International Brands Scramble For Entry Into Australian Markets

Australia has emerged as a global retail hotspot, attracting 139 new entrants between 2012 and 2016, with the next half-decade to see further saturation across the nation.

CBRE’s latest Viewpoint, International brands still hunting Aussie locations highlighted the strong level of international brand expansion in Asia Pacific over the past five years, with Australia one of the most sought after markets on a per capita basis.

Between, 2012 and 2016, Australia accounted for seven per cent of the 2000 international brand entrants in Asia Pacific, with Sydney and Melbourne ranking in the top 10 markets on a per capita basis.

CBRE Senior Research Manager Danny Lee said Australia’s favourable economic conditions – strong population growth, wealth, employment and tourism – was supporting the inbound expansion.

“Australia’s attractive macroeconomic conditions have cemented it as a compelling destination for international retailers, from both a new entry and existing expansion perspective,” Lee said.

“Australia also has a relatively low international brand penetration rate – 30% in comparison to the 45% plus in Singapore, Hong Kong and the UK.”

CBRE’s Alistair Palmer said the relative lack of competition in Australia’s retail market had helped ensure strong sales productivity for international brands.

“By global standards, Australia’s market is relatively unsaturated, with a lack of products and services in some geographies meaning retailers don’t face the same competition,” Palmer said.

Sydney and Melbourne have been the key entry markets for international brands looking to enter the Australian market, with 46 new offshore retailers in the Victorian capital since 2012, followed closely by Sydney with 44 openings and Brisbane with 19 brands.

European and US fashion retailers have dominated expansion into Australia over the past five years, accounting for 53% and 19% of new entrants respectively.

“In terms of new entrants, we will also see UK department store giant Debenhams open its first Australian outlet in Melbourne’s St Collins Lane on Collins Street later this year," Palmer said.

Continued department and discount department store rationalisation was expected to create further opportunities for offshore retailers.

Brand entry into the Australian market is expected to continue over the next three to five years, albeit at a slower pace than the past two years – potentially equating to 1.2 million square metres. Existing international retailers such as Uniqlo, ZARA, TK Maxx and H&M are also expected to execute their rollout plans into other cities.

Palmer said the success of retail brands – both offshore and local – was dependent on their willingness to adapt and be flexible in an increasingly competitive environment.

“Particularly for international retailers, it is vital that they understand the Australian market and adapt their product accordingly to ensure there is no disconnect,” Palmer said.

“Riding on a strong international reputation isn’t enough – as we’ve seen with some recent casualties, it is imperative brands get the product right, at the right price point.

"Advertising is also key – the launch of a new brand helps ignite interest that will lay the foundations for a strong local operation.”