A top designer was forced to close his only store because the Australian retail market is going through a serious downturn.
Alex Perry has announced that his flagship store at Strand Arcade, in the CBD of Sydney, will close its doors in March.
The fashion designer said his decision is because the number of customers is decreasing with the increase in online shopping.
Perry said that instead, his focus will be shifted to his thriving online store, where he makes nearly four times as much revenue.
Australian fashion designer Alex Perry (photo) has announced that his store in CBD in Sydney will be closed in March
“Why would I extend that lease for another three, four, five years if it is much more economical and we earn much more money online than what we do with all the costs you incur if you have bricks and mortar,” Perry told the Daily telegram.
“If you convert more business online and the costs are considerably lower, you can do other things with that money.”
Aside from changes in market trends, Perry said the construction of the light rail in the CBD reduced foot traffic, which had a huge financial impact on retailers.
At the same time, he noticed that his online sales increased exponentially as the market shifted to the internet.
The flagship store is located next to other major brand names in Victorian-style Arcade Beach in Sydney on George Street
Despite the closure, Perry said it is flourishing internationally with famous clients such as Jennifer Lopez, Kim Kardashian, Saoirse Ronan, Gwyneth Paltrow and Rihanna.
The Alex Perry brand is sold in 10 outlets in Australia and another 100 outlets internationally in 30 countries.
Perry said he does not believe that physical stores will become obsolete, but the industry will need a makeover to survive.
“I don’t think it’s dead and I’m not saying I’ll never have a store again. I just think we should raise our standard of service in brick and mortar stores to give them the best possible chance of surviving in a dynamic online environment, “he said.
The women’s clothing outlet is just the last victim of Australia’s terrible retail market, with more than 170 stores being closed this year.
Perry said that he has almost four times more sales from his online store than the physical point of sale
Experts have warned that Bardot and Harris Scarfe are just the beginning of the collapse of big name Aussie brands
Household names such as Harris Scarfe, Bardot, Roger David and Napoleon Perdis have fallen like flies in the past year with dozens of stores closed, resulting in heavy job losses.
Experts claim that the closures can be the tip of the iceberg, as consumers are increasingly focusing on online shopping about bricks and mortar stores.
Australian retail growth has been at the worst level since the recession in the early 1990s and international giants such as Amazon and Aldi are threatening to foster turmoil.
Entrepreneur Dick Smith believes that the prospects are so bad, notable collapse will accelerate until little is left.
Australia is on its way to a retail apocalypse that could even kill Myer, who closed his store in Hornsby, Sydney, after serving customers for 40 years
‘Job loss is worrying. We have planned 170 retailers to close just two weeks in January this year, “he said today.
In a conversation with Daily Mail Australia, Smith said that internet companies had caused the retail disaster.
“We will end up with only Amazon and Aldi and in principle all Aussie companies will go bankrupt,” he said.
“All those famous brands will disappear. Some of them may exist only in name, but will be taken over by foreign companies. “
Smith watched the electronics chain that bore his name in 2016, decades after he sold it in 1980. The collapse was one of the biggest failures in Australia.
Harris Scarfe, founded in 1849, also surprised consumers when it entered administration last month and is now closing at least 21 stores.
Australia is on its way to a retail apocalypse by ruthless invaders such as Amazon and Aldi and there is nothing that can stop them, an expert claims
Household names such as Harris Scarfe, Bardot, Roger David and Napoleon Perdis have fallen like flies in the past year with dozens of stores closing and heavy job losses
The businessman was skeptical that even giants such as Coles, Woolworths, David Jones and Myer would survive.
Dropping like flying: some recent Australian victims
2016: Dick Smith, Masters hardware, Payless Shoes
2017: Topshop Australia
2018: Avon, Espirit, Toys ‘R’ Us, Max Brenner, Roger David
2019: Ed Harry, Diana Ferrari, Napoleon Perdis, Ziera, Bardot, Harris Scarfe
Smith said that an overseas operator was smarter than almost everyone on the Australian market and ruthless enough to crush them.
Gary Mortimer, a retail expert at Queensland University of Technology, said Australian companies were not fast enough to adapt to the changing retail landscape and consumer preferences.
“We’ve seen many market changes in Australia over the last decade, with global fashion retailers entering the market almost 20 years ago and Aldi,” he told 9news.
“We have changes in the consumer and too much choice in the market.”
Entrepreneur Dick Smith believes the outlook is so bad that high-profile collapse will accelerate until few Australian companies are left
He said retail companies needed a strong online presence to compete in the current market.
Myer closed 74,670 square meters of stores in 2015-17 and closed its Colonnades store in Adelaide and Belconnen in Canberra.
The Hornsby store, in the north of Sydney, closed on Sunday after 40 years after a depressing fire sale up to 80 percent off.
David Jones has been in the hands of a South African conglomerate since 2014 and is struggling just as hard as his arch rival.
While Aldi’s sales increased by 10 percent in 2018 to around $ 9.2 billion and last year opened around 20 stores across the country. Coles was around $ 39 billion.
The Northcote Plaza (photo), 5 km from the CBD of Melbourne, has been open for decades, but is struggling with a decrease in the number of visitors
Amazon Australia sales reached $ 260 million in 2018, the first full year since opening, and are tipped to $ 23 billion in 10 years.
Roy Morgan chief executive Michele Levine said the brands most vulnerable to forced elimination by Amazon were those products that were easy to replicate.
“All brands that are committed will really be in conflict,” she told Daily Mail Australia.
“Those who will survive are the ones who have recorded something special. Something that people will pay more because it is unique or it speaks to them or they fall in love with it. “
Several shops are empty (photo) while the Melbourne shopping center is struggling with a decrease in the number of visitors
Too many retailers are in this space, especially large department stores without sufficient identity, and have resorted to observation discounts just to sell.
Retail expert Brian Walker said that those at highest risk are big fashion chains that have existed for decades because they could no longer rely on their store offerings to beat online rivals.
It comes when grim pictures have emerged of a shopping mall in Melbourne that has been abandoned by retailers.
Northcote Plaza, which has developed online cult status for its bleak scenes, loses Kmart on November 22, 2020.
Huge household debts, larger bills and stagnating wages affect spending
Macro market forces also play a role in reducing total retail sales – consumers simply don’t spend enough.
Despite record low interest rates, Deloitte Access Economics last year found sales as the lowest since 1990, when Australia was in a recession.
“Stagnant wage growth and weak house prices have limited consumer willingness to spend, while tax offsets and interest rate cuts have not yet translated into sales,” predictor David Rumbens said.
Former Director Richard Evans of the Australian Retailers Association blamed these problems, along with the enormous debt burden of the household.
“The disposable income is not as much as it used to be and household indebtedness is far too high,” he told Daily Mail Australia.
“In addition to paying off these debts, the costs of people, such as energy bills, go up without covering the wages.”
The household debt / income ratio in Australia reached 110 percent in the 2018 financial year – $ 1.10 for every $ 1 earned at work.
Mr. Rumbens said retailers were encouraged by irresponsible spending by Australians and that the gap of 0.6 percent between revenue growth and disposable income growth was unsustainable.
“That difference is quite a change, and it’s fair to say that many retailers have only survived in recent years because we have exceeded our resources,” he said.
“But that ship has sailed now.”
- Update: since the first publication of this article we have been asked to make it clear that Beds R Us has not been entered into administration. We are happy to set the record straight.