Popular labels add pressure to retailers
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."
Frequently Asked Questions about this Article…
The article says a new wave of international brands (H&M, Uniqlo and others) is landing in Australia and will increase competition for domestic retailers. Analysts expect more pressure on existing bricks-and-mortar stores, likely driving sector consolidation and forcing local retailers to improve customer experience and value.
The article highlights Uniqlo opening in Melbourne’s new Emporium, H&M expected to secure sites in Sydney soon, Thomas Pink opening at the redeveloped 357 Collins Street, leasing at the former AMP Square on Bourke and William streets, a new wing at Chadstone and a revamped Highpoint — the latter developments are linked to owners like CFS Retail Trust, Singapore’s GIC and GPT.
According to the article, a fall in interest rates is unlikely to solve retailers’ problems. Fears of unemployment mean consumers are prioritising savings to repair balance sheets, so lower rates may not prompt strong increases in discretionary spending.
Analysts quoted in the article expect online retail to keep gaining market share because of attractive customer benefits (price, range, convenience, fulfilment). They estimate online could account for roughly 10–15% of the sector’s market share in about five years, contributing much of future growth.
JP Morgan’s Shaun Cousins and Uma Joshi point to several cyclical and structural factors: increased household savings, growth of online retail, the importance of customer experience, and a rise in international entrants — all of which will continue to shape retail performance.
The article notes major redevelopments and flagship space demand (Emporium, Chadstone wing, Highpoint revamp) that could benefit owners who secure international tenants. Funds tied to these assets (such as CFS Retail Trust, GIC and GPT-linked projects) may see different outcomes depending on leasing success and tenant mix.
More international entrants are expected to raise the competitive bar, which should lead to better customer experience, greater emphasis on value, and stronger in-store offerings from domestic retailers. At the same time, tougher competition may accelerate consolidation among weaker players.
The article suggests watching: leasing activity by international brands, performance of shopping-centre redevelopments (Emporium, Chadstone, Highpoint), shifts in online sales market share, and analyst commentary on consumer savings and unemployment risks. These indicators can signal how competition, tenant mix and foot traffic may affect retail earnings and property values.
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