Australian retailers will bounce back

G’day and a sprinkling of fair dinkum from down under. Here’s some insight from the work we do in Australia, where I’ve been spending an increasing amount of time.

It’s a strong market. However, while there hasn’t been a US or EU-style recession, consumers are more cautious, with expenditure of disposable income reducing by 12% in a year. People are saving more and spending less.

That said, the relatively stable economy combined with high disposable income has meant that even with extremely high rentals, lots of international retailers are entering the market, such as Topshop opening in Melbourne.

However, international and local retailers have the same challenge around ‘seasonality’.

International retailers have to have an autumn/winter range when the rest of their business in the UK and Europe is in spring/summer mode and vice versa. Talk about four seasons in one day.

UK pure-plays including Asos and Wiggle and multichannel players such as House of Fraser have been successful at taking market share from Aussie retailers.

Asos is shipping over £1m of fashion products to consumers in Australia every week. At an average order value estimated to be about $100, that’s 10,000 orders weekly.

So while Australian retailers such as David Jones and Meyer have been working out their ecommerce, multichannel and internationalisation strategies, UK retailers have been eating their lunch.

But this success is not purely down to the customer value proposition.

With the strong Australian dollar – a few years ago you’d get nearly $3 to the pound, now it’s only $1.47 – it’s cheaper for consumers to buy many products online from international retailers than from local brands.

But if you think Australian retailers will continue to sit back and watch this pattern continue, you can think again.

They know how to retail, and they’re catching up fast.  And as anyone who follows sport knows; they don’t lie down for anyone. So you can expect a bounce back.