Professional Documents
Culture Documents
By Paige Rundle
S3567307
The total clothing retail revenue for the industry in 2017 was 20.3 billion. There are four large
Australian players in the industry currently; Woolworths International (Australia) Pty Limited,
Specialty Fashion Group Limited, Premier Investments Limited and The Cotton On Group.
GAP, Zara, H&M, and Uniqlo are major International players in the market here but with the
opening of Amazon Australia this could cause strain on many of these local and international
brands. With a monopolistic market structure, it gives the industry the opportunity to alter
Some of the threats the industry face are the economy not doing as well as economists had
previously visioned; International competition with Amazon launching their Australian site,
and Environment from the start of life materials and the end of life disposing of.
The opportunities the industry have are companies using e-commerce as a way to reach a
wider market and appeal to the younger generations who are the future; Customer
experience with Augmented Reality and Virtual Reality; and Generation Z who have little
The solutions made by the author for Sustainability are to use sustainable fabrics like Tence
and reuse clothing and fabric when it gets to end of life. This is seen by companies such as
The strategies that could be adopted for Generation Z are looking more into customer
experience using smart technology, focusing on e-commerce but not forgetting about bricks
and mortar.
Table of Contents
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Introduction.....................................................................................................................3
1.1 Players in the market..............................................................................................4
1.3 Relative Size.............................................................................................................5
1.4 Market Structure......................................................................................................5
2.1 Threats.......................................................................................................................5
2.1.1 Economy................................................................................................................5
2.1.2 International Competition....................................................................................6
2.1.3 Environment..........................................................................................................6
2.1.4 Opportunities........................................................................................................7
2.1.5 E-commerce..........................................................................................................7
2.1.6 Customer Experience..........................................................................................7
2.1.7 Generation Z..........................................................................................................8
3.1 In Detail Threat and Opportunity...........................................................................8
3.2 Environment.............................................................................................................8
3.3 Generation Z.............................................................................................................9
Conclusion....................................................................................................................10
References....................................................................................................................11
Appendices...................................................................................................................13
Introduction
This report was prepared by Paige Rundle, a third year RMIT student undertaking the
Bachelor of Fashion.
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The author was given the task of researching the Australian Fashion Retail Industry and how
volatility with sales, consumer uncertainty about the future and economy, supply chain
complexity and ambiguity of uncertainty about the future of retailing in Australia (VUCA)
The objective of this is to complete a report for the Australian Fashion Retail Industry.
The author collected secondary data sources including industry databases, online reports,
and articles.
The author looked at the current market situation by evaluating major players in the industry
including local and international, the relative size of the market, market structure,
oppourtunites and threats of the industry in Australia and gave solutions and strategies to the
According to the report (IBIS World 2017), the main players in the Australian fashion Industry
are Woolworths International who owns the Country Road Group including Country Road,
Witchery, Mimco, Politix, and Trenery, they have 4.2% of the market share. The Specialty
group who own brands such as City Chic, Rivers, Millers, Crossroads, Katies, Autograph
who have 4% of the market share and The Just Group owning Peter Alexander, Just Jeans,
Dotti, Jaqui. E, Portmans, Jay Jays and Smiggle with 4.3%. (Appendix A). Cotton On Group
is listed in IBIS World as a medium player with an estimated 3.8% market share which
includes all of the 7 brands; Cotton On, Cotton on Body, Cotton On kids, Rubi, Typo,
Factorie and Supre but as the company is the largest Australian global retailer (Cotton On
2018) and has only 0.5% less market share than The Just Group, it is still one the major
players. (W1_RCO5)
With an overwhelming number of international brands coming to Australia, it could see local
retailers struggle more. Zara, H&M, Uniqlo, and GAP are some of the largest brands in
Australia right now and putting the market in a ‘red water’ environment as Australian brands
are competing with faster turnaround times, price and fashion (W1_RCO1). “Last year,
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global brands including Zara, H&M, and Uniqlo took $600 million out of Australian clothing
retail.” All of these brands are looking at expanding across Australia in the next 5 years
(Global Powers of Retailing 2017) as well as the introduction of Amazon and talks of Alibaba
Medium players in the market are ARJ Group Holdings which includes Sports girl, Sussan
and Suzanne Grae and have 2.6% of the market share. Fast future brands Limited including
TEMT and Valley girl have an estimated 1.1%. (IBIS World 2017).
The industry in Australia is worth $20.3 billion (IBIS World 2017) (Appendix B) which
includes the Australian brands and International brands trading in Australia. From December
2017- January 2018 the entire retail sector in AUS had a trend of $26259.8 million. In
January 2018, there was a rise on the trend estimate of 0.3%. (ABS 2018).
The market structure in Australia is monopolistic as there are large amounts of smaller
companies/ businesses “in which firms have many competitors, but each one sells a slightly
different product.” (Economics Online 2017). This allows them to alter the price, meet
2.1 Threats
2.1.1 Economy
The uncertainty of the economy makes it difficult for consumers to want to spend their
money in the clothing retail sector. With the economy only rising around 2.75% this year it
leaves a lot of unease in the market and consumers. Economists are saying that this year
won’t be as good as what people had hoped for but there is still some improvement so it
won’t be bad either (Clarke 2018). This will affect the retailers as they are likely to get less
local business and need to think of new innovative ways to market their products and keep
consumers spending. The unemployment rate is now at 5.6% despite more jobs being
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created (Letts 2018) which affects consumers as they have less disposable income and are
less likely going to want to spend what they have on items that aren’t a necessity. On 22
March 2018, 1 AUD equaled 0.7744 USD (RBA 2018) making it harder for Australian
retailers to keep the Australian consumers buying local as Australians get cheaper products
from overseas such as United States. Although this can affect retailers in a positive way as
payment for manufacturers and suppliers overseas are usually done in USD. (W3_RCO1)
International retailers are continuing to open bricks and mortar in and around Australia
making it increasingly more difficult for local retailers to compete with them. Apart from the
large international brands that have been in Australia for a few years such as Zara, H&M,
GAP and Uniqlo, there are many other large brands from USA and Europe that have opened
lately or are on their way e.g. Tiffany and co which already has several stores around
Australia; Swarovski; and Decathlon who opened their first bricks and mortar store in 2017
(Pash 2018). The online presence from international brands has expanded as well with the
likes of Amazon, Alibaba and Zara hitting online this month, with free delivery on orders over
$75 and free returns as well as being able to click and collect in store which is a benefit they
have over ‘The Iconic’ (Kimmorley 2018). Amazon is one of the biggest threats that
Australian retailers are facing right now, although it didn’t have as much of a bang as was
expected when launching because of cost and delivery prices, it is still thought that they will
make a comeback especially with Amazon prime expected to launch in the next year. (Scutt
2018).
2.1.3 Environment
The making of cotton and other raw materials comes with an extremely large cost to the
environment. Not only is it likely that the world will run out of fresh water, but also oil as it
continues to get extracted from the environment and cannot be replaced. By 2050 the world
will have too many people to sustain the luxuries that are now used e.g. washing machines,
cars. End of life clothing essentially ends up in landfill which causes massive issues for
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health and the environment it is dumped in. The industry needs to think of innovative ways to
save Australia in the future (Mellery-Pratt 2017). There are already some companies that are
2.1.4 Opportunities
2.1.5 E-commerce
E-commerce is becoming an increasingly large part of our economy and lives. Especially
with the Generations Y and Z, the preferred way to shop is online rather than in store right
now. With the top online fashion retailer in Australia being ‘The Iconic’ and aimed at 20-35
year olds, they are targeting the Gen Y and start of Gen Z who are the future of retail
(Financial Review 2017). Other Australian retailers could look at what ‘The Iconic’ have done
e.g. have a pure play business structure. Obviously, pure-play won't work for every company
and would depend on each individual brand but it is worth consideration. If not, omni-
channeling is the best way to reach a larger market. Currently e-commerce in Australia has a
revenue of $11,789 million USD and expected to rise by 8.8% by 2022 (Statista 2017)
(Appendix C). “Consumers are more comfortable than ever buying online; footwear, fashion
accessories and active wear items, in particular, are increasing in popularity.” (Inside
With technology improving rapidly, the retail sector needs to upgrade at the same rate.
Virtual Reality (VR) and Augmented Reality (AR) (W3_RCO3) are two ways that the retail
sector can improve by adapting these new smart technologies, this has already been seen
by companies like Topshop who had an interactive window display where customers could
watch the most up to date runway shows which gives them the feeling that they were there
firsthand. Ikea has also released an app using AR where consumers can virtually place Ikea
products into their own home and give customers an idea of what it will look like before they
buy. Robots are starting to be used in department stores to give directions to customers and
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direct them to products they are looking for. These technologies will start to be seen a lot
2.1.7 Generation Z
Generation Z (Gen Z) is one of the largest threats as well as opportunities that the retail
industry currently has, this is because there is so much uncertainty about them. Currently
there has not been much research into the buying habits of the generation and therefore it
leaves massive gaps for the industry and its future. Gen Z have very high expectations for
the retail industry now and even higher for the future, they assume the store and assistants
to remember them and what they have previously purchased even without giving the brand
any loyalty (W1_RCO1). The industry has to keep up with marketing strategies to use as the
biggest way to market to this generation is through social media. Instagram is the main
marketing platform for this generation as it has a lot of social media influencers on it. They
are followed by a lot of brands target market and the followers trust what they have to say.
3.2 Environment
“To make a pair of jeans and a t-shirt takes 20,000 litres according to the WWF” (Business of
Fashion 2017) this is mostly from the dying and treatment procedures that raw materials
need to go through. Using such a large amount of fresh water comes at a large cost to the
world. After consumers are done with their clothing, they throw them away and don’t think
anything of it again but this then ends up being in landfill for years and then gets burnt
producing produces methane into the environment and in the end, can cause health
problems for people that live nearby. Landfills usually end up being near or in lower income
areas which has many issues other than health for the locals, e.g. house worth goes down
as does. By burying rubbish in the ground, the dyes and gases leach into the soil and can
then get into food grown in the area. The time it takes for certain materials to decompose
can vary from 3 months to 80 years when buried. With this being said there are several
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brands already doing things to help this. Reformation currently uses sustainable fabrics e.g.
Tencel which is semi-synthetic using eucalyptus trees and do not use any pesticides or
chemicals, also uses 80% less water than cotton does (Reformation 2018). When choosing
a product on their website you can see how many savings you are making on water, carbon
dioxide and waste (Appendix D) (W1_RCO2). Another company already looking into the
environment is H&M who already use recycled products or sustainably sourced materials on
some of their products. By 2020 they have a goal to have all of their cotton coming from a
sustainable source, so far, they are at 43% (Business of Fashion 2018). Adidas have also
released three trainers which are made from plastic found in the ocean, 11 bottles are used
per shoe. The company is hoping to make a million of these shoes just this year. Companies
could also look at prolonging the life of clothing they make by using smart materials,
biodegradable buttons, electronic receipts which Urban Outfitters are already doing and stop
Severe weather conditions are predicted to happen more often in the future which will likely
impact the livelihood of many of the factory workers and manufacturers which can lead to
problems in the supply chain and fewer products being made (Business of Fashion 2018).
Although there is not a lot that the industry can do about the weather, there could be room
3.3 Generation Z
There are so many oppourtunities for the industry with Gen Z. Marketing is a very big factor
that is changing, going from marketing on television, billboards, radio etc. moving onto
(W2_RCO2). Interestingly the influencers used are less commonly celebrities and more
likely to be regular people that have gained a following on social media from around the
world. They promote and advertise brands that send them items to use in the post and/or
send them money, for example, Mimie Lashiry has 906 thousand Instagram followers that
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her posts would reach directly and so many more indirectly (Instagram 2018). This is just
one example of the millions of influencers out there that brands use depending on their
This generation has extremely high expectations when they shop but also have no brand
loyalty which makes things very difficult very the retail industry as they will need to come up
with innovative ideas while still keeping their depth and variety of products right for their
consumer. (W1_RCO4) Merchandise management is developing the right product mix for
the consumer for the right event and season. If a brand is not already doing this well then it
is unlikely they will stay in the industry for much longer, but this is still not enough to just do
to be at the top of this industry. Some strategies to stay in the market are store experience
using new technologies as well as services like personal shopping and ‘smart mirrors’ letting
customers virtually try on clothes in the fitting rooms (Retail Tech News 2018) (W2_RCO1).
These new technologies could be frightening for older generations but studies show that
etc. the industry should be focusing on targeting their consumer on these now but as studies
show it may not stay this way with a strong push from the generation to keep bricks and
mortar in the future (Marketing Land 2017). This is a massive opportunity for the Australian
Industry as they have the chance to take ideas from international companies and bring them
Conclusion
The industry is still strong but there are a lot of threats such as International competitors
currently here and also incoming that is going to cause a lot of unsettlement for local
retailers. They are going to need to be innovative to stay on their feet and play in the field
with these other brands coming in with faster supply chains and cheaper pricing.
In the monopolistic market structure, there are four major local players in Australia right now
with another four international with a lot of smaller businesses in the mix as well. The other
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threats that the author covered for the industry were the economy, International competitors,
and environment. The solution for the environmental issues stated was to use sustainable
fabrics that save on water, carbon dioxide and waste which is what reformation is currently
doing. Also cutting out paper receipts and emailing them instead cuts out the paper waste
which has been seen by Urban Outfitters. The oppourtunities covered were E-commerce
Customer experience and Gen Z; strategies to use are creating a different customer
experience for this generation as they shop completely differently to older generations.
References
Aus Post and StarTrek 2017, Inside Australian Online Shopping, company report, Aus Post,
and StarTrek, viewed 20 March 2018, <https://acquire.startrack.com.au/pdf/Inside
%20Australian%20Online%20Shopping%202017.pdf/>.
Australian Bureau of Statistics 2018, Retail trade, Australia, cat. no. 8501.0, ABS, Canberra,
viewed 22 March 2018, <http://www.abs.gov.au/ausstats/abs@.nsf/mf/8501.0>
Carrington, C 2018, Low wages, high debts and housing bubble threaten the Australian
economy’, ABC News, 4 January, viewed 15 March 2018,
<http://www.abc.net.au/news/2018-01-04/australian-economy-threatened-by-low-wages-
high-debts-bubble/9286048>.
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Cotton On Group 2018, About us, Cotton On group, viewed 25 March 2018, <
http://cottonongroup.com.au/about-us/>.
Deloitte 2018, Ageing Consumers, Will retailers still love me when I’m 64?, Retail Forecasts-
February 2018, viewed 15 February 2018, <https://www2.deloitte.com/au/en/pages/media-
releases/articles/retail-forecasts.html>.
Deloitte, 2017, Global Powers of Retailing, industry report, Deloitte, viewed 20 March 2018,
Deloitte database.
Deloitte 2017, Virtual Augmented Reality- A guide for Australian Retailers, company report,
Deloitte, viewed 24 March 2018, Deloitte database
Economics Online 2017, Market Structures, Economics Online, viewed 27 March 2018,
<http://www.economicsonline.co.uk/Business_economics/Competition_and_market_structur
es.html>
Evans, S 2017, ‘Aust online fashion sales to double in five years, says The Iconic CEO
', Financial Review, 1 November, viewed 17 March 2018,
<http://www.afr.com/business/retail/clothing-and-accessories/aust-online-fashion-sales-to-
double-in-five-years-says-the-iconic-ceo-20171101-gzcnhi>.
Hobday, L 2017, ‘Local retailers feel fashion pain as global brands expand', ABC News, 24
February, viewed 20 March 2018, <http://www.abc.net.au/news/2017-02-24/local-retailers-
feel-fashion-pain-as-global-brands-expand/8301502>.
Kimmorley, S 2018, Zara has launched its Australian online store- here's it's the biggest
advantage over the iconic', Business Insider, 14 March, viewed 20 March 2018,
<https://www.businessinsider.com.au/zara-launches-online-store-australia-2018-3>.
Letts, S 2018, Unemployment edges up to 5.6% despite more jobs being created’, ABC
News, 22 March, viewed 25 March 2018, < http://www.abc.net.au/news/2018-03-
22/employment-and-unemployment-february-2018/9575148>.
Magner, L 2017, Clothing Retailing in Australia, report G4251, industry report, IBISWorld,
viewed 15 March 2018, IBISWorld database
Pash, C 2018, The three threats to Australian retailers in 2018, Business Insider, viewed 23
March 2018, <https://www.businessinsider.com.au/the-3-threats-to-australian-retailers-in-
2018-2018-1>.
Scutt, D 2018, ‘Australia’s major retailers are struggling to keep up with Amazon’s
discounted prices’, Business Insider, 28 February, viewed 20 March 2018,
<https://www.businessinsider.com.au/australias-major-retailers-are-struggling-to-keep-up-
with-amazons-discounted-prices-2018-2>.
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Statista 2018, E-commerce Market report 2018, market report, Statista, viewed 25 March
2018, <https://www.statista.com/outlook/243/107/ecommerce/australia#>.
Sutija, D 2017, Retail game changers: millennial, Gen Z shoppers are bricks and mortars
essential future, Marketing Land, viewed 23 March 2018, <https://marketingland.com/retail-
game-changers-millennial-gen-z-shoppers-brick-mortars-essential-future-226011/>.
Zhou, N 2018, Australian retailers resilient as they face down ‘Amazon Effect’, The
Guardian, 14 February, viewed 20 March 2018
<https://www.theguardian.com/technology/2018/feb/14/australian-retailers-resilient-as-they-
face-down-amazon-effect>
Appendices
From Week 1:
From Week 2:
From Week 3:
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RCO2 - Challenges of Global Interdependence
RCO3 - Technology and globalisation
RCO4 - The new global era
RCO5 - Global trade
Appendix A
Appendix B
Appendix C
Appendix D
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