1. The B-Bottom Line
Ed Harry. Covers. Colorado. Satch. Tough conditions placed many fashion retailers into the arms of administrators or receivers this year. But could it all be in the name? A trawl through Ragtrader’s news archives revealed a brow furrowing rate of B-titled bust ups. Barkins kicked off the insolvency trend in January, followed by Bettina Liano, Brown Sugar, Belinda International and Baubridge & Kay. Faced with tighter banking terms, along with growing production and front of house costs, these businesses bucked under the weight of growing debts and collapsed, often owing trade creditors millions. But it wasn’t all doom and gloom. Bettina, Belinda and Barkins were handed back to existing directors through creditor approved restructures (Document of Company Arrangement) or management buyouts, while the assets of Brown Sugar and Baubridge were sold off to investors. It was a difficult year for the sector, but one which proved life exists outside of administration.
Satch
2. Fashion Week future
Australian Fashion Week founder Simon Lock broke ties with the iconic industry event in November, 2010. Then like falling dominos, marketing maestro Graeme Lewsey, general manager Daniel Hill and designer relations executive Lucia Labbate followed suit throughout 2011. It was a fashion exodus, but one which New York-based event organiser IMG Fashion saw as a fresh opportunity to revamp. As well as distributing a survey to participating designers about possible changes to the annual event, the firm flew executives to Sydney for one-on-one consultations with industry. While executives revealed to Ragtrader that key dates and venues will remain largely unchanged for 2012, this will not be the case for 2013 onwards with the Overseas Passenger Terminal set to be replaced and the event shifted to early-mid April. There are other plans underway to strengthen the 16-year-old trade showcase including industry partnerships - but more on that in the new year.
Australian Fashion Week
3. Natural born enemy
Three quarters of Queensland was declared a disaster zone after significant flooding occured over late December 2010 and early January 2011. Designers such as Masayo Yasuki told Ragtrader it wasn’t only boutiques and major retailers which were swamped, with her studio taking in 1.8 metres of water and 35 per cent of her exclusive fabrics claimed by tar-like sludge. In June, Christchurch retailers also revealed they were still struggling to come to terms with the city’s devastating earthquake three months on. Among the hardest hit were fashion players on the High Street, which fell into the ‘red zone’ and left many traders without access to their premises or a possibility of recovering merchandise. Yasuki proved her resilience in the aftermath of Queensland’s floods however, re-establishing her business with the support of friends and industry. As for Christchurch, boutique trader Margaret Quinn became an instant Ragtrader hero after converting shipping containers into a makeshift, cutting-edge shop front.
4. Scandal for Scanlan
It was a volatile year for one of the most respected, and notoriously media shy designer brands in the country. It started in April, when the Textile, Clothing and Footwear Union (TCFUA) revealed it was investigating a number of leading fashion labels over possible breaches of the industry award and issues with their supply chain. TCFUA executive Michele O’Niel revealed the union had met with Scanlan & Theodore in particular a number of times over the last two to three years over its legal obligations relating to manufacturing and production. Just a few months later, the union staged a protest outside Scanlan & Theodore’s Little Collins St boutique, alleging it had links with collapsed supplier Blossom Road which owed over half a million dollars to workers. Around the same period, animal rights groups called for and staged protests relating to the brand’s use of fur. While Scanlan & Theodore general manager Sener Besim strongly denied allegations levelled at its supply chain earlier in the year, the brand retreated into silence over the Blossom Road and fur scandals.
Scanlan & Theodore
5. Calling to inquire
Westfield, Myer, Target and BB Retail Capital found their voice in a federal government inquiry into the retail sector. After months of processing submissions and staging public hearings, the Productivity Commission submitted its final report into the state of Australian retail to the government on November 4. The initial draft report revealed that regulatory reforms are needed for the industry in order to adapt to a more globally competitive market. While a majority of fashion retailers lobbied against the current GST exemption on imports under $1000 - allowing offshore players to avoid tax and duties - the draft report judged this to be a minor contributing factor to international online purchases. Other issues raised by fashion retailers included globally uncompetitive shopping centre rental rates, increasing wages and penalty rates as well as nationally inconsistent trading hours.
6. E-tail immigration
It was as though every international e-tailer and his dog threw open their order books to Australian customers this year - River Island, John Lewis, Gilt - but there were a handful that went the extra mile. Recognising the country as its second biggest market outside the UK, asos.com launched a triple pronged assault on the country. First off the mark was free international shipping, then came a dedicated micro-website for local customers, followed by a Sydney-based returns centre and the appointment of a country manager, Sally Anne Newson. Designer fashion website my-wardrobe.com followed suit, with UK expat Madeleine Allman appointed to drive growth in the market through a range of strategic PR and media partnerships. Allman has already created marketing synergies with Marie Claire and In Style magazine, as well as brand alignments with premium players such as Jo Malone. She is also working to create a range of VIP corporate styling evenings with major banks and business firms.
7. Retail immigration
Of course, 2011 wasn’t all about the cybers. After years of breathless “confirmations” by national newspapers, Spanish fast fashion giant Zara finally launched into the Australian market with a flagship store at Westfield Sydney. This was followed by a concept store in Bourke Street, Melbourne and confirmation of a new site to be opened at Burnside Village in Adelaide. Then came news distributor Next Athleisure secured exclusive franchise rights for Topshop and Topman, making Australia the 32nd store in the world to welcome its brick-and-mortar presence. The brand’s flagship store is positioned in Melbourne’s Jam Factory complex, covering 1300 square metres and stocking men’s and women’s wear. But could there be yet another major assault on the horizon? In September Japanese fashion chain Uniqlo hinted it was scouting retail sites across Australia and New Zealand, with chief executive Tadashi Yanai telling a global press conference it was part of a broader strategy to roll out a global network of stores.
Zara
8. Prices are down
It was a race to the bottom for discount department stores this year, capped off with the introduction of a new budget line by supermarket giant Coles. Kmart’s “low prices everyday” scheme proved to be a hit with consumers, with the retailer debranding its entire fashion range, removing excess swing tags and product stickers to bring lower than ever pricing to its shoppers. A 40 per cent increase in volume across its apparel and footwear business also allowed Kmart to utilise the services of higher-volume, vertical factories, bringing dollar spend even lower. Competitors such as Big W and Big W followed the lead, as consumers rushed online for bargains or made use of brick-and-mortar options such as Costco, which offered Levi’s for $50 at its warehouse-like sites. Target more or less resisted the urge, pairing with Stella McCartney and Grazia magazine for its next round of designer collaborations. In September, Coles rocked the boat by commencing a nationwide rollout of its Mix fashion collection, offering most of its “budget-safe” options for under $25.
Coles Mix fashion
9. Trade shows are up
While discount department stores engaged in a war of prices, domestic trade shows took a decidedly upmarket turn with the launch of Premiere and The Wearer’s Right. Premiere was the first cab off the rank, launching a spring/summer edition in Sydney on March and an autumn/winter follow up in Melbourne during August. Staged by event organiser Australian Exhibitions and Conferences, the trade show showcased brands such as Alex Perry, Project D, American Vintage, Isabel De Pedro, True Religion and Gold Hawk. Next came The Wearer’s Right, pitched at the premium streetwear market, which debuted in Sydney over September 18 - 20 and offered brands such as Chronicles Of Never, Citizen Deconstructed and Song for The Mute. The event was organised by Life Instyle founder Thibaud Cau-Cecile, who’s intention was to create an event “with substance and personality for labels of the same kind”. Both events are scheduled to roll out into 2012.
10. Shock, horror, GASP.
In a year marked by profit downgrades and corporate collapses, it was little wonder that a story involving a disgruntled customer and a sassy shop assistant made national and international headlines. Despite the serious nature of good customer service, there wasn’t a straight face to be found among spectators of Keara O’Neil VS Gasp. O’Neil was on a shopping trip to find bridesmaid dresses for her wedding on September 24 when she entered into a dispute with a sales assistant at the Chapel Street store. After submitting a formal complaint via email, O’Neil was met with a lashing that soon turned into a viral campaign against Gasp. The lashing included comments such as: “As I am sure you are aware, people whom are talented generally do not tolerate having their time wasted, which is the reason you were provoked to leave the store...” and “we respectfully ask that you side step our store”. Area manager Matthew Chidgey commenced a somewhat “media tour” defending the actions of Gasp across newspaper, radio and television channels both in Australia and abroad.
11. My my McInnes
He’s baaaack. After exiting department store David Jones amid claims of sexual harassment last year, Mark McInnes made a return to the sector in March. Billionare Solomon Lew recruited the controversial chief executive to run the retail division of his firm Premier Investments, which includes chains such as Peter Alexander, Jay Jays, Dotti and Portmans. Under the arrangment, McInnes is to earn a base salary of $2 million a year, receive up to $2 million in bonuses and around $1.2 million in performance rights. One of his first movements as chief executive was to make a series of executive appoitnments to his team, including former Target Australia business manager Karen Russell and ex-Myer business manager of women’s youthwear Deanna Moylan. A month later, he announced the closure of 50 loss-making stores and the intention to unleash 100 stores in the next three years in high-performing centres.
12. Luxe acquisitions
With administrations, liquidations, management buyouts, acquisitions and mergers illustrating a year of highs, lows and survival strategies, it proved to be an interesting period for well known designer brands. Normally an area for private investors, there were a number of high-profile acquisitions by the majors over 2011. In February, department store Myer announced its $42.5 million purchase of womenswear label Sass & Bide. Myer picked up a 65 per cent stake in the Sydney-based label, seeing it sever ties with rival and long-time stockist David Jones in the process. Myer claimed Sass & Bide sales were $37 million in 2009/10, with an annual growth rate of 50 per cent over the past two years. In September, Apparel Group announced it had acquired luxury brand Willow and planned to extend its retail infastructure, strengthen its international wholesale base and establish an online presence. That was as much as the group would reveal, with the level of investment and shareholdings bound by confidentiality clauses.
13. Rental rage
Against a background of falling profits and tight spending by consumers, longstanding tensions between landlords and retailers came to the foreground this year. A 2011 research report by Morgan Stanley revealed Australian retailers paid significantly higher rents than offshore retailers in comparable markets. The biggest punch to the purse strings occured in the specialty retail sector, where domestic players paid rents around three times higher than similar US businesses. It found Westfield Speciality Retail paid the most at an average of US$1,428 per square metre, followed by Premier Investments which paid US$1,202 per square metre. In comparison, US competitors such as Limited Brands (Victoria’s Secret, Pink, La Senza) paid only US$421 per square metre while clothing retailer GAP paid US$424 per square metre. Unsurprisingly, Premier Investments boss Mark McInnes launched a public tirade against landlords in September, citing a deep chasm between falling customer traffic and CPI-plus rent increases. The group successfully secured a 30 per cent rent cut after a dispute with a Canberra-based shopping centre.
14. Diffuse the situation
Diffusion lines are no new development in the fashion industry, with celebrated designers such as Dion Lee and Therese Rawsthorne continuing to introduce price competitive ventures this year. But could boardrooms be the new black? Both Trelise Cooper and Alex Perry developed corporate ranges to be stocked at department store David Jones, with Cooper’s version set to launch in select outlets from February 2012. The diffusion lines are competitively priced; Alex Perry offering his 10-piece collection up from $179 to $599 and Cooper’s 30-piece range retailing from $249 for skirts and printed tops to $599 for suiting jackets. High Street retailers also took up the designer diffusion strategy, as Cue and Noni B launched their first ever local collaborations with Dion Lee and Daniel Avakian respectively.
15. Poms for brains
The industry’s love affair with fashion retail executives from the motherland endured, with a number of major retail groups recruiting new chief executives from the UK. The first significant appointment came in March, when Apparel Group revealed it had lured former Burberry senior executive Daniel Bracken to its newly created role of CEO. It marked the end of a six-month domestic and international manhunt for the position, with Bracken’s experience across general and strategic management, fashion buying and merchandising, retail operations and supply chain winning over executives. He joined the group, which manages Sportscraft, Saba and Willow, after 18 years with the heritage London-based brand. Then just three months into his role as Jeanswest merchandise director, Mark Daynes became the company’s new chief executive on October 3. Daynes brought 30 years of experience with him, including senior roles at The Burton Group, Topshop and Topman under the Arcadia umbrella, George at ASDA/Walmart, Littlewoods and Target Australia. The latter broke the trend, appointing former CEO of Sears Canada Dene Rogers as Target Australia managing director in October.
Burberry