New research has identified womenswear as one of the weakest sectors in the Australian market.
According to the IBISWorld 'Womenswear Stores' report, womenswear stores have struggled in a challenging retail environment over the past five years, as weak consumer sentiment, subdued demand and intensifying competition have driven down revenue and profit margins.
The study also notes that the womenswear stores industry is in the mature stage of its life cycle. over the five years through 2013-14, industry revenue is expected to contract by an annualised 2.5 per cent to $5.0 billion.
Over the 10 years through 2018-19, the industry's contribution to the economy (industry value added) is also expected to fall by an annual rate of 0.1 per cent. This indicates a “weak performance” when compared with annualised GDP growth over 2.5 per cent and suggests that the industry is growing at a slower rate than the overall economy.
IBISWorld said the industry is characterised by a low level of market share concentration with the top four major players accounting for 36.7 per cent of revenue.
While retail chains such as Country Road, Sportsgirl, Portmans and City Chic have significant influence over the market, the industry also has of a large number of smaller, independent operators. The firm estimates that 43.1 per cent of companies generate between $200,000 and $2.0 million per annum, while only 5.4 per cent of industry enterprises earn $2.0 million or more.
The industry is also characterised by a low level of market share concentration. The top four major players are Specialty Fashion Group Limited, ARJ Group Holdings Pty Ltd, Premier Investments Limited and Country Road Limited.
The report cited a number of factors for the gloomy prediction, including the effects of the global financial crisis.
IBISWorld industry analyst Lauren Magner said since the global financial crisis, consumer confidence levels plummeted. As a result, consumers have become more cautious, cutting down expenditure on discretionary items and preferring to save rather than spend.
“This trend prevailed throughout much of the five-year period, as consumers remained nervous about global economic conditions and financial market instability”.
Magner added the fact that consumers are able to compare different products and prices across a range of online retailers before making their selection, could also be affecting the decline womenswear industry.
“This shifts revenue away from traditional bricks-and-mortar retailers, as online stores often have greater flexibility over prices and are able to offer better value for money,” Magner said.
In response to growing competition IBISWorld notes that it is expected that retailers will invest in increased employee training in order to provide a higher level of customer service and differentiate themselves from competitors. This is expected to support sales growth in the womenswear stores industry over the next five years.
However, increased acceptance of online shopping will continue to adversely affect industry revenue. Despite the development of multi-channel strategies by many companies in this industry, online sales generated by traditional retailers are excluded from this industry.