Battle of the Retail Brands


Shoppers in Sydney should get ready as a plethora of high-profile international retailers including Topshop from Britain and Uniqlo from Japan are preparing to open up new stores.
Amid the high anticipation of the Spanish Zara brand opening in Westfield Sydney, Pitt Street Mall, next Wednesday, leasing directors from other overseas retailers are in Australia looking for sites.
But given the distance from their head offices in Spain, Britain and the US, these big hitters will not just want to open one or two stores.
Depending on demand, they will seek out sites in all the major cities and shopping malls.
Already GAP is in Sydney and Melbourne's Chadstone Shopping centre and is said to be looking at Brisbane and Perth.
Although the prices of some items may be higher than overseas, having these big names in the city is putting Australia on the international fashion map.
And with the new entrants, it is also giving exposure to the rest of the Australian retailers, as international tourists visit all the stores.
What we can expect to see is a "battle of the brands", Knight Frank's associate director, Alex Alamsyah, said.
"It is understood that Topshop has secured a new local partnership with Next Athleisure and would like to open their first flagship store in Sydney CBD in 2012," Mr Alamsyah said.
"Forever 21 from the US has recently met major shopping centre owners to discuss takeover of some stores of embattled bookstore chain Borders in Australia."
It is understood that US retailer Abercrombie & Fitch and Uniqlo are also both seriously considering the Sydney CBD for their first marquee stores in Australia.
The Swedish H&M group is still talking to some major Australian shopping centre owners and retail leasing agents, but there is no concrete commitment yet.
"There is strong activity in the Sydney CBD," Mr Alamsyah said.
"These heavyweight global brands, seeking roughly 1000 to 4000 square metres, are flocking to the Sydney CBD. The order appears to be Zara next week, Topshop next year with F21 and Abercrombie & Fitch likely to arrive in 2012/2013, while Uniqlo and H&M may follow in 2013/2014.
"Zara, Topshop and F21 will not come to Australia from as far away as Spain, UK and the US just to open one or two stores in Australia. They will open more and more, including outside the CBD in well-to-do suburbs.
"Fashion fans like to see great showdowns of highly anticipated and long-speculated battles of heavyweight brands in prime Sydney CBD locations. They like to see a face-off between Zara and Topshop, F21 and H&M, and A&F and Uniqlo."
In the middleweight class (stores between 500 and 1000 square metres), Specialty Fashion Group is talking to Victoria's Secret and will perhaps open a 500-square-metre flagship store in the Sydney CBD.
Brand Republic has opened its first GAP store in Westfield Sydney and is potentially in search for 600 square metres for Banana Republic.
Billabong is fitting out its 500-square-metre flagship store in Sydney Arcade, while both Quiksilver and Kathmandu are still looking for 500-1000 square metres for their next showcase stores in Sydney CBD.
Mr Alamsyah said that, in the lightweight class (stores of between 200 and 400 square metres) Patagonia from the US has secured its first 300-square-metre Sydney CBD store and will open in July, setting up a heated contest with North Face.
"In addition, Paul Smith, CH, Marc by Marc Jacobs, Thomas Pink and Class Roberto Cavalli are all looking for prime sites in the Sydney CBD," he said.
"Talk that Sydney City retail leasing has been lacklustre seems to be off the mark and there's been plenty of action from big names in retail.
"Louis Vuitton will open its super flagship store at the corner of King and George streets in November and Christian Dior will take over the current Louis Vuitton store at the corner of King and Castlereagh streets."
In other moves, Hermes has expanded its store by taking over the ex-Swarovski store in Market Street; Tiffany&Co was looking to expand to the Escada store in Castlereagh Street; Burberry has moved to a larger store of about 800 square metres in Martin Place; Omega has also moved to a larger store of about 250 square metres in MLC Castlereagh Street.
The Mont Blanc retailer has renewed its store in King Street, Longines has opened its first flagship store on the corner of Pitt and King streets, and Porche Design has opened its first flagship store in ex-IM Lingerie's King Street store.
Carolyn Cummins is the Herald's Commercial Property Editor.
Carolyn Cummins
April 14, 2011 - 2:02PMSydney Morning Herald

    Is 'Anchoring' to blame for low retail spend?


    Anchoring is a behavioural economic principle that explains how we can be influenced by seemingly useless information. Retailers have been using anchoring since the dawn of time, e.g. was $179 now only $99 (note: $179 is the anchor).

    A study conducted by Dan Ariely (Behavioural Economist Guru) with college students found anchoring also works on a subliminal level. Students were asked to write down the last 2 digits of their social security number before bidding on items in a silent auction. Those with higher social security numbers placed consistently higher bids than those students with lower social security numbers.

    With online purchases only making up a fraction of Australian retail spend, it's hard to believe the story retailers are telling the media about the unfair trading conditions in regards to GST not applying to online stores.

    Taking anchoring effects into account, it would be a fair to say "...the real damage the internet is doing to some local retailers: it’s not the spend, it’s the knowledge it gives them on pricing."
    Source (www.smh.com.au / Retailers stung by new thrift)

    It seems more likely that the average consumer is now simply more aware of how much things costs and will walk out of your store if your price doesn't match expectations, rather than an explosion of consumers shopping online to avoid paying GST.

    With consumers now more price aware and frugal, retailers will need to start getting more innovative to keep their margins or simply lower their prices