Australia offers established domestic retailers and new international entrants an enticing retail environment thanks to its rising disposable income, consumer confidence and increasing high net worth individuals. In fact, the retail industry is one of Australia’s most prominent business activities, generating more than 310 billion AUD in sales per year and is rising by 10 billion AUD each year as a result of the steady population growth.
In the fast moving digital age, Australian customers are more savvy and more informed than ever before and retailers need to be responsive to these consumer changes. Additionally, in recent years new international entries in the Australian retail market include supermarkets CostCo and Aldi as well as fashion retailers, Zara, TopShop, H&M and Uniqlo and, most recently, the online giant Amazon. Both the changing tastes of the Australian consumer and the entry of overseas businesses are disrupting the industry and all retailers, both domestic and international, can take advantage of the new developing retail environment.
Close to the Australian consumer’s heart both as an employer and as an industry, the retail industry continues to beat expectations. Here are the facts that set the scene for the Australian retail landscape.
Retail Employers in Australia
Retail and the Australian public have a long history, from hawkers’ vans and the corner store to elegant city department stores and the mega mall, shops have been and still are at the core of the nation.
- Retail currently employs 1.7 million Australians
- Almost 11% of all working Australians work in retail
- Australians working in retail earned over 60 billion AUD in 2015
- An estimated 50% of the population have worked in retail at some point in their career
- Some of the country’s biggest employers are retailers: Woolworths Group & Wesfarmers.
Australian Retail Adds Up
Investing in the Australian retail presents a unique opportunity for brands as although the population is small, sitting around 24 million, growth is steady and sales for month-on-month trading continue to rise.
- Number of retail companies: 5,500
- Number of brick-and-mortar stores: 77,000
- Total economic activity per year: $120 billion AUD
- Percentage of average retail trade growth year-on-year: 1.5%
- Average year-over-year increase on revenue between 1983 and 2016: 5.99
So, baring in mind that Australia is the second-wealthiest nation in terms of wealth per adult and is the 14th-largest national economy by nominal GDP, what are the opportunities for retailers in the Australian market?
High Street Renaissance
The cosmopolitan capital cities of Sydney and Melbourne have enjoyed a high street renaissance thanks to the entry of international brands sitting snugly alongside home-grown favourites. Global fashion stores including Topshop, Zara, COS, Uniqlo, H&M and Forever 21 are establishing themselves as go-to stores while local success stories such as Witchery, One Teaspoon, Bed + Bridge, Country Road, Kookai and Cotton On continue to stand their own ground. In fact, the sectors that continue to outperform, including fashion, cosmetics and luxury, are perfect candidates to join Australia’s high street renaissance.
Australia was an early adopter of labor-saving technologies to increase consumer self-service which has meant savings in labor costs for retailers. When implemented in-store, Australian shoppers enjoy a faster and more efficient purchase process via self-checkout, digital kiosks with additional product information, scanners for price checking and retail assistants armed with mobile technology for stock checking. Online, a self service portal provides Australian customers with instant access to information and allows personalisation without additional personnel resources. Speed is key for the Australian consumer!
Retail Specialty Chains
When it comes to size, less is more for the Australian consumer with department store sales consistently declining over recent years. Retail speciality stores tend to offer better in-store experiences for their customers as a result of more knowledgeable staff, better prices and a focus on a more personalised service. For retailers, smaller stores also cost less to open and operate as well as taking up less space in high-density urban environments with heavy foot-traffic. The beauty sector is taking advantage of the taste for speciality chains with stores like Mecca Cosmetica and Mecca Maxima along Sephora winning over consumers with their curated product selections.
Longer Trading Hours
Australian stores are open 7 days a week with uninterrupted trading hours meaning they are more accessible to the customer. Major supermarkets are open Monday to Saturday from 7am to 9pm with shorter trading hours on Sundays and public holidays. Most shopping centres and larger stores open at 9am and close 5pm every day with “late night shopping” until 9pm once a week and with 6 hours of trading on Sundays and public holidays. Additionally, only 6 public holidays have extensive restricted trading hours. So more hours means more customers through the door!
The Australian retail industry is supported by both its local market and tourists. In fact, “Retail Tourism” is a great way for retailers to attract shoppers and gain traction not only in the Australian market but in new markets thanks to exposure to international tourists. Australia currently welcomes more than 9 million visitors per year and it’s a number that keeps growing. International visitors to Australia also spent a record $42.3 billion in the year to March 2018, up an incredible 6% from the previous year. By targeting tourists as they wander streets and laneways, seeking bespoke jewellery, luxury fashion, bookshops or technology, retailers can tap into new customers and, potentially, new markets.