As Australian Fashion Week starts today, research by business information analysts IBISWorld shows that overall revenue has declined for the fashion industry.
Following a five-year freefall in revenue for the Australian fashion industry, IBISWorld expects the industry to slip a further 1.7% in 2013, with total takings falling to $12.2 billion.
But according to IBISWorld, the next five years is looking brighter, with growth of 1.1% per annum anticipated over the five years through 2017-18.
Growth is being driven by luxury fashion retailers such as Oroton and Sass & Bide posting growth alongside international brands like Louis Vuitton, Gucci and Chanel.
Budget fashion retailers are also defying the downturn and those fashion retailers managing the transition to online retailing – and new eCommerce platforms – are reaping the rewards, with strong growth recorded for British fashion giant ASOS.com’s Australian business, as well as for new player The Iconic.
IBISWorld expects online shopping trends will continue to shape the fashion forecast, bringing in $13 billion over the coming year, which is 6% of total retail sales, and posting exponential growth of around 20% per annum, with fashion representing one of the most significant online shopping segments for both growth and market share.
Naren Sivasailam, senior IBISWorld analyst, told SmartCompany the problem for the fashion industry is anaemic consumer sentiment.
“Post the global financial crisis, consumers have been very prudent in their spending, which has been compounded by the savings ratio going up with consumers prioritising savings and debt repayments over discretionary spending,” he says.
“Not all retail has been bad: online retail has been the obvious stellar performer, which has been driven by several factors. Comfort in online buying is a huge factor, Australians are more used to it; the choice online is pretty much unparalleled, particularly when you look at the high street.”
Sivasailam says there is an “enormous wealth of opportunity” for small and medium size businesses in the online fashion space.
“Despite the perception that consumers are buying from international online retailers, 72% of online retail still comes from Australia, regardless of what you are selling – from fashion to groceries there is clearly opportunities for small businesses in there,” he says.
“Fashion is very popular and lends itself much better than other categories to online retail.”
Brian Walker, chief executive of the Retail Doctor Group, says what is happening is a large structural shift between fashion retailers, with mature businesses struggling and the money spent on fashion segmenting.
“Now I think we are seeing a middle ground where fashion retailers are not large in scale or small and boutique and they are getting caught in a middle ground,” he says.
“This move to value fashion is playing a part as well, as people are watching their disposable income and trading down.”