Feb 18 2019
The Clothing Retailing industry has experienced several challenges over the past five years. The expansion of major international retail chains and the growing popularity of online shopping has intensified competition for industry operators. Furthermore, low wage growth and falling house prices have dampened consumer sentiment, creating a difficult trading environment for the industry. Traditional retailers have expanded their online sales platforms to resist these trends, fuelling industry revenue growth. Overall, industry revenue is expected to grow at an annualised 2.1% over the five years through 2018-19, to $16.8 billion.
“Australian bricks-and-mortar retailers have faced mounting pressure from online stores over the past five years, particularly from online-only international retailers. Australian clothing retailers have been slow to adopt online retail strategies. As a result, domestic operators have only just started to catch up with online-only retailers by introducing services such as free delivery and free returns,” said Senior Industry Analyst Kim Do
External competition from large chains and online stores is squeezing industry profit margins. In response, retailers are increasing their share of the market through mergers and acquisitions. This has allowed retail chains to increase their economies of scale and compete with international retail stores such as UNIQLO and H&M. Consolidation has enabled industry players to streamline their operations and maintain their profitability.
Increased demand for online shopping, improved economies of scale and expected growth in disposable income are all anticipated to drive industry revenue growth over the next five years. However, industry competition is likely to intensify as major international retail giants continue to expand and more online-only stores appear. Traditional retailers will have to expand their online retail channels to continue to compete in the future.
The adoption of multichannel retailing strategies has benefited some businesses, allowing them to tap into online sales and compete with online-only retailers. Furthermore, a projected increase in disposable incomes will likely increase demand for clothing over the next five years. Overall, industry revenue is forecast to grow at an annualized 1.5% over the five years through 2023-24, to $18.1 billion.