The High Street is a Changin'

SYDNEY: The surge in discount retailing will force many international fashion businesses to move upmarket as a point of competitive difference, a retail expert has predicted.

Australian Centre for Retail Studies program director Steve Ogden-Barnes believes the "overpopulated" value sector – which includes UK retail giants such as Primark and George @ Asda – has already pushed key players to distance themselves from price-based promotions and product categories.

Speaking at the 2008 Global Retail Insight Seminar, Ogden-Barnes said even traditional value operators such as UK department store Debenhams, Next and Zara were reinvesting in stores, merchandise and service as a necessary point of difference.

"In most countries, the value sector is very well populated but the temptation for businesses is to trade down to meet that value sector rather than to trade up and move away from it," Odgen-Barnes said. "Even Zara is considering moving its value position to a higher place by investment in it stores and store experience as opposed to just a place to buy products."

Ogden-Barnes said the growth of e-tailing meant consumers could also purchase products directly online, meaning retailers had even greater incentive to boost in-store experiences. Debenhams, which has long relied on heavy discounting and price-based promotions, is one of the key players reinvesting in this strategy through upmarket fit-outs, Ogden-Barnes said.

"It's fighting back by reinvestment in the store. It’s going to have to wean itself off that price addiction which is characteristic of so many retailers if it wants to gain a higher ground and move away from the very well populated value sector."

Ogden-Barnes said High Street chain Next had also leveraged its market position by introducing a collection of premium products at a higher price point. Moss Bros, a historic value retailer which specialises in "50 quid" suits for men, is another powerful player which has shifted upmarket through heavy investment in refitting and expanding its product offering.

"[Both] have realised consumers are moving away from throw away basics and trading up for more expensive items," Ogden-Barnes said. "Next has focused away from price attraction into product attraction by a move into the premium and upscale ranges as part of the whole mix."

The discounting which has long defined Australian retailing will too be tested as tougher economic conditions set in, Ogden Barnes said. "Working smarter not harder in relation to sales promotional may be critical for the future of your business."

By Assia Benmedjdoub