You may have seen this week fashion retailer The Iconic managed to win another round of funding, worth $25 million – we spoke to founder Finn Haensel about the deal. That’s a significant get for an Australian business, especially a fashion retailer, considering the business has already received other funding rounds.
Yet it seems it’s only the latest story of an Australian online retailer winning big. Companies like Shoes of Prey are receiving a significant amount of attention, and established online companies like Kogan are continuing to grow by moving into new services.
At the same time, traditional retail is suffering its usual woes. We’ve seen Myer delve into another tricky dispute with David Jones over a young fashion designer, who Myer says breached an exclusivity contract.
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The nasty dispute is an example of how desperate the retail situation is becoming – because David Jones and Myer are losing sales to online, exclusive agreements like these are a great way to win customers. Of course, if you lose them you’re in for a bad ride and expose yourself to further competition.
So, on the one hand we have online retailers that are going from strength to strength. On the other, dying department stores are relying on premium partnerships to survive.
Is it just me, or should Myer buy The Iconic?
Maybe not The Iconic, perhaps another company. But it seems if Myer wants to get out of its rut, it needs to take a look at larger tech companies to fill out its fairly thin online offer. After all, that’s where the department story category is going to find success.
Apple, Amazon, Microsoft and Facebook are constantly buying little start-ups for talent they don’t possess, or for a particular piece of technology. Why couldn’t Myer or David Jones do the same?
Finn Haensel and his team at The Iconic told SmartCompany yesterday the stake bought by Summit Partners nearly constitutes a majority. A conservative estimate would place that at somewhere around 40%, placing the company’s value at around $60 million.
Myer could buy The Iconic to round out its fashion plans, and bolt-on Shoes of Prey if it’s really game. Add a few little acquisitions here and there to fill out its main offering, and you’re looking at a department store that looks like it can actually make a dent in the online space. As long as the buyer stays hands-off.
This isn’t a new idea – it’s probably been discussed in the board rooms of both these companies. And I highly doubt the two companies I’ve mentioned want to sell to a department store, considered by many to be a dying category.
It’s all easier said than done. But if department stores want to survive into the next decade, buying a few online businesses here and there wouldn’t be a bad thing. It could actually do a lot for online retail in Australia – once a bit of value starts flowing through online retail, many others could follow.
You can follow Patrick Stafford on Twitter @pdstafford.