Australian retailers are falling victim to sluggish consumer spending and stronger competition. Photo: TND
Almost 200 retail stores are set to close over the coming months, as tough market conditions and increased online competition continue to take their toll.
Weak wages growth and record high debt levels are forcing Australians to cut back on spending.
And traditional retailers are struggling to keep up with the times.
Harris Scarfe was the first major retailer to announce a significant number of closures this year – flagging last Monday that it would cut 440 jobs and close 21 stores as part of the receivership process announced before Christmas.
And in the days since, McWilliam’s, Bardot, EB Games, Jeanswest, and Bose have all gone the same way.
Analysts say McWilliam’s failed to remodel itself as a premium brand. Photo: Getty
Sound and speaker specialist Bose was the last to go, announcing on Thursday that the “dramatic shift to online shopping” would see it close eight stores in Australia and a total of 119 globally.
And analysts say the retail bloodbath is far from over.
Billy Sung, senior marketing lecturer at Curtin Business School, said weak economic conditions were partly to blame for the spate of recent closures.
Economic growth last year dropped to its slowest pace since the global financial crisis, after heavily indebted Australians adjusted their spending to the ‘new normal’ of weak wages growth.
But Dr Sung said retailers must shoulder some of the blame, too, with many failing to give consumers a reason to shop at their stores.
The rise of online shopping has increased competition to such an extent that loyalty can no longer be bought with price, he said.
Consumers can easily find cheaper alternatives online, so bricks-and-mortar retailers must find new ways of winning over customers.
“For instance, if I’m looking for a pair of jeans, I can easily compare the price of that pair, not only with the domestic market, but also with the overseas market,” Dr Sung said.
“And if a number of competitors have no unique selling proposition, no point of differentiation, what you will see is the average consumer will just go for the lowest price.”
Dr Sung said Jeanswest had failed to convince consumers their jeans were better than cheaper alternatives.
“However, if you look at luxury brands, one of the unique selling propositions is not only the high quality, but the brand name, the model that wears them, the endorser who endorses the brand,” he said.
R.M Williams is a good example, he said. The Australian retailer has successfully marketed itself as a premium brand selling Australian-made products.
“Obviously, Jeanswest is a very longstanding brand, so they wouldn’t be able to just elevate to [become a] luxury brand,” Dr Sung said.
“But what they have failed to do is give customers a reason to buy from Jeanswest.”
I'm genuinely struggling to keep up this week @carey_alexis
Risky strategy to move to pure-play model when you're selling $600 headphones and $4000 speakers when you can't hear the products.#bose #retail https://t.co/cKfQQkJUP8
— Professor Gary Mortimer 🛒🛒🛒 (@ProfRetail) January 16, 2020
Retail Doctor Group chief executive Brian Walker offered a similar take, telling The New Daily that Jeanswest failed to accommodate new consumer trends.
“The world is changing, and these large, legacy networks of stores have frankly never changed their look or their image, apart from some cosmetics,” he said.
“Where was the product innovation? Where was the investment in omni-channel play?
“They had a good loyalty programme, I understand that, but price can’t be the only differentiator – there has to be more.”