The Council of Textile & Fashion Industries of Australia (TFIA) has sounded an alert for the sector, following the release of worrying retail figures for fashion operators.
The latest ABS Retail Trade report showed that while retail turnover rose 0.5 per cent in July 2011, including a 1.2 per cent surge in department store takings, the clothing, footwear and personal accessory sector plunged 4.2 per cent.
In an exclusive interview with Ragtrader, TFIA chief executive officer Jo-Ann Kellock said while the statistics were good news for most categories, they could see more closures and job losses ahead for the sector.
“The reports we receive are telling us that foot traffic is also down, and these latest ABS figures are cause for concern because they reflect an industry under pressure on many fronts. Increases in fibre and material costs, high wages, the rising Australian dollar, falling tariffs, GST [concerns] and reduced domestic demand. Plus the recent opening of overseas brands such as Zara,” Kellock said.
“This reflects a difficult period ahead and a lot of restructuring and/or rationalisation. There will be opportunities but also closures and job losses.”
Speaking on possible causes for the TCF turnover dive, Kellock said the lacklustre figure was likely the result of a combination of factors.
“We don’t really know if the drop is caused by a reduced value of clothing or quantity, but I suspect the latter. And sentiment [in general] is definitely one of cautious optimism,” she said.
However, Kellock said while bricks-and-mortar retailing for fashion businesses may be under threat, online operations are thriving. This might also explain why department stores, such as Myer and David Jones, saw a rise in retail turnover.
“We can’t see the breakdown [of the department stores] so it's hard to guess. But I believe all have miraculously introduced online shopping cart features in last 6 months,” she said. “I think online purchasing of clothing articles is accelerating faster than anyone thought possible especially amongst the younger market segment.”
The Australian Retailers Association echoed Kellock's comments. Executive Russell Zimmermann said that despite a perceived downturn in clothing, footwear and personal accessories retailing, the online constituent is rocketing ahead undeterred.
“What's interesting, is when you delve further into the figures and look at year-on-year figures, you see that other retailing as a category, is up about 7.2 per cent. And in the other retailing sector are our internet sales, in general. We do definitely know that clothing and footwear is bought quite strongly on the internet, so I think that's something we have to keep in mind.”
Looking forward, both Kellock and Zimmerman believe fashion retail is now at a point where only the savviest operators will flourish, with quick adaptation to market conditions a must to survive.
“The clever operators will look to value add, protect their design and creative talent, improve customer service, tap into Australian made loyalty sentiment, reduce all sorts of rents, get informed with market intelligence and integrate social media tactics with marketing campaigns,” Kellock said.
“They will also make sure they have latest online shopping features on their websites, look to leverage products with sectors and towns doing well and, finally, invest in up skilling their good people.”
Zimmerman adds:
“It's no secret the sector has done it tough since the GFC and it will continue to. But I think these figures also show that retailers in the clothing, footwear and accessories market need to get into the online space. They need to grab onto that opportunity and give an offering on the internet that is a seamless operation.”