Australia might be facing some pretty bleak retail and consumer spending numbers, but in the world of fast fashion, not everyone is slamming on the brakes.
Despite a fortnight of news of retail carnage, including weak consumer spending figures and the collapse of the Australian franchise of Topshop and Topman, Uniqlo Australia is powering ahead with its expansion across the east coast and says opening its fourth Queensland store in two years “made sense”.
Ragtrader reports the new Uniqlo store in Chermside, Brisbane — the brand’s 13th since launching here three years ago — will add 50 staff members to Australian operations. Chief operating officer Kenji Tsuji pointed to “a very positive response from local shoppers who have loved the wide range of every-day products and innovative fabrics that we sell” across the state.
The insistence from the Japanese fashion chain that all is rosy in the local market comes at the same time as NAB figures on online retail and consumer spending suggest the nation is headed for even tougher conditions in the sector.
In an update on Wednesday, NAB analysts reported online sales had further contracted in April to produce a “virtually flat” future trend estimate of 0.1% growth, while first quarter customer spending in retail trade dropped 1% compared with this time last year.
Fashion or scale?
However, retail experts remain cynical that growth has slowed completely across the board, instead telling SmartCompany this morning that Uniqlo has two elements that rarely get airtime in the local consumer spending debate.
The first element is that in a time where retail is seeing the “death of the average”, the Uniqlo brand has robust systems in place to sell merchandise people actually want, says National Online Retail Association executive director Paul Greenberg.
“I think we’re falling into a bit of a trap of blaming some of our retail woes on macroeconomics,” Greenberg says.
Both online and in bricks-and-mortar stores, Uniqlo has been able to leverage a simple connection with shoppers in terms of ease, colour and quality, he says.
“They’ve obviously caught the imagination of the shopper. Their merchandising is terrific, it’s a very colourful shopping experience and it’s a holistic value experience,” he says.
RetailOasis strategist Pippa Kulmar says the success of international fashion imprints like Uniqlo and Zara in the local market isn’t merely about customer’s fashion interests: Australian businesses are underestimating the sophistication of the brands’ supply chains and technologies.
“I think in the Australian market that’s what we’ve misunderstood, that what they’re actually really great at is supply chain and logistics,” Kulmar says.
“Uniqlo can buy a whole supply of raw materials direct. Then they’ve got the scale because they’re huge so they can roll it out across their stores. It means they’ll be able to offer cashmere at $70, instead of $200.”
Thinking about Uniqlo as “fast fashion” might also not be accurate, because it’s one of brands in this space that has nailed affordable fashion shoppers can wear for years, she says.
“Uniqlo are awesome at maintaining the technical elements of the fabrics, and it’s not about a season or one-off wear,” says Kulmar.
Retail figures get tricky
There’s been a slew of worrying figures in the world of retail over the past few months, but Greenberg worries it’s actually getting more difficult to get an accurate snapshot of what’s happening in the market overall.
“To say online sales are down when you’re a convergent retailer doesn’t always make sense, because online drives to bricks-and-mortar and vice versa,” he says.
NAB’s most recent online sales numbers show month-on-month sales dropped 0.8%, while year-on-year growth looks to be 6.9% for the year, down from the 10.9% predicted in March.
However, it’s difficult to track offshore consumer spending and given so many businesses are now multichannel, getting an accurate snapshot of individual businesses is tricky, Greenberg says.
“I hate to say it but ‘lies, lies and damn statistics’ probably applies again,” he says.
Kulmar agrees, saying it’s difficult to get a snapshot of the sector given surveys tend to leave out at least one part of retail.
“If you look at ABS spending figures, it looks like spending is really down but that doesn’t pick up international, online and pure play retailers,” she says.
SmartCompany contacted Uniqlo Australia for an update on its growth strategy but did not receive a response prior to publication.