Follow me to Oz

So, despite my repeated naysaying it seems not only is US ragtrader The Gap definitely coming to Australia (their first store will open in Melbourne next month), but they may well be leading a serious onslaught of entrants into the Aussie market.

According to this hype-heavy piece, the list of fashion retailers eying off Aussie wallets now includes Banana Republic (a Gap brand), Forever 21 (from US), Topshop (UK), and Uniqlo (Japan). While I am still taking this talk with a big grain of salt, there is certainly a long tradition of follow the leader amongst multinationals.

This behaviour may reflect several underlying motivations. Rivals may be concerned about early movers locking up resources and this limiting the scope for late moves.

In the retail domain there are grounds for concern that early movers may secure prime store locations, although this is much more of an issue in groceries and fast food than in fashion.  Indeed in fashion, it is more likely any early advantage comes from building stronger relations with landlords and property brokers as anchor tenants.

Unlike fastfood, the franchising model used is only likely to be rolled out at a country-level (i.e. companies are awarded the right to run all stores in a state or country, rather than companies that then sub-franchise to individuals store-by-store), so there is a less of a race to secure franchisees and/or build reputations.

Interestingly two of the most successful internationalisers H&M and Inditex (i.e. Zara) remain very tightlipped about any Aussie plans.  Both firms are much less inclined to franchise (mainly because they control their value chains much more tightly than the others on this list). They’ll need a lot more convincing that Australia represents sufficient bang for their buck/Euro/krona.  I suspect they still see Australia as small fry.

But I’m reluctant to say never anymore. The  performance of their international rivals down under may well play out as the demonstration effect (that this is a market worth seeking) that is a further key aspect of following.

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10 Responses to “Follow me to Oz”

  1. uniqlofavourites Says:

    I really hope they bring UNIQLO to Australia, I LOVE their women’s clothing

  2. Gerhard Apfelthaler Says:

    This reminds me of The Gap’s failure in Germany a few years ago. They hype was there, too, but The Gap completely ignored the differences in the external environment. They didn’t choose their locations wisely, ran into legal problems and alienated their German employees. Let’s hope they’re smarter this time around.

  3. Leon Sammartino Says:

    Maybe not so tight lipped –

    Zara Confirms Australian entry:

    http://www.insideretailing.com.au/Latest/tabid/53/ID/8635/Zara-confirms-Australian-entry.aspx

  4. Sachiko Says:

    I would be interested in UNIQLO’s entry into Australia. (Partly because I’d love to use it as a case company in my subject.) Their marketing strategy in the home country (i.e. Japan) changed drastically in the last one year or so after launching flagship stores in Paris and NY. They hardly used western models despite the fact that that is very common amongst other Japanese brands. But now they do a LOT.

  5. Frank O. Phile Says:

    Here’s some more commentary on the Zara entry:

    http://www.theage.com.au/business/fashion-shops-must-look-to-genghis-khan-style-20100720-10jlw.html

    Some good estimates of revenue per square foot etc.

  6. Steve Sammartino Says:

    As a consumer I’ve gotta say I’m happy, because the local Australian offers like country road are incredibly overpriced for the crap they deliver.

    • Andre Sammartino Says:

      Actually Steve, Country Road is NOT a “local” firm these days anyway, as it is 88% owned by the South African company Woolworths Holdings (no relation to our local giant).

      And the mob bringing the Gap out to Australia (i.e. the local master franchisee) is also South African – Busby Holdings. They already run Guess and Aldo stores down under. In South Arica they also operate the Espirit and MNG franchises.

      But I echo the desire for more and better choices…

  7. vantiroh Says:

    Wow, this post is fastidious, my sister is analyzing these things, so I am going to convey her.

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