Retail apocalypse claims another scalp as top Australian designer closes his only store
A top designer has been forced to shut up his only store as Australia’s retail market takes a dire downturn.
Alex Perry has announced his flagship shop on the Strand Arcade, in Sydney’s CBD, will shut its doors in March.
The fashion designer said his decision comes as customer numbers dwindle with the ascent of online shopping.
Perry said he his focus will instead be re-directed towards his booming online store, where he makes almost four times as many sales.
Australian fashion designer Alex Perry (pictured) has announced his store in Sydney’s CBD will shut down in March
‘Why would I renew that lease for another three, four, five years when it is far more economical and we make a lot more money online that what we do with all the expenses you incur when you have bricks and mortar,’ Perry told the Daily Telegraph.
‘Business-wise if it is making more sales online and the costs are significantly less, then you can do other stuff with that money.’
Aside from changes in market trends, Perry said the construction of the light rail in the CBD diminished foot traffic, which had a massive financial impact on retailers.
At the same time, he noticed his online sales increased exponentially as the market shifts in favour of the internet.
The flagship store sits alongside other big brand names in Sydney’s Victorian-style Strand Arcade on George Street
Despite the closure, Perry said business is thriving internationally with celebrity clients including Jennifer Lopez, Kim Kardashian, Saoirse Ronan, Gwyneth Paltrow and Rihanna.
Alex Perry’s brand is sold in 10 outlets in Australia and a further 100 outlets internationally across 30 countries.
Perry said he does not believe physical stores will become obsolete, but the industry will need revamping to survive.
‘I don’t think it is dead and I am not saying I won’t ever have a store again. I just think we need to raise our standard of service in bricks and mortar stores to allow them the best possible chance of surviving against a dynamic online environment,’ he said.
The women’s wear outlet is just the latest victim of Australia’s dire retail market, with more than 170 stores tipped to close this year.
Perry said he makes almost four times more sales from his online store than the physical outlet
Experts have warned Bardot and Harris Scarfe are just the start of the downfall of big-name Aussie brands
Household names like Harris Scarfe, Bardot, Roger David, and Napoleon Perdis dropped like flies in the past year with dozens of stores closing resulting in heavy job losses.
Experts claim that the closures could be the tip of the iceberg as consumers continue to turn more to online shopping over bricks and mortar stores.
Australian retail growth is at its worst level since the early 1990s recession and international giants like Amazon and Aldi threaten to further the shake up.
Entrepreneur Dick Smith believes the outlook is so bad, high-profile collapses will accelerate until there’s very little left.
Australia is headed for a retail apocalypse that could even kill off Myer, which closed its store in Hornsby, Sydney, after 40 years of serving customers
‘Job losses are concerning. We have 170 retailers slated to close only two weeks into of January this year,’ he told Today.
Speaking to Daily Mail Australia Mr Smith said that internet companies had driven the retail disaster.
‘We will end up with just Amazon and Aldi and basically all the Aussie companies will be sent to bankruptcy,’ he said.
‘All those famous brands will go. Some of them might exist in name only but will be taken over by overseas companies.’
Mr Smith watched the electronics chain that bore his name crash in 2016, decades after he sold it in 1980. The collapse was one of Australia’s biggest retail failures.
Harris Scarfe, founded in 1849, also took consumers by surprise when it entered administration last month and is now about to close at least 21 stores.
Australia is headed for a retail apocalypse at the hands of ruthless invaders like Amazon and Aldi and there is nothing to stop them, an expert claims
Household names like Harris Scarfe, Bardot, Roger David, and Napoleon Perdis dropped like flies in the past year with dozens of stores closing and heavy job losses
The businessman was skeptical that even giants like Coles, Woolworths, David Jones and Myer would survive.
Dropping like flies: Some of Australia’s recent retail casualties
2016: Dick Smith, Masters hardware, Payless Shoes
2017: Topshop Australia
2018: Avon, Espirit, Toys ‘R’ Us, Max Brenner, Roger David
2019: Ed Harry, Diana Ferrari, Napoleon Perdis, Ziera, Bardot, Harris Scarfe
Mr Smith said a overseas operators were smarter than almost anyone in the Australian market and ruthless enough to crush them.
Queensland University of Technology retail expert Dr Gary Mortimer said Australian companies were not being quick enough to adapt to the changing retail landscape and consumer preference.
‘We’ve seen a lot of market changes in Australia over the last decade, with global fashion retailers entering the market base and Aldi almost 20 years ago,’ he told 9news.
‘We have consumer changes and too much choice out there in the marketplace.’
Entrepreneur Dick Smith believes the outlook is so dire that high-profile collapses will accelerate until there are very few Australian companies left
He said retail businesses needed a strong online presence to compete in the current marketplace.
Myer closed 74,670 square metres of stores in 2015-17 and shut down its Colonnades store in Adelaide and Belconnen outlet in Canberra.
The Hornsby store, in Sydney’s north, closed on Sunday after 40 years following a depressing fire sale of up to 80 per cent off.
David Jones has been owned by a South African conglomerate since 2014 and is struggling just as much as its arch-rival.
Whereas Aldi sales jumped 10 per cent in 2018 to about $9.2 billion and opened about 20 stores across the country last year. Coles was about $39 billion.
The Northcote Plaza (pictured), 5km from Melbourne’s CBD, has been open for decades but is suffering a decline in footfall
Amazon Australia’s sales reached $260 million in 2018, its first full year since opening, and are tipped to hit $23 billion in 10 years.
Roy Morgan chief executive Michele Levine said the brands most vulnerable to being forced out by Amazon were those that’s products were easily replicated.
‘Any brands that are commoditised are going to be in real strife,’ she told Daily Mail Australia.
‘The ones that are going to survive are the ones that have captured something special. Something that people will pay more because it’s unique or it speaks to them or they fall in love with it.’
Several stores sit empty (pictured) as the Melbourne shopping mall struggles with a decline in footfall
Too many retailers are in this space, particularly big department stores without enough of an identity, and have resorted to perceptual discounts just to make sales.
Retail expert Brian Walker said those most at risk were big fashion chains that have existed for decades, because they could no longer rely on their in-store offerings to beat online rivals.
It comes as grim photos have emerged of a inner-Melbourne shopping mall that has been deserted by retailers.
Northcote Plaza, which has developed a cult following online for its dreary scenes, will lose Kmart on November 22, 2020.
Huge household debt, bigger bills, and stagnant wages hit spending
Macro market forces are also at play in forcing down overall retail sales – consumers simply aren’t spending enough.
Deloitte Access Economics last year found despite record-low interest rates and election-promised tax cuts, sales were the lowest since 1990 when Australia was in recession.
‘Stagnating wage growth and weak house prices have limited consumer willingness to spend, while tax offsets and interest rate cuts have yet to translate to sales,’ forecaster David Rumbens said.
Former Australian Retailers Association executive director Richard Evans blamed these issues along with massive household debt.
‘Disposable income isn’t as much as what it used to be and household debt is far too high,’ he told Daily Mail Australia.
‘In addition to servicing these debts, people’s costs like power bills are going up without wages covering it.’
Australia’s household debt-to-income ratio hit 110 per cent in the 2018 financial year – $1.10 to every $1 earned at work.
Mr Rumbens said retailers had been buoyed by Australians’ irresponsible spending and the 0.6 per cent gap between sales growth and disposable income growth was unsustainable.
‘That difference is a fair chunk of change, and it’s fair to say that many retailers have only survived the last few years because we’ve lived beyond our means,’ he said.
‘But that ship has now sailed.’
- Update: Since first publication of this article, we have been asked to make clear that Beds R Us has not gone into administration. We are happy to set the record straight.