All three of you have operated fashion businesses based in Melbourne for some time – what changes or new challenges have you experienced as a result of the current retail environment?
Nick: I think retail on a global scale is in a state of flux; it’s certainly not an isolated issue to Melbourne. Stock management is probably the biggest challenge of running our business right now. The game is won and lost on your ability to effectively manage all aspects of stock. From buying through to final sell through, everything needs to be watertight to have a solid business in the ragtrade – particularly now.
Alex: I think that there have been a number of abrupt changes over the past couple of seasons that have changed the retail landscape, and certainly not restricted to Melbourne. The soft consumer confidence is fairly obvious. People are trying to save and, as a result, they seem to be looking for less fashionable pieces and trying to shop for long-term value. The bulk discounting that we have seen from many chains has also added to this.
Haim: I agree with Alex, however, I would say these changes apply more to the bigger retailers who are more mainstream and mass produced. Other than that, I also agree that challenges of recent times include the change in consumers spending habits. People have become very careful about spending due to the economic downturn globally. I have noticed that the consumer is now a little more demanding in what they are getting in return for their hard-earned money. Challenges to smaller retail companies will always include bigger retailers selling for knockdown prices as they make 100 per cent of their product overseas! Smaller retail stores will always face this challenge though - it is your typical ‘little person, big person’ scenario!
Alex: Of course, online has also changed shopping habits across the board. It is so often the first stop to shop now. Sometimes it’s just research, sometimes it’s to purchase, but people have become a lot more comfortable with buying clothes online than they were a couple of seasons ago.
So how have each of you adapted or evolved your business strategies in response to the changing landscape?
Nick: We’re finding that the downturn in the retail market is creating an opportunity outside of the ‘sales’ area, things like negotiating better terms on existing leases and coming from a stronger negotiating position with new stores. Of course, we supply over 180 stores worldwide so we know first-hand what is happening in the market, but you don’t have to be Einstein to realise that retail on a global scale is in a state of flux. All retailers need to be thinking about the evolution of their business; remaining stagnant isn’t a viable option anymore, because the world is racing ahead.
Rather than retract, we’re opting to push ahead. We’re looking at opening three more stores, we’ve added a range of new product lines, including denim, which is yielding some great results. We’re spending on technology, advertising and infrastructure. We believe that now is the best time to forge ahead.
Alex: We actually haven’t changed our strategy too much as we haven’t hit a slump. We are looking to open in Perth and Brisbane this year, and hope that it means we can get a good location at a discounted price. We have, however, changed our strategy to fully vertical, due in part to the availability online and discounting of other labels that we stocked. Shoes being a prime example of this.
However, our biggest challenge recently I would say, has been the wholesale side of our business, overseas markets in particular. We found that, as we aren’t a big name, it is harder to get traction when times are tough. In response, we have changed our wholesale strategy to provide a stock service. This is taking a lot of the risk away from the retailer, providing them with an immediate delivery on stock when they have the need, alleviating the risk they have of long-range indenting.
Haim: For Dizingof, we have begun to look into wholesaling as our product has been desired for many years by many high-end boutiques, so finally we are looking into this as we would like to open new revenue streams.
Repeat clientele has kept our company very strong in the last couple of years, but I do agree that we as retailers now have more of an opportunity to negotiate leases and rent. However, on the point of online shopping, as mentioned by Alex, while I agree that buying online has increased, I feel that when it comes to luxury brands such as Dizingof, the customers still desires to experience the full sales service, in-store with a stylist, like the girls we train to work for us. Consumers are happy to buy Topshop and the like online, but not luxury and expensive garments.
Alex: Haim, I have actually been surprised at the number of local online shoppers that we have. The convenience of online, with a good return policy, is outweighing the ‘in shop’ experience for many people.
Nick: There is certainly the impact of online, but the States and Europe are 10 years ahead of us in terms of buying online and last time I checked online sales hadn’t exceeded 10 per cent of total fashion and footwear revenue in those regions. So it’s obviously ‘massive’, but there’s room for both.
Haim: Alex, while I do believe that the bigger the company and more well-known the brand the more people will buy online, for us our stores do best on in-store sales, simply because of the amazing experience that the consumer receives. This is something I believe is lacking in a lot of retail stores, in many cases because sales assistants have become lazy and are not caring to help.
Nick - you recently launched the new Nique website and you are about to launch a new label – Light Comma Shadow – which will see Nique moving into a new category of apparel (surf/beach wear) for the first time. Was this in response to the changing market, or just a general evolution of the brand?
Nick: In today’s market I think a brand, large or small, really needs to do everything well to move forward. Our online store needed to be updated to match what’s happening in the market place, things like live inventory updates to our warehouse and retail stores, visible on iPads, iPhones, etc, search engine optimisation, and so on. So that was a matter of catching up. The new brand is something we have been working on for a while, and we’re working with the strategy of smaller and specialised for this one.
But overall, in response to the tougher retailer climate we’ve sharpened our online offer, and we’re also focusing on generating our own content for social media, which is yielding some amazing results so far. We’re also thinking about what the future of retail will look like and what form our particular model will take and opening stores in higher profile areas that were previously unobtainable due to inflated rents. Additionally, we’re spending more on the right kind of marketing to ensure we make a positive noise in a quiet market.
Haim, you said earlier that coping strategies, such as bulk discounting – mentioned by Alex – apply more to the bigger retailers which are more mainstream and mass produced. What about smaller designer brands, such as Dizingof?
Haim: I believe for the smaller company it has to be very much customer based. For example, after sales service, customers are always emailing to thank us for their experience within our stores, which we believe is what keeps them coming back and not going online. I do think this is something that Australian retail stores are lacking. We keep a customer file for every customer that walks in our doors, we check with them to make sure they are enjoying the garment and to let them know what our product of the week is – we just keep up-to-date with them and let them know their business is so important to us. While smaller stores have begun to use this to gain a strong customer base, it’s important to remember that because we are smaller stores, we have to go that little bit further, I guess.
Nick: I think what Dizingof is offering in its stores is great. This is the time for offering something beyond the status quo and we’re trying to do the same, thinking through every in-store process to work out what we can do that is different and goes beyond expectation. We’re also applying this thinking to our products and marketing – the whole box and dice.
Alex: It’s so essential that boutiques are offering an experience that is different to the larger store. I think that we (including Nique and Dizingof) are in a good position because we can tailor our product and have things that are not available in other stores. But it is really about having happy customers, as a result of both great product and great service.
What about specific changes on the Melbourne retail scene?
Haim: I believe Chapel Street has changed a lot in the last few years. I am not sure if you will all agree but it seems to have lost its high-end boutiques and the street has become more filled with your typical brand/high street stores.
Alex: The main change that I have seen in Chapel Street is that it is becoming a majority of locals. It doesn’t seem to be the destination that it was in past years. There are also a number of business that have closed around our stores, and the soft consumer confidence has caused us to slow our expansion plans a little. We didn’t open any new shops last year for the first time, as we were just being cautious. But that will change this year with hopefully two more in the works.
Nick: We’ve seen the same issues facing Oxford Street in Sydney on many of our much-loved retail strips here in Melbourne lately. But we’ve also secured our busiest and most successful store recently – in St Kilda. Previously this site was unobtainable due to an overinflated rental and ‘fee’ for the fit-out. We’ve also had a lot of success with our pop-up program. We’ve secured some premium sites for short periods and done some good numbers.
As I mentioned earlier, I truly believe the downturn is a positive thing and, as any crook stockbroker will tell you, ‘where there is movement in a market, up or down, there is opportunity’. We are starting to see the emergence of this right now. The Australian market is going through a cleanse, which will hopefully leave fertile ground for those who survive.
MEET THE PANEL
Alex Cleary
Director, Alpha60
Alex Cleary is co-founder and director of Melbourne-based boutique label Alpha60, which he launched in 2005 with his sister Georgie Cleary. Since inception, the brand has experienced rapid growth and has worked on collaborations with Sportsgirl, ASOS and Polaroid. The Alpha60 retail network now also includes six ‘Welcome to Alphaville’ stores, with four based in Melbourne and two in Sydney.
Haim Bzezinski
Founder and head designer, Dizingof
Haim Bzezinski created the Dizingof label in 1999 and has since expanded to launch three stand-alone stores in Melbourne at the QV, Brunswick Street and HarbourTown. The brand currently caters solely to womenswear, including coats, jackets, vest and skirts. Bzezinski describes the Dizingof style as a “mix of the old world/new world look”.
Nick Ennis
Director, Nique
Nick Ennis is director and head designer of streetwear brand Nique. Ennis co-founded the label with Lucy Ennis and the label is now sold in over 180 stockists across the globe and currently operates five stand-alone stores in Melbourne. The Nique clothing range currently includes menswear, womenswear and a newly-launched denim line, as well as White Label - a spin-off basics brand. Nique is now looking to launch a new surfwear brand in September, titled ‘Light Comma Shadow’.