You’ve heard of all the problems facing Australian retailers: the internet, high rents, falling consumer sentiment and Australia’s high wages.
In fact, if you listened only to Myer and David Jones, you’d think that the Australian retail market was a desert wasteland of calcified skulls and tumble weed. For them it is. Both have enjoyed anaemic growth at best.
But recent developments are showing these claims up for what they are — a giant load of hot air.
If the Australian retail environment was as bad as David Jones and Myer describe it, you wouldn’t expect large international chains to be entering the market.
But that’s exactly what’s happening.
H&M has just signed its first Australian lease. It will join Costco, Zara and Uniqlo in setting up new Australian operations.
These are global players with stores across the world. They too will come up against the Australian dollar and falling consumer sentiment. They will pay Australian wages, the same wages which some have claimed are sending retailers broke.
So what’s going on?
Put simply, they are running better businesses than Myer and DJs.
They’re able to compete with the disruptive force of the internet by selling better products, and utilising a quicker supply chain which means in-store clothing is always up-to-date.
They are more efficient and leaner, but also invest in customer service — Uniqlo has promised to hire hundreds in their Australian stores to provide the best customer service.
Myer and DJs have gone some way to speeding up their supply chain, and after gutting customer service are hiring again.
But if they want to compete, they’ll have to do better.
Callum Denness
Contributing Editor, Money Morning
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