Popular labels add pressure to retailers

RETAILERS are bracing themselves for another challenging year as another flood of high-profile international labels arrive and consumers hunt online for bargains.

And it is doubtful a drop in interest rates will help their woes, with fears of unemployment continuing to prompt consumers to plough cash into household savings.

Big-name European brands like H&M are tipped to secure sites in Sydney within the next few months, while the Japanese group Uniqlo is already opening in Melbourne's new Emporium.

The redevelopment of 357 Collins Street will also see the opening of a Thomas Pink menswear label, part of the Louis Vuitton stable and leasing is under way at the former AMP Square, on the corner of Bourke and William streets.

There are a number of new developments across all capital cities intent on providing appropriate flagship space for international players, all of whom want to open with a flourish.

Max Cookes, associate director of CBRE's retail services, said another wave of international brands are heading for Melbourne.

CFS Retail Trust and Singapore wealth fund GIC's Emporium will open later this year, with a number of international and local brands.

Other developments include a new wing at Chadstone shopping centre and a revamped Highpoint shopping centre, which are owned by GPT.

The reshuffling and new entrants will put more pressure on existing retailers, according to analysts.

JP Morgan's Shaun Cousins and Uma Joshi have warned that cyclical and structural factors will continue to impact the sector: savings, online, experience and international entrants.

There will continue to be a broader shift to savings as households seek to repair balance sheets in a sensible way following a 20-year debt cycle.

"The more sophisticated, discerning and demanding consumer will continue to the focus on value," they warn in a research note.

"Online retail will continue to gain market share within the retail sector, although with different impacts across different categories, driven by the attractive customer experience [price, range, convenience, fulfilment]."

What market share it gets in the medium term is difficult to determine, but in five years online could be about 10-15 per cent, comprising much of the sector growth, they said in the research note.

"The number of international entrants is expected to increase, raising the competitive bar for domestic bricks and mortar retailers that have previously faced only modest competition.

"This will see an overall improvement in customer experience from domestic retailers, while also assisting in sector consolidation."