Online Retailing – Unfashionable Down Under

About a year ago I first broached the topic of the lack of digital investment by Australian retailers, and 1 year on it seems whilst we have progressed we are still falling further behind the digital 8 ball. This trend seems to ring true – particularly within the fashion sector whereby Australia is hemorrhaging online sales to overseas counterparts.

Online Australian Consumers Wont Wait For Fashion Retailers

Online Retail WebsiteAccording to stats released by the online retailers conference in Australia more than 45 per cent of all online retail sales are currently going offshore from Australia. This compares with just 14 per cent in 2005. And whilst fashion is not the only segment whereby Aussie retailers are missing out to overseas competition, it seems that international fashion retailers are actively pursuing Australian consumer $$$$ and are rubbing their hands together in the process.

According to a recent article in the Sydney Morning Herald, several British and US retailers have exploited the lack of investment in eCommerce fashion in Oz. In April, the British online designer boutique Asos.com listed Australia as its fourth-strongest international market behind the US Denmark and France and Net-a-Porter also lists Australia as ”one of its biggest international markets”. Whilst America’s Revolveclothing.com says Australia is its third biggest market outside the US.
It therefore seems Australian consumers have a healthy appetite for buying fashion online and are going abroad because of the lack of choice in the local market.

Can Clothing Retailers Afford Not To Do It?

Many Australian fashion retailers are still yet to realise the value in online retailing, however there are a select few that have made an investment in the space and are deriving significant value from their online stores. Witchery, for example, lists its online store as its fourth most profitable outlet, out of 80 stores nationally. And Mimco, which is owned by Witchery Holdings, ranks its online store as its 10th most successful, with turnover of about $90,000 a month.

However it is not only profitability and revenue that is delivering value for brands. Online stores have provided brands such as Guess and Sportsgirl with the ability to reach out to consumers in cities and towns that are not close by to bricks and mortar outlets;

Simon Nankervis, Managing Director of busbrands which owns the rights to Guess in Australia said about 80% of the sales within the past week have been from areas where Guess does not operate a retail location, and he wants it to stay that way. “This is being done by consumers where there is no retail location, such as the Northern Territory, or like in other parts of Western Australia as we only have one store in Perth.”

The Threat Of Inaction

online fashion retailForrester Research predicts Australian online spending will grow to $32 billion by 2012, with further evidence to suggest that this could just be the beginning. Figures from IBISWorld show that online sales may eventually reach $75 billion as more retailers increase the efficiency and reliability of their online channels.

Fashion retailers need to realise that getting the right mix for success is not an easy task in the online world and fashion retailers need to be ramping up their online stores now to;

1) Gain a larger slice of the current consumer online fashion spend
2) Ensure that they are well established to capitalise on the future revenue opportunity which is presenting itself.
Inaction is not an option – if eCommerce and digital strategies do not become fashionable for Australian clothing retailers soon, the brands that do not move with the times maybe left behind like last seasons unpopular lines.
What are your thoughts on the lack of eCommerce investment by Australia’s fashion retailers?

Article References
www.smartcompany.com.au/retail/20100217-fashion-brand-guess-opens-web-store-in-bid-to-expand-retail-reach.html+online+fashion+retailing+australia&cd=4&hl=en&ct=clnk&gl=au
http://www.smh.com.au/lifestyle/fashion/new-york-london-paris-prized-labels-just-a-click-away-20100515-v5j7.html
http://www.insideretailing.com.au/Latest/tabid/53/ID/8174/Aussie-retail-dollars-head-overseas.aspx

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