DANIELA: I’d like to begin by discussing what lies ahead for independent fashion retailers in 2012, given the tumultuous retail climate at the moment. What are your thoughts on this?
PHOEBE: I think independent fashion retailers can look forward to a slight improvement after a couple of very difficult years, however they will still have to practice innovation in retail. However, astute control of their businesses will be as necessary as ever. And rents are currently, and will continue to be, their biggest issue in 2012 and also, consequently, margins and turnover.
GARY: Rising costs of operation will continue to limit performance.
ROBERT: Core competencies of retailers will be paramount. In addition, they will need to be mindful of an ongoing practice to maintain quality relationships with their staff, their suppliers and their customers. While this will not be a total panacea, it will set solid foundations for dealing with the other challenges which lie ahead.
GARY: Apart from occupancy costs, many retailers also face above average labour costs increases, and threats on the horizon include equal pay claims for women and the proposal to abolish junior rates.
PHOEBE: Retailers will also need to support suppliers who support them back, that is, manufacturers who can offer staggered
deliveries and charging and also in season stock support. This will be vital to independent retailers.
ROBERT: Retailers should also look to take advantage of the new modern awards and the flexibility clauses contained therein. We are currently lobbying the government to try and provide increased levels of education to enable retailers to be able to better manage their industrial relations.
GARY: I disagree with the comments about the modern award flexibility. The modern award has delivered no new flexibility and has significantly increased labour costs for many retailers. From my perspective, the new modern award is a highly inflexible instrument and offers little that would assist. We have been trying for two years to vary this award to allow school kids to work a short shift after school and have still not succeeded.
ROBERT: I disagree with you on the inflexibility of the new modern awards. I was recently talking to some experts and the opinion is that it has never been easier to make an agreement with your staff. In particular I think that clause seven in the retailer award, allowing the employer and the employee to make arrangements on a range of different items within the award, is fantastic.
GARY: These flexibility agreements need to pass a no disadvantage test and are limited to variation to specific clauses - I would be surprised at this reaction and concerned about the legitimacy of the outcome.
ROBERT: It’s not that there needs to be no disadvantage, it’s that the employee should be happy that they feel that they are better off overall. Get that in writing and you are 95 per cent of the way there. To some degree our short exchange here has demonstrated that not enough people - employers and their trade associations - know enough about the new award and how it could work most productively.
DANIELA: What about online? This has been a huge focus in recent times. How do you think independents are faring in the online space?
PHOEBE: Online is still something retailers will need to fully embrace and also digital marketing such as Facebook pages. This will greatly assist them in gaining extra sales and reaching a far wider audience for their business.
GARY: Unless the tax and customs regime is reformed, importing retailers will also continue to be disadvantaged in their competition with foreign websites. Foreign clothing websites avoid collecting GST and do not pay duty (10 per cent) on imports under $1,000.
ROBERT: I don’t know that this is a particularly big issue. Of course, every 10 per cent helps, but we often find that the prices offered by overseas suppliers and online retailers are significantly more than the 10 per cent GST which is being forgone by the Australian government.
PHOEBE: Mainly high profile brands will be affected by the overseas online discounting, but also I think retailers need to realise online is not always about discounting and it is a chance for them to showcase Australian brands to the overseas markets. I agree it frightens me how behind and slow retailers are to embrace online and thus further their business. It’s not a case of ‘us and them’ anymore with online; it’s a case of retailers having both bricks-and- mortar and extending to online.
GARY: The theory around multi-channelling is not challenged, but retailers need to complete a cost-benefit analysis and satisfy themselves that the investment in multiple channels is viable. Some of the questions that need to be answered about online investment also include:
• Do our target customers shop online?
• Is our business losing sales to online competitors?
• Do we offer something tangible or intangible in store that cannot be replicated online?
• Will online sales improve overall sales or merely cannibalise bricks-and-mortar sales?
• Will an online facility attract customers and sales and provide an adequate return on investment?
ROBERT: Specifically addressing the fashion retailer aspect, however, it is only face-to-face and in-store that can make a client or potential client feel like a million dollars, but only spending a few hundred dollars. This will never be adequately addressed online and bricks- and-mortar retailers need to spend more time on it, learning how to show a genuine interest in their clients, their activities and be more aware of how the product will be worn and shown off.
PHOEBE: I think ultimately the costs of having a bricks-and-mortar shop at the moment is questionable...shopping centre landlords are the biggest enemy and also high profile locations are becoming cost-prohibitive for smaller traders. Mark McInness summed it up perfectly by saying, “retailers are not there simply to pay their landlord’s rent”.
ROBERT: I agree that landlords have been pushing the price to a point which is now unsustainable for many small businesses, especially in the fashion industry where it can often be boom or bust, but I reiterate that it’s the quality of relationships you build with your customers, whether it be through Facebook, face-to-face, word-of-mouth or just as visitors into the store, which will ultimately determine the loyalty they demonstrate.
PHOEBE: But you are talking from a Tasmanian point of view - you should see the astronomical rents in Oxford Street, Paddington, Queen Street Woollahra. You still need to pay these rents, and they are massive.
ROBERT: I agree that the rents in those areas are potentially unsustainable for smallish businesses, which is why the power of social media, lots of people on your Facebook to ‘like’ you (65 per cent of people who have liked to one Facebook will positively recommend you to other people) now enables enterprises to not necessarily have to be in the highest traffic flow areas but may be able to find an less expensive and out of the way premises to attract their regulars and subsequent followers.
GARY: Maybe some of the medium and smaller chains will also re-evaluate their business models in the face of escalating rents in the enclosed centres and look to relocate to strip centres, which will assist in revitalising some of these precincts.
Daniela: Independents certainly seem to have quite a few hurdles to overcome in 2012. Do you think it’s necessary for these smaller businesses to have some sort of backing or support in light of this?
PHOEBE: We are fashion agents and I think there needs to be an industry body supporting a national marketing campaign getting customers supporting independents.
ROBERT: As Gary will turn it, there is no shortage of people prepared to support your campaign to support independents, it’s just that somebody needs to pay for the service and it’s very hard extracting dollars from independent retailers.
GARY: It’s also counterproductive to advocate lesser choice for consumers, so a campaign favouring independents would need to be creatively driven and focus on points of differentiation that consumers will relate to.
ROBERT: In the long run their support can only come from customers. It’s up to retailers and their trade associations to start to think more innovatively about their public face and how they go about encouraging support for their members.
PHOEBE: Isn’t it up to national bodies to also support retailers, otherwise what is the point of them joining them? I agree that everyone is responsible for their own business, but leadership is needed from the major bodies to support the independents?
ROBERT: Yes Phoebe, but who’s going to pay?
PHOEBE: Large apparel companies, participating retailers, and also magazines and sponsorship. If they did it with Vogue Fashion’s Night Out what is the difference? It’s a question of leadership more than anything.
ROBERT: Another issue is that trying to manage a large group of independent retailers is a bit like herding cats. We all want to have a go but the challenges are great. I also think the approach that the government would take would be more about improving the business skills of many of the independent retailers. With the current parlous state of the national budget, I don’t think they would be very open to a broad marketing campaign. They would, however, be interested in increasing the skills of the business owners.
PHOEBE: I do agree with that point. I think retailers’ biggest challenge is to become more savvy with business. There are some very good retailers, but equally there are some which I do worry about. Strategy and innovation are key for retailers.
Daniela: Speaking of strategy and innovation, are there any major or new trends you have noticed in regards to independent fashion retailers? And what are your predictions for 2012 in terms of business trends?
PHOEBE: Sharing shops is becoming common, I know of a few retailers that are doing this, combining two businesses in one, and I think it’s smart as a means of lowering overheads. Retailers are being very cautious in terms of buying and I don’t blame them. They simply cannot afford any margin of error and I have noticed they will look at new brands from the same manufacturer, which is smart, thus keeping accounts consolidated.
ROBERT: Fashion labels have been in 10 a penny and with the increasing acceptance of home brand groceries maybe some of the independents should be looking to have their own home brand which cannot be price checked and comes down to the skill of the salesperson and the quality of the clothing. To do this, of course, they need the support of the manufacturer/supplier.
ROBERT: I’m also seeing far more small businesses take advantage of the social media opportunities available to them, including Facebook, and getting their clients and other friends to like them. Regular use of this medium then encourages smaller retailers to have a more mature web presence, which then puts them into the league of some of the other online retailers.
MEET THE PANEL
Phoebe Garland
CO OWNER, GARLAND & GARLAND FASHION AGENCY
Phoebe Garland is co-owner of Garland & Garland Fashion Agency, which was established in 2002. Garland & Garland Fashion works with several fashion brands in both menswear and womenswear including Black Night, Black Pepper, Breakaway, Extra Pepper, La Dame, Me First, Yvonne Black, Bazz by Bazz, Sacred Collections, Embrace, Mossee, Picadilly, Adam Jacobs, and Picadilly Gold. Garland is also one of the judges of The Spirit of the Black Dress, which is part of the L’Oreal Melbourne Fashion Festival for 2012 and an industry mentor.
Gary Black
EXECUTIVE DIRECTOR, NATIONAL RETAIL ASSOCIATION (NRA)
Gary Black has worked for the National Retail Association since 2001 and was appointed as executive director of the organisation in 2007. The National Retail Association is Australia’s largest representative retail industry organisation. It provides a range of professional services to the industry and represents the interests of the retail sector to governments, the media and the wider community. The NRA is also a not-for-profit organisation and the only mainstream retail association which delivers retail-specific advice through dedicated in-house functional experts.
Robert Mallett
DIRECTOR, THE NATIONAL INDEPENDENT RETAILERS ASSOCIATION (NIRA)
Robert Mallet is a director at The National Independent Retailers Association and an executive officer of the Tasmanian Small Business Council. Mallett also manages and operates The Frontman, a Tasmanian organisation specialising in meeting facilitation, corporate training, conference management, association management. The NIRA is made up of member associations from around Australia which work together to represent and promote the interests of independent retailers throughout the nation and assisting in the protection of small businesses.