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Zara is set to close its first store in Australia

Carolyn Cummins, Business Day

After its rock star-like opening and fast expansion program, Zara fashion group is in discussions to break its lease at the QIC-owned Robina shopping centre on the Gold Coast, due to the challenging retail sector.

If the lease is broken, retail leasing agents said it could be a "game changer" in terms of how the international brands are faring.

Earlier this year the fast fashion group Forever21 closed its stores in Sydney's Pitt Street Mall, Macquarie Centre and Brisbane and there have been suggestions that other international labels are slowing down their store rollouts to ensure they do not cannibalise their sales.

When Zara's first store opened in Sydney's Pitt Street Mall in 2011, security staff were needed to control the queues.

These stores remain some of the more profitable tenants in shopping centres but, like their Australian peers such as Solomon Lew's Premier Investments, they are feeling the cool winds of slow consumer demand, and are looking at shutting down stores.

Last year Zara also opened an outlet at the nearby Pacific Fair at Broadbeach on the Gold Coast and has a flagship site in Brisbane's CBD. There are 15 Zara fashion stores across Australia and two separate Zara Home outlets.

It was the first mega international brand to arrive in the country with a much-hyped store rollout, but with competition in that area of retail at fever pitch, it has decided to curate its locations. It remains committed to Australia.

Zara is the largest fast fashion label in the world run by the Spanish Inditex group. Its main rival is the Swedish group H&M.

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A spokesperson for Zara said the group was "unable to comment on this".

QIC declined to comment on the Zara lease negotiations, except to say the group was "constantly evolving" its shopping mall offerings.

The Robina Town Centre general manager, Anita Brown said: "It is not appropriate for the centre to comment on the commercial operations of our retail partners.

"During the past 20 years we have repeatedly evolved our offer, through significant and sustained reinvestment as part of our active management approach, delivering transformations that continue to meet the needs of our community," Ms Brown said.

"The most recent examples of this commitment in action are demonstrated in the launch of our Australian-first foodies' playground The Kitchens, as well as our stunning Central Mall development, which is currently under way."

According to Colliers International's latest research and forecast report, the Australian retail sector has been facing a number of well-documented challenges, but is still tracking outstanding demand with high occupancy levels.

Michael Bate, national director of retail at Colliers International, said the demand for retail space remained high with densely populated areas continuing to perform, particularly for major retail assets such as shopping centres.

"The integration of these sites with the social and physical infrastructure of a community makes them highly sought after for investors and retailers alike," Mr Bate said.

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But with the imminent arrival of online giant Amazon, the need for landlords and retailers to embrace technology and enhance the value proposition to customers has never been more important, according to George Wragge, director of project leasing at Colliers International.

"Collation of consumer spending and data, and understanding of how to interpret such data will be crucial for instore experiences and bricks and mortar retailing," Mr Wragge said.

This article was originally published by the Sydney Morning Herald's Business Day. Read the original here, or follow Business Day on Facebook.