sydney’s problem with brand names

Let me give this post some context. Sydney’s Pitt Street has been (all but) closed for the last two years in order to undergo extensive construction and renovation works as part of the $1.5 billion redevelopment of the precinct. This involves the consolidation of the Imperial Arcade, Centrepoint and Sky Garden under the Westfields banner, the redevelopment of the Mid City Centre, as well as beautification works along the mall itself.

The Mid City Centre will officially open in June. The Westfields shopping precinct is expected to open later this year and into 2012. The mall should look nice by August.

There has been continuous speculation as to which flagship stores will open within the Pitt Street shopping precinct. There is much buzz about the anticipated opening of  the Spanish-owned ZARA. [ZARA has now opened in Sydney] There is also talk about the likes of GAP [GAP has also opened], H&M, UNIQLO, Marks & Spencer and Banana Republic scouting for suitable locations in Sydney for their first shop. (this paragraph updated 20 April 2011)

This leads to the question that many including myself would like answered: Why is it so hard to get brand names to come to Sydney? Why is Sydney so behind the rest of the world?

Let me try and explore some of the reasons why I believe this is the case.

Inverted seasons

Frankly stating the obvious, Sydney’s seasons are the opposite of Madrid, Stockholm and Tokyo’s. It would be unreasonable to expect that these overseas brands would be delivering for our market fresh new designs based on our seasons. The strategy they would adopt would be to bring the excess winter and summer stock to Australia in time for the change in season here.

Would Sydney’s market accept clothes that were seen in the northern hemisphere half a year ago?

High prices

The cost of bringing the clothes down to Australia would be the most considerable factor. Should these costs be high, inevitably the consumer would be the one that loses out. Brands like UNIQLO and H&M operate on a relatively low cost, high affordability marketing strategy. Likewise, ZARA’s clothes are not by any means cheap, so to be further constrained by high import costs would be disastrous.

If I could buy something similar that costs half the price, then why wouldn’t I?

Same clothes all season

The sales strategy for most of these brands is based on a continuous release of clothes throughout the season in order to keep the collection fresh and affordable. An example of this is the UT strategy by UNIQLO whereby cheap (starting from ¥990/AUD12) t-shirts are constantly released. Australia does not have the necessary demand for this to happen. Clothes here hang from the beginning until the end of the season.

Is Sydney fashionable enough so that people buy new season stock immediately, or would the average Sydneysider wait until the sales at the end of the season?

Lack of retail space

The biggest problem is that Sydney lacks retail space. Compare that to Hong Kong, Seoul, Tokyo, New York or London. The result is that Sydney’s retail rental prices are amongst the top ten in the world. High rental costs only mean one thing: higher costs and thus less affordable products.

Would you be willing to travel to the City to shop at an overseas based brand?

Introducing these overseas brands

If I was to choose the top two brands that I would like to see in Sydney, they would be the ones below.

H&M

UNIQLO

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11 responses to “sydney’s problem with brand names

  1. I read this article yesterday. Bring on Zara wooot! (oh and H&M). Though I dunno about that coz I prefer looking forward to going back to Thailand to go to Zara instead…hmmm… >.<

  2. I would love love love to see the above three open in Sydney. It’s such as a tease to see H&M’s constant announcements on their social media platforms that they are opening new stores around the world…all except for Sydney! Where’s the loveeeee?

  3. Haha that’s right Jason, what will I do when I go overseas if I can get the clothes here?

    We aren’t shown very much love down here I tell ya.

  4. if H&M is not coming to sydney within 2 years, i mite go for the anti-H&M campaign. lol..

  5. In addition to all of the points you’ve mentioned, there’s also another crucial factor that prevents international high street brands from coming to Sydney. Namely, the operating hours of our stores!

    The stores in Sydney tend to open at 9:00AM when everyone is at work and close at 6:00PM when everyone finishes work. Apart from Thursday, this essentially leaves only the 2 hour luch gap between 12:00 – 2:00PM each day for retailers to really make money. Even on the weekends the stores close early. This is unlike Asia, the USA and Europe where the stores actually open at 11:00 AM and close at 9-10:00 PM.

    Given the high rental prices, import costs and seasonal differences and the needs to re-stock new trends every two weeks, it really is a big risk for them to establish stores in Sydney.

    A big issue is that Sydney is a really low density city which means people need to travel light years after work to to get home and thus tend to do so instead of loitering around after work to shop.

  6. Oh I forgot two other points… sizing and target market are an issue as well.

    I work in consulting and if I was giving ZARA or UNI-QLO advice I would certainly draw to their attention that two things…

    a) Unlike Asia and Europe, 65% of the people in Australia are overweight (I know this sounds cruel but it’s true) and thus you will probably need to adapt the fit of the clothes to the market. This essentially means having to use more fabric to make the clothes whilst keeping the price constant. An expense issue.

    b) Market – how fashion forward in general are the people in Sydney? Are they like the crowds in Asia and Europe such as Tokyo, Hong Kong and London that are willing to constantly spend their money on fashion? The issue is Sydney is 90% suburbia and thus unlike Tokyo, Hong Kong, New York, London etc. fashion churn is a lot less aggressive because people simply don’t feel as pressured to dress up as those that live in high density cities.

    If you stand on the exit of Wynyard or Town Hall station in the mornings you’ll tend to find that people in general are quite daggy compared to those that live in the aforementioned cities.

  7. They’re great points, Jack. I agree that low density is a problem here, as well as the lack of fashion focus in this city.

    Are you a marketing consultant?

  8. I’ve been going to Zara every three or so days since it opened a few weeks ago. I can’t imagine what would happen to my bank account if Uniqlo and H&M open a store as well.

  9. Have you found that Zara has been changing their stock, since you’ve been going every three or so days, Jesue?

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