Niche retailers – from fitness clothing stores to plus-size clothing shops – will outperform the rest of the fashion industry over the next five years, according to research released this week.
Despite recent gloomy retail profit forecasts, the latest report from IBISWorld shows some Aussie retail sectors can look toward the future with confidence.
The report shows several niche clothing retail sectors have shown strong growth over the last five years through 2014-15, and are expected to build their annualised growth over the coming five years to considerably outperform the general fashion, footwear and accessories sectors.
IBISWorld industry analyst Lauren Magner told SmartCompanythe report shows retailers who specialise are more likely to succeed.
Fast Fashion is the strongest growing niche market in Australia, with a 10.1% annualised growth in the last five years and a further 11% growth forecast for the coming five years.
Magner says the entry of global fast fashion giants such as Uniqlo, H&M, Topshop and Zara have driven significant growth, which has outpaced the general retail category.
“Demand for fast, affordable fashion has expanded in Australia recently. That was evidenced by the long queues we saw in Melbourne with the opening of H&M,” says Magner.
The fast fashion industry is expected to hit $2.16 billion by 2019-20.
Luxuries retailers grew by 9.8% in the last five years and are looking at 8.5% growth in the future to reach $2.35 billion by 2019-20.
Magner says this is due to luxury retailers repositioning themselves to appeal to mid- to lower-end consumers with affordable ‘luxury’ products.
“Australians have developed a strong demand for premium goods and are happy to invest a larger amount of money in a product that promises to be long lasting and good quality,” says Magner.
She says luxury retailers have taken advantage of this by offering items such as key rings, belts and costume jewellery. “Consumers can now purchase a little piece of luxury.”
Other niche retailers to have ridden recent success include fitness and athletic clothing (grown by 5.2% annually), maternity wear clothing (5.4%), plus-size clothing (3.7%) and bridal clothing and accessories (1.6%).
Magner says plus-size clothing has been driven by an increased potential customer base, with many retailers branching out to service the growing number of plus-sized consumers not happy with the product offering of non-specialised retailers.
She says the bridal industry has weathered the economic gloom faced by the broader clothing sector because consumers consider bridal purchases a high priority expense.
Magner says if general retailers and department stores want to regain market share, they will have to focus on customer service and in-store experiences to generate sales.
“That will mean upgraded store formats and developing omni-channel platforms that integrate traditional bricks and mortar stores with online offerings,” she says.