As swarms of international retailers snaked their way through the streets of Melbourne last year, local boutique Gusto & Elan closed its doors to the public.
The store’s director Katya Ellis says the decision to shutter its Fitzroy flagship was a result of soaring rental costs.
“The big players can afford excessive rents, and are vertically integrated, so even if they are on sale they are making healthy margins.”
Ellis believes this infiltration flows further still.
“For Melburnians all these retailers were, and still are, a novelty. We were 35% down at Christmas the year H&M opened. Brunswick Street was crickets and tumbleweed, while people were queuing at H&M.”
From her perspective, the outlook for fashion boutiques and other small businesses seems dire, but the government has hatched a plan to both bolster the growth of international retailers whilst nurturing the veterans.
The Melbourne Retail and Hospitality Strategy is on a mission to transform the landscape by 2017.
So far on its quest, it has managed to fuel the opening of Emporium Melbourne as well as Australia’s first H&M store at GPO, through Council marketing and stakeholder opportunities.
When H&M opened its doors at Melbourne’s GPO in 2014, foot traffic increased by a staggering 20% than the preceding four Mondays.
Additionally, the initiative has injected $25.6 million into the redevelopment of the city’s Swanston Street, with a focus on catering to the burgeoning athleisure phenomenon. As part of this strategy, The City of Melbourne has forged rental agreements with sneaker merchants such as Hype DC and Platypus.
Smaller merchants such as Gorman are also benefactors, signing a long term lease on Little Collins Street after trialling a pop-up store through the initiative.
On the surface, the facts and figures seem to suggest that the strategy has and will continue to harness positive developments in Melbourne retail.
Talking to the experts however, there are potential pitfalls that could see major expenditure on the project fall flat.
In fact, National Retail Association (NRA) CEO Trevor Evans seems to believe implementing these sorts of reinvigorations to inner city hubs will create a myriad of challenges for retailers.
“Inner city areas are often impacted by the scarcity of space and competing demands and pressures. Access and convenience can mould or change shopping habits, so when unavoidable and often beneficial inner city developments and infrastructure projects take place it’s important for governments to do their part to try to mitigate negative impacts on customer traffic and business sales, especially for small businesses.”
A report on the progress made by the Melbourne Retail and Hospitality Strategy revealed there was a 2.5% retail vacancy rate in 2014 compared to 2.6% in 2013.
The reason? The revitalisation of the CBD from the presence of new domestic and international retailers and major development activities.
Discussing the government’s role in reviving the retail sector, Evans says while its support is critical, it’s down to retailers to make sure they have all bases covered to stay ahead of the curve and drive consumer engagement.
“Customers and shopping decisions ultimately will determine the success of retailers. Broadly speaking, the retail sector is unregulated and unlicensed, meaning that governments can only ever have a limited direct impact on retail business performance.
"However, government does have an important role in managing and developing shared spaces, especially for destinations like the City of Melbourne, so it’s important for them to continue to engage, work hard and evolve alongside businesses and consumer choice.”
One local tenant says despite schemes like the Melbourne Retail and Hospitality Strategy, the government simply cannot provide the support independents need.
Independent boutique Capsule operates stores across Sydney and Melbourne and its owner Nick Denton believes that the sector is copping a blow.
“Online shopping and the non inclusion of government duties and tariffs to those orders placed overseas has made it touch for a lot of small businesses.
“Australians are a well paid work force as a whole and a lot of that spend has gone off shore where stores operate with tax breaks for Australian customers and little implications in terms of import duties as retailers have.”
Despite the struggle, Denton says there are still major opportunities to be harnessed by independent boutiques and retailers that could see them hold their place in the market.
“Being small gives you the ability to move quickly and make decisions efficiently. You call the shots, you take the risk, you get the reward.”
Indeed, after the closure of Gusto & Elan, Ellis turned the focus to ecommerce and is bolstering the brand’s presence in the online retail space.
“There is a massive shift in the market. Time will tell exactly how the story unfolds. We are going to see more labels do pop-ups and try their own stores, or work collectively, because there will be fewer and fewer independent retailers that can actually buy labels, especially new labels.”
Ellis says over the past few years, some of Melbourne’s most prolific boutiques have entered the twilight zone.
“If you think about it, in the last couple of years most of the retailers that vocally prompted independent labels have closed their stores. Alice Euphemia, Fat, Lupa and Gusto & Elan. Doesn’t that speak louder than words?”
In spite of this, Ellis believes the market will come full circle, in line with other creative and hospitality industries.
“Eventually there will be a shift, like there is one happening in the beer industry, where boutique beers are all the rage, but of course the big companies are buying up any independent brewery that is taking any market share.”
The Melbourne Retail and Hospitality strategy will wrap up in 2017 and so far, it appears to have smashed many of the goals it set out to conquer.
Despite the hurdles, Evans is confident the initiative has the capacity to help the city flourish.
“Initiatives like this strategy can provide effective support for retail businesses, especially when it comes to the positioning and activation of retail spaces as experience-led destinations.
"This strategy represents best practice for local government and continues some great work and momentum in positioning the City of Melbourne as a premier shopping destination in Australia.”