to give the customer a chance to experience your brand, but then also adapt and make localised changes - this is a real balance to ensure you’re meeting each country’s customer needs while still protecting global brand integrity.”
From humble beginnings operating our of a car boot in Geelong 24 years ago, the company has not only secured a steadfast business in the domestic market, it’s dominating overseas competitors.
At present, Cotton On Group operates 9 brands, around 1,300 stores and employs approximately 19,000 staff in 16 countries around the world.
It’s also focusing on launching mega format flagship stores in major cities in Asia, South Africa and Brazil.
At home, McGahan says its niche in the domestic market lies in building a strong relationship with its consumer base, as well as remaining committed to a philanthropic mission through the Cotton On Foundation.
“I feel we are the local brand here and we connect with our communities providing them with on-trend, casual Australian style that delivers value product. All the while, we’re also focused on making a difference in people’s lives, whether that be through our Cotton On Foundation, or creating career paths for our teams or looking for a way to make a difference in a customer’s day – it’s the little things that make a difference. That’s what our role is in the market and that’s why we’re here, plus we want to have fun while we’re doing it.”
In terms of supply, it operates seven distribution centres across the globe in Australia, New Zealand, US, Hong Kong, South Africa and Singapore, something which McGahan believes keeps supply well ahead of demand.
“Our ‘speed to market’ is most certainly one of our strengths. We have developed a unique vertical retail model that enables us to monitor fashion trends and deliver them to our customers with a speed to market demanded by our customers – that’s what they want and that’s what we deliver. As customers have increasingly demanded faster access to the latest trends, we have responded by innovating our production pipeline to achieve the speed to market our customers now expect –which means dropping new product into our stores twice a week.”
Could it be that feasible that while Australians are accustomed to waiting for product shipment to land on home soil, immediacy is a critical factor to surviving in the global market? McGahan seems to think so.
“Supporting the business to maintain its rapid pace is a stock replenishment system that sees stock replaced within days of being sold throughout the global store footprint – ensuring up to the minute products are always on hand.”
The company works with around 500 suppliers to ensure that the business ticks along like clockwork from supply to the shop floor.
And whilst the differences in seasonality prove time and time again to be one of the key logistical nightmares for retailers and designers alike, McGahan says that there are also huge opportunities to cash in on that wouldn’t necessarily apply to Australia.
Most global and even Australian retailers would be aware of the huge cash injection generated into China’s economy through its annual 11/11 event, yet similar spend ups occur in other countries that although may not equate to the estimated AU$11.8 billion during last year’s 11/11 spree, could earn companies major revenue.
For Cotton On, McGahan says that this is vital to its global strategy.
“A big difference between Australia and our other markets is the varying brand awareness and brand perception which is present in each region. Another big difference is timing (seasonal and promotional) and each market’s shopping patterns around different events. For example, in the USA, Back to School and Black Friday, as well as South East Asia’s Chinese New Year and the Middle East’s Ramadan. We need to be in touch with local events to meet customers’ needs around their lives and their cultures.”
For the record, last year’s Black Friday sales in the US according to reports drummed up over US$1.5 billion; an estimated increase of 26% from the previous year.
Comparatively, the Australian apparel retail industry racks up $19 billion in annual revenue according to IBISWorld’s latest market research report, accumulated by the estimated 12,785 businesses operating in the sub-sector.
On top of that only 6% of these businesses make over $2 million in revenue per year.
And whilst many clothing brands with a long-standing heritage in the domestic market grapple with the idea of gaining global traction, Australian accessories brand Colette by Colette Hayman has already made its move before its fifth year in operation.
The company has opened around 100 stores in around four years, including retail spaces in New Zealand, South Africa, Singapore and the United Arab Emirates (UAE).
In addition, the collective footprint of its master franchise agreements totals an extra 150 stores across the globe.
Considering how young the brand is, even in the local market, it’s striking as to how it has managed to establish its business overseas.
It could be due to the decision to offer these master franchise opportunities to selected territories around the world.
Founder Colette Hayman says that the decision to franchise the business not only allows the potential to generate profit, but also builds strong relationships with those who understand the ins and outs of foreign markets.
“We have been fortunate in securing strong partnerships to enable the growth of the brand in international markets, each bringing local knowledge and experience to ensure the success of the brand locally.”
Even so, there needs to be something enticing about a brand to appeal to potential franchisees and from there, also generate profit.
For Colette Hayman, the answer seems pretty straightforward – monitoring international trends and monetise translating them into affordable accessories.
“Similar to the domestic market, we see international markets as a wonderful opportunity for the brand; we are currently in four other countries and are working with potential partners in many others. We take our inspiration from international fashion trends and our products would sit easily in any major city around the world.”
The affordability factor remains an integral part of marketing the brand towards its demographic of 15-25 year old females.
When it comes to the major differences between the Australian market and other territories around the world, Hayman said it’s a matter of considering the sheer scope of competition.
“With the globalisation of retail accelerating many of the international markets, they are very similar to Australia now and are highly competitive. When we open in a new market we are one of dozens of retailers from all around the world chasing both the best locations and customers in these new markets. Many of these retailers are still to land here so the main difference is the scale of the competition overseas.”
And so it would seem that it’s retailers like Colette by Colette Hayman and Cotton On who are driven by what those on home soil are fearful of: competing.