Lane Crawford: Australia's next Diamaru?

SYDNEY: Hong Kong's biggest fashion retailer has baffled local industry experts by announcing plans to expand into the Australian market.

Lane Crawford, a 157-year-old business that operates a small chain of department stores and 200 high-end specialty boutiques throughout Asia, has confirmed it will open a high-end Pedder-branded shoe store in Sydney next year. It is understood Lane Crawford plans to open further stores in Australia but will test the market before announcing any formal rollout plans.     

The Australian Centre for Retail Studies program director Andrew Cavanagh was shocked by the company's proposition.
"I have absolutely no idea what international brands would see in Australia when they have China, India, Brazil and Russia that are growing at such phenomenal rates," he said. "We don't have a large enough population to sustain a large number of specialty upmarket retailers - we simply do not have the critical mass."

One factor in Lane Crawford's decision making process might have been the failure of its franchise operation in China, Cavanagh said. He said the company, which is now re-entering the Beijing market with a self-funded department store, had to shut down its network after a bungled attempt at licensing its business. Cavanagh said opening specialty stores - such as the planned Pedder boutique in Woollahra - could be a safer model for it to try new markets. 

"There is always room for another player, international or otherwise, as long as they are offering something different or in a way that is different to the existing player. There is no room for just more of the same."

Specialty stores account for an estimated 60 to 65 percent of total Australian footwear and clothing sales in 2006/07, worth at least $20 billion a year. Australian Fashion Council general manager Zoe Edquist said competition among specialty boutiques was particularly rife given that only two department stores - David Jones and Myer - and a handful of discount retailers vied for the remaining percentage.

She cited the failure of Japanese department store Daimaru as an example of how tough the Australia market was for international players. In 2002, Daimaru was forced to shut down its national operations after ten successive years of losses. 

"There's a strong place in Australia for clever retailers - our economy is very strong and the retail sector is growing," Edquist said. "But global retailers need to ensure they are servicing Australian consumers specifically and not just transplanting international ideas. Diamaru is a good example of a department store that came in with all the bells and whistles, ready to take over the world but ultimately flunked."

However, Brian Walker, director of consultancy firm The Retail Doctor, argued the Lane Crawford model would sit well with Australian consumers.

"Let's not assume Australia is an easy market for entry, rather it would take planning, time and significant investment. Australia provides a sound springboard or testing model for different branded concepts due to its wide range of tastes and interests."

Lane Crawford representatives declined to comment on the company's Australian retail strategy but confirmed its first Pedder branded shoe store would open "early in the new year".

Lane Crawford department store brands include Anna Sui, Easton Pearson, Balenciaga, Marni, Jil Sander, Marc Jacobs and Dries Van Noten.

By Assia Benmedjdoub