BACHELOR OF FASHION

(MERCHANDISE MANAGEMENT)
MKTG 1250 F&T
MERCHANDISE MANAGEMENT ASSESSMENT 1
SEMESTER 1, 2017

TASK: TO PERFORM AND ANALYSIS OF THE WAYS IN WHICH THE INTERNATIONAL

COMPETITORS HAVE CHANGED AUSTRAIAN FASHION RETAILING

NAME: QUEK ZUOYU SELENE JOAN

STUDENT NUMBER: S3492120

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 EXECUTIVE SUMMARY

With many global brands entering the Australian Fashion Apparel Retailing Industry, many local

brands are required to adjust their business and marketing strategy in order to stay competitive in

the industry. The purpose of this report is to communicate the overall business strategy implied by

both global and local brands in Australia and to analyze the impact it has created in the industry. It

is also to determine the drivers of change and factors that will impact the Australian Fashion

Apparel Retailing Industry over the next five years.

The current market indicates that in recent years, the Australian Fashion Apparel Retailing Industry

is experiencing growth, primarily driven by an increase of younger demographic by their lifestyle

and the market is increasingly engaged and connected on digital and mobile devices through

social media. The recommendations provided are taking into consideration in addressing issues

identified with respect to the drivers of change. The key findings are technologies and consumer

preferences, which Australian Fashion Apparel Industry are able to tap into for a more fashionable

and trend-driven product offering by using technology to reach out to their consumers.

For this report, the two global brands that are analyze are Zara and H&M, and the two local brands

analyzed are Cotton on and Sportsgirl.

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 1.0 INTRODUCTION

This report has been prepared to analyze the Australian Fashion Apparel Retailing Industry. The

purpose of the report is to communicate the overall business strategy implied by both global and

local brands in Australia and to determine the drivers of change that will impact the Australian

Fashion Apparel Retailing Industry over the next five years.

Prior to submitting this report, only secondary research has been conducted. The scope of the

report will involve an overview of the current market situation, the external marketing environments,

two global brands and their strategies impacting the Australian Fashion Apparel Retailing Industry,

two local brands and how what they did to stay competitive in the industry and the drivers of

change.

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2.0 MARKET ANALYSIS

2.1.1 OVERVIEW OF THE MARKET

MARKET SIZE AND GROWTH

AUSTRALIAN FASHION APPAREL RETAILING INDUSTRY

Figure 1. Key statistics Snapshot, IBISWorld Industry Report G4251 (February 2017)

As shown in Figure 1, the Australian Fashion Apparel Retailing industry is increasing in growth by

4% in 2012 to 2017 and 1.5% in 2017 to 2022. This is a good indicator for the fashion industry in

Australia as it means there is a demand for products.

The market size of the clothing retail industry is equivalent to $19.1billion with a profit of $651.0

million (Figure 1). There are 13,284 businesses in the industry, indicating the industry is a very

complex market with no players holding more than 5 percent market share (Figure 2).

The growing competition faced by the industry from the arrival of international fashion brands and

increasing number of online retailers will continue to restrain revenue growth for Australian retailers

(Magner 2017). With the advancement in technology in Australia has created an alternative way for

consumers to shop. Consumers are becoming more informed and educated about product prices

and are able to make purchases on their mobile devices at their convenience. This has lead to

putting pressure on traditional retail stores (W1_RCO2).

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KEY PLAYERS

Figure 2. Retailers in Aus tralia Market Share, IBISWorld Industry Report G4251 (February 2017)

As illustrated in Figure 2, Premier Investments Limited is the major player in the industry by

occupying 4.7% market share, which is then followed by Specialty Fashion Group Limited at 4.6%

and Woolworths International (Australia) Pty Limited at 4.3%.

KEY CHARACTERISTICS

DEMAND FROM ONLINE SHOPPING

It has been found that many consumers are turning their attention to online shopping and this has

affected traditional retailers in various ways. Research by Roy Morgan Research (2015) reported

that in 2011, 568,000 Australians bought one or more products from online shopping in an average

of four weeks, this has almost tripled to 1,586,000 in 2014. This suggests that the demand from

online shopping has grown rapidly and will make a big impact on the industry in the next couple of

years (W3_RCO3).

ETHICAL PRODUCTS

Consumers are becoming more aware of where and how their purchased products are being

made. Studies have shown that, consumers have expressed great emphasized on their buying

behavior particularly when it comes to ethical garments (Khan & Rodrigues 2016). For apparel

brands, consumers expectations of social responsibility have been growing worldwide due to

greater awareness and human rights violations in apparel factories. Consumers are not only

concerns about what retailers sells and the cost of the products, but also under what conditions

those apparels were produced under (Adams 2002) (W2_RCO1).

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5.0 DRIVERS OF CHANGE

5.1 TECHNOLOGIES

Digital technologies have transformed media, retail, entertainment and many other industries. With

more consumers turning their attention to online retailers, their shopping experience and the

benefits of shopping online, Australian retailers has to upkeep not only their physical stores but

also their e-commerce business strategy.

The shopping experience for customers has drastically evolved over the past decade. According to

Deloitte Australia (2015), digital interactions influenced 40% of in-store retail visits in Australia in

2014. This suggests that digital is becoming an integral part of every element of an in-store

shopping experience and Australian retailers need to understand how to harness its influence to

increase their efficiency. Retailers need to focus on merging experience into a single digital

channel and enhancing the shopping experience for customers.

The use of 3-D printing are being adopted by some manufacturer to make apparel that eliminates

the need for sewing or allows items to be made specifically for an individual. As 3-D printing

becomes more popular, the costs of it will start to decrease, thus small fashion industry firms are

able to use this as an opportunity to attract customers (Adkins 2016).

5.2 CONSUMER PREFERENCE

With the rapid advancement of technology, consumers constantly have the option to choose when

and where they want to shop. Many choose to shop online, as besides convenience, they are also

able to compare prices and source for a cheaper source to purchase their products from. This has

caused a big disadvantage to brick-and-mortar stores.

Consumer behaviors are also affected by their real household disposable income. It is expected

that in 2016 to 2017, there will be an increase in disposable income, which presents an opportunity

for the industry to boost their revenue (Magner 2017).

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Retailers and manufacturers have to always be up-to-date with trends and their demands. They

have to be prepared to respond rapidly to emerging trends to capture consumers. Businesses have

to monitor shifting consumer preferences and discontinue items that are not capturing consumers

interest before the inventories are not moving in stores (Adkins 2016).

This is why many retailers are turning to fast fashion to keep up with consumers demands for

trendy products and affordable prices.

5.3 ECONOMIC OUTLOOK

Over the past five years, there have been many uncertainty and instability of the economy. This

has resulted to consumers being price-conscious especially since any purchases of apparels

typically come out of a consumers disposable income. When the economy is in a downtown,

disposable income may fall as jobs become scarce. When uncertainty of the economy is on the

rise, this could risk as an issue for retailers as consumers who are affected by this may result in

avoiding or postponing clothing purchases or shift to a cheaper option, which will cause a sharp

sales downturn for retailers.