Jeanswest has collapsed, leaving nearly 1,000 jobs in jeopardy, but more major brands could be set to follow, a retail expert has warned.
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August 2019: Target set to shut stores as sales fall
A “perfect storm” of economic caution, low wage growth and increasing competition means that Australian retailers need to adapt rapidly or face extinction, retail expert and CEO of consultancy Retail Doctor Brian Walker told Yahoo Finance.
Australia also has the third-most retail space per capita in the world, and this means the sector is in for a “massive adjustment”.
“It’s not the end of physical retail, but it’s the death knell for mid-market ‘shop on every corner’, vanilla, ‘it all looks the same’ retail,” he said.
While Australian retailers had previously enjoyed long lifecycles, the recent failures of EB Games, Bardot and Jeanswest proves that the life cycle for several Australian retailers is shortening as online shopping takes over.
“Everything moves much faster so it's a very challenging environment particularly for mid-market fashion and mid-market specialty retail.”
Legacy brands with large networks which move slowly compared to online competitors are directly in the firing line, particularly as fast fashion trends take over.
“I think we’ll see another 20 - 25 per cent shakeout [within 5 years],” he said, which will see those businesses either eliminated or acquired and consolidated.
“The piece will be whether those brands re-shape, re-create into something new and interesting, that will be the next piece.”
In the future, retailers that previously held 50 stores will now hold 10 as online shopping accounts for more purchases, and bricks and mortar flagship outlets are used for experience-shopping. That is, shopping while listening to music, shopping with a cocktail or other shopping events.
“Now retailers are forced to innovate and be fresh and quick-moving, and when they’ve got these big legacy networks, it’s challenging.”
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