This is the latest instalment in a new partner series with The Retail Score, presenting a first-of-its-kind Fashion Retail Index that tracks top-line performance across the clothing, footwear and accessories industry.
July proved to be another challenging month for Australia’s fashion industry. Like-for-like sales increased by a paltry 0.2%, driven by soft sales volumes (down 0.4%) and relatively modest growth of 0.8% in average transaction values.
Online was the only channel to deliver meaningful growth, with sales increasing by 2.8%. Sales through standalone stores rose by just 0.2%, while both concessions and outlet stores recorded declines – down 1.9% and 3.6% respectively.
The disappointing July result can largely be attributed to yet another increase in discounting. The average discount rate rose by 3.5 percentage points, eroding the benefit of higher original prices. While original prices were 5.2% higher than last year, final selling prices barely moved once discounting took effect.
The financial impact is material. Gross profit declined for the first time in more than 12 months – a serious warning sign for the fashion industry. Retailers, clearly desperate to clear winter apparel, appear to have decided that cash flow currently trumps margin.
The challenge facing standalone stores
The relatively weak performance of standalone stores highlights a longer-term question for the industry: what is the sustainable future of the premium fashion boutique?
Standalone stores have struggled for the past two years, with average sales barely moving despite continued increases in rents, wages and other operating costs. There are, however, some encouraging exceptions – most notably within established fashion precincts on the high street.
An analysis of The Retail Score Index at postcode level reveals that fashion precincts in Paddington (Sydney), Armadale (Melbourne) and Fortitude Valley (Brisbane) have all significantly outperformed their surrounding retail catchments.
In Paddington, for example, same-store sales from January to July increased by 14%. This compares with negative sales growth across Sydney, Bondi and Parramatta.
Armadale recorded growth of 3.2%, outperforming comparatively softer results in major shopping-centre locations such as Chadstone and Fountain Gate. Similarly, Fortitude Valley achieved growth of 10.9%, compared with weaker performances across Brisbane, Chermside and Carindale.
Consumers are still seeking an experience
These results suggest that consumers remain willing to shop in a more traditional way when the experience is compelling. This represents a genuine bright spot for the fashion industry.
That is not to discount the importance of large super-regional shopping centres, which clearly continue to attract a significant share of consumer traffic. However, in the current trading environment, there appears to be a distinct segment of shoppers seeking an experience that extends beyond the conventional shopping mall.
Well-curated high streets offer a broader experience—combining distinctive retailers, hospitality and an engaging local environment. For premium boutiques facing rising rents, the fashion precincts remain and important point of differentiation that are also delivering results.
A message from our sponsor: The Retail Score Index is open for all retailers to participate in. Those retailers who agree to share data with the Retail Score get the benefit of data updated weekly Monday evening. The data contains a broad range of measure that extend well beyond basic sales data and reports across multiple location segments including postcode.
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