Business information firm IBISWorld reports on how fast fashion expansion into homewares poses a challenge to local retailers.
International fast fashion chains are expanding into the Australian homewares and furniture market, which presents a new challenge for local operators.
IBISWorld expects fast fashion brands to enjoy double-digit annualised growth in homewares and furniture sales over the next five years.
Major global brands such as H&M and Zara are bringing their fast fashion business model to the Australian homewares market.
According to IBISWorld senior industry analyst Lauren Magner, this will present a challenge for established operators such as Harvey Norman and IKEA.
“If the market penetration of fast fashion companies’ homeware and furniture ranges matches that of their fashion ranges, we anticipate annualised double-digit growth in this area over the next five years,” Magner said.
Established operators, such as Harvey Norman and Freedom, are likely to feel the impact of the aggressive expansion of these international entrants.
The expansion of big-brand homewares in Australia, which follow the same high-growth, high-profit strategy as international fast fashion retailers, could encourage the exit or consolidation of some local operators that are unable to offer regularly changing collections at appealing prices.
“Companies operating mainly in the Australian market will suffer due to a lack of scale, particularly in design and procurement, and the fact that they are often slower to bring on-trend items to market,” Magner said.
Fast fashion in the home
Relatively high disposable incomes tend to make Australia a natural target for lifestyle companies.
Increasingly, major European and US players are expanding into Asia to pursue growth avenues. As they develop a greater presence in the southern hemisphere, these companies are targeting Australian shoppers.
Brands such as Zara and H&M have quickly developed a dedicated following in Australia, and these companies are expected to leverage their reputations to attract consumers to their affordable homeware ranges.
Lower pricepoints and existing expertise in the sourcing of fabrics have offered fast fashion retailers an advantage in the homewares market when producing soft furnishings such as cushions, throws and rugs.
“One of the advantages for brands like Zara Home is that they are not destination retailers like IKEA or Harvey Norman, which customers will often visit on a weekend or planned outing. Zara will benefit from people visiting and browsing during their lunch break, or while looking at fashion, and making impulse homeware purchases,” Magner said.