For many years, the manner in which Australian clothing retailers operated remained largely untouched, allowing the growth and revenue of major retailers to remain steady. However, the rise of online shopping and the current on-demand culture have pushed clothing retailers to adapt to the changing environment or face the consequences of inaction. The traditional definition of clothing shopping has been redefined as consumers become more accepting of ecommerce as a viable and safe avenue for shopping. The effects of the COVID-19 pandemic have further magnified this shift, as lockdowns and trading restrictions have kept customers out of bricks-and-mortar stores.
Impatience is a virtue
The increasing ability for consumers to buy what they want, when they want, has changed the store-based retailing environment. The ability to purchase clothes through a few taps and swipes on a mobile phone without leaving the house has posed significant challenges for traditional bricks-and-mortar retailers. As a result, traditional retailers that have been proactive in developing multichannel strategies to adjust to consumers’ needs have been able to stay competitive.
Woolworths International (Australia) Pty Limited, which trades as Country Road Group, is one traditional retailer that has developed multichannel strategies. Woolworths International’s clothing retailing revenue is expected to increase at an annualised 1.6% over the five years through 2021-22, to $942.3 million. Despite holding 5.0% of the clothing retailing industry’s market share, the company’s growth has underperformed the overall industry in nominal terms over the same period. The company has faced intense competition from online-only retailers, which has constrained its industry specific revenue growth. However, Woolworths International has benefited from an expected 30.5% annualised growth in online sales over the five years through 2021-22.
Mosaic Brands Limited and Lowes-Manhattan Pty Ltd have also faced challenging conditions over the past five years. While Mosaic Brands’ acquisition of a 50.1% interest in EziBuy Limited prompted a spike in revenue in 2018-19, the company’s revenue has declined over the past two years. Meanwhile, Lowes’ revenue growth has stagnated over the past five years.
Along came COVID-19
The COVID-19 pandemic has reduced Woolworths International’s sales volumes over the two years through 2020-21, as many stores were forced to close temporarily. The company’s industry specific profit margins decreased over the past five years as a result of both an increasingly competitive retail environment and lower sale volumes due to the COVID-19 trading restrictions.
Increased online shopping has had enormous effects on clothing retailers in Australia. However, even online shopping could not compare to the effect that the COVID-19 pandemic would have on traditional retailers. Lockdowns and trading restrictions have required consumers to stay home and prevented bricks-and-mortar stores from opening for physical trading. Operators in the Clothing Retailing industry have struggled to achieve growth amid multiple lockdowns in many states and territories. Many retailers faced challenges in pivoting their operations to online channels, which contributed to an overall decline in industry revenue in 2019-20 and constrained revenue growth over the past two years. However, the outlook is not all doom and gloom for the industry, as higher household disposable income is expected to prompt a 0.7% increase in industry revenue in 2021-22.
Alfabank-Adres reports used to develop this release:
Clothing Retailing in Australia
