Retail

Karen Millen enters administration, becoming latest international retail casualty

Priscilla Pho /

Karen Millen is set to close all of its Australian stores, after the UK-headquartered retailer entered administration last month.

Deloitte partners Richard Hughes, Tim Norman and Michael Billingsley were yesterday appointed joint administrators of the fashion label’s Australian arm.

A “controlled wind-down” of all seven stores and eight in-store concessions in David Jones and Myer is expected over the next few months.

Surviving the Australian market

University of Tasmania retail expert Louise Grimmer tells SmartCompany the Australian retail market is intolerant of indistinguishable brands with “bland land offerings”.

“Just because a brand is successful in the UK or the US, does not automatically mean it will be embraced by Australian shoppers,” she explains.

“The Australian market is incredibly competitive and almost ruthless in terms of being distinctive and standing for something.

“Whilst some international brands have been successful, we need to remember that the Australian population is relatively small compared with many international markets, and this can be a barrier for entry for some brands that might not have the pedigree or name recognition of, say, Zara or H&M.”

The collapse adds to a rising number of international clothing brands withdrawing from the Australian market over the past few years, including Esprit, Topshop and Gap. Within the last year, big retailers Roger David, Shoes of Prey and Laura Ashley have also closed shop.

“It also reflects the broader issues of our flat economy, low wage growth and very low levels of household discretionary spending,” Grimmer says.

For Karen Millen specifically, Grimmer says the large number of concession stands played a contributing factor in its downfall.

The department store format is certainly suffering here in Australia (as well as internationally) and the strategy of a fairly heavy reliance on concession stores was probably not helpful,” she explains.

Lessons for local retailers

While Grimmer believes these closures serve as a “cautionary tale for other brands looking to enter the Australian market,” there are also lessons to be learnt for local retail brands.

In short, distinguishable characteristics and varied options for consumers are key.

“There is so much competition in the clothing sector that a brand really needs to stand out, stand for something in the minds of consumers, and offer a meaningful experience for shoppers,” Grimmer says.

“There will always be a place for small, local businesses that can offer unique and good-quality products, superior personalised customer service, and increasingly give their customers the choice to shop in-store or online.

“Retailers need to give shoppers a compelling reason to come into their stores or visit their website.”

NOW READ: Why did Shoes of Prey fail? Because it listened to customers

NOW READ: The three problems that landed Shoes of Prey in trouble, according to Bernie Brookes

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Priscilla Pho

Priscilla is a reporter at SmartCompany. You can contact her at [email protected].

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