A conversation about Australian fashion brands with any Australian (particularly a younger citizen of their so-called Lucky Country) is bound to come around to the topic of the tough times they currently face. A long inflationary spiral and a housing crisis have caused belts to tighten, and the domestic retailer industry—in particular, local fashion and apparel brands that were once the backbone of the Ozzie shopping scene—are beginning to suffer.
International expansion may be a better way for Australia’s fashion brands to boost growth. This has been a well-trodden path for the country’s iconic surf brands (Rip Curl, Quiksilver and Billabong among many others) and is now a route for more traditional fashion players such as Zimmerman.
Anxiety, Inside Out
Australia’s economic woes are not immediately apparent to the outsider: wages and employment levels remain high, and with a third of Australian industries reportedly critically short of talent, a tight labor market will continue to benefit in-demand workers. Discretionary spending is still growing, according to the Australian Bureau of Statistics’ latest report, though durable goods purchases have been flat, and essentials, such as healthcare and auto repairs, are taking larger chunks out of consumers’ budgets. Inflation has been high (3.8 percent in the first half of 2024), but so too has it been everywhere—Australia’s price increases are actually at the lower end of global averages this year. Still, consumer confidence continues to sag: the Westpac-Melbourne Institute Consumer Sentiment Index has dipped into negative territory six out of nine months this year.
The one unambiguous fact dampening the spirits of Australian consumers has been a prolonged lack of housing supply, which has pushed prices up and sent people further out into exurbs in search of affordable living. A 20-something professional in Melbourne we interviewed points out that “housing in Australia is just increasingly unaffordable for people starting out; it just makes sense to cut costs where you can.”
Housing is woven into several other intertwined threads in the Australian consumer landscape. Post-Covid high-street retail has not really bounced back: “Shops in central business districts are turning into condos,” observes one executive of an Australian retail chain. He adds that Australian workers are able to invoke the ‘right to work from anywhere,’ and as “Australian companies are starved for talent, they can’t force people back to the office, and the high cost of housing means people are spread out,” and downtown shopping districts suffer accordingly.
Online Down Under
These socioeconomic conditions have, unsurprisingly, pushed more Australian shoppers online. Like consumer markets the world over, digital channels have steadily taken over, although many retail brands still retain a dense physical footprint. Some have turned that brick-and-mortar presence into a unique sales proposition: Chemist Warehouse still trades on a unique physical presence and brand recognition, which has intensified during the pandemic and has reportedly served to enable its international expansion efforts. Chemist Warehouse shops in Ireland and China are said to be among their most active.
But even the most resolutely physical retailers have built up their own online presence. The Just Group, owners of Just Jeans, Peter Alexander Sleepwear and several other well-established Australian apparel brands, maintains over 1,000 outlets but has ramped up their own online storefronts as Covid shifted habits online. Importantly, however, Just Group does not sell through Amazon or other online marketplaces and international channels. This is a common practice among Australian brands, who feel that Amazon and other platforms take too large a commission, and bury their brands in a vast heap of undifferentiated options.
Home-grown digitalization comes at a cost, however, according to one executive at a retail sales software firm. “Economies of scale in building and maintaining digital points of presence, inventory and fulfilment is costly, and much of the technology support and cloud resources are far away, over oceans and time zones,” she observes. This has prompted many local retailers to invest in modern solutions, although perhaps not leading-edge, noting that some retail technology trends like RFID are underdeveloped. “Australian retailers have been told for 30 years that RFID will revolutionize their supply chains, but few have felt that it is really worth the investment.”
As a result, the Amazons and Temus of the world have seen an opening in high fashion and fast fashion sectors, which are traditionally served by chain stores serving Australia’s small population spread over a vast market (two-thirds of the country is squeezed into just five cities—a contributing factor to the housing crunch). It is often hard to find unique styles in local retail shops, and trendy expensive boutiques are often tucked away in far-off neighborhoods. Online shopping offers variety, convenience, and speed and, as in other ecommerce markets, international digital marketplaces are willing to eat the airfreight costs, meaning that a pair of shoes from Temu could arrive days before a local retailer can fulfil the order.
Gen Oz-Z Lifestyle Hacks
Younger shoppers in particular have increasingly used other digital avenues to be fashionable on a budget. “I see women out on a Saturday night wearing thousand-dollar dresses I know they can’t afford,” says a young restaurant manager in Adelaide, “and when I ask them where they got them, they always tell me they’ve rented them.” Boutique dress-for-hire sites offer one-time rentals from deeply curated top-end designer collections, whether peer-to-peer (such as The Volte) or self-contained stores (such as Style Theory and Dress Hire Au). Most also do a decent trade in second-hand sales.
The convenience and price points that ecommerce channels provide are not always a competitive conflict with purveyors of high-end handcrafted clothing, particularly the beachwear and chic casualwear for which Australian brands are known. “I’ve got a friend that makes over A$300 for one of her handmade bikinis through her Depop store, and ships internationally as well,” says the Adelaide restauranteur.
High Thread Count
Yet, while hundreds of Etsy-esque Australian grassroots fashion boutiques are flourishing online, some industry observers are growing concerned about the domestic industry’s long-term health. The Australian Fashion Council recently commissioned a report examining the state of Victoria’s A$930 million textile, clothing and footwear industry. It argues that without policy intervention to limit the effects of low-cost overseas competition, Victoria’s fashion sector will shrink by 8 percent by 2030. This is a hefty decline for one of Victoria’s key export sectors; the value of clothing sales overseas is nearly three times more than the wine the Yarra Valley exports. Some commentators reckon the solution is for domestic consumers to step up and buy more local fashion. This is a particularly tough sell in a land of increasingly tightened belts, which already purchases more garments per capita than any other country in the world—56 per person per year, just over the U.S. at 53.
Second-Hand Roses
If Australians are already consuming too much clothing (locally produced or otherwise), perhaps orienting consumers towards sustainable fashion could energize the industry. Thrifting for second-hand fashion is becoming more popular amongst younger consumers. Thrifting platforms make budgetary sense and fit into next gens’ fashion and environmental sensibilities. “Me and all my friends started using Depop during the pandemic, because it seemed more climate responsible, in addition to being cheaper,” says the Melbourne-based Gen Zer.
Depop, the UK-based fashion reseller platform purchased by Etsy in 2021, has counted Australia as its third-largest market globally for several years, as younger Australian consumers are drawn to the sense of local curation and homegrown style its online stores promote. “Slow” fashion is reportedly rising fast in Australia, although it still accounts for less than A$2 billion of the country’s A$18 billion apparel industry.
Sustainable fashion and consumer products have cachet among environmentally conscious Australian shoppers, but there are limits. Electric vehicle sales, for instance, have languished for years. According to one Australia-based auto executive, “EVs are not very popular here, primarily because the charging infrastructure hasn’t been built yet, and top-down energy transition policies are not as clear or as aggressive.” The Australian Automobile Association reported that traditional internal combustion engine models accounted for 75.5 percent of the 312,000 vehicles sold in the second quarter of 2024, and while this is the lowest percentage in the last two years, fully electric models still languish at around 8 percent of sales. While that’s comparable to EV sales percentages in the U.S., it pales in comparison to Europe (roughly 15 percent) or China, where nearly 50 percent of vehicles sold this year are electric.
Down Under Fashion Road Trip
International expansion may be a better way for Australia’s fashion brands to boost growth. This of course has been a well-trodden path for the country’s iconic surf brands (Rip Curl, Quiksilver and Billabong among many others) and is now a route more traditional fashion players such as Zimmerman. The country’s first billion-dollar label sold off a majority share to Boston-based PE firm Advent International last year, which is fueling the rollout of new points of presence in the U.S., Europe and the Middle East (Dubai is reportedly Zimmerman’s top-selling outlet).
Zimmerman seems to have been able to create valuable differentiation in an Australian market bursting to overflowing with chic-but-simple higher-end eveningwear designers (such as Camilla and Marc, Viktoria & Woods, and Bianca Spender, to name three). This will be difficult for many brands to duplicate, but it seems an inevitable growth strategy for Australian brands’ survival.
International expansion gives brands access to global logistics and production scale—and, most importantly, customers outside of their backyard market. Australia’s relatively small and crowded apparel market is a constraint for Australian brands. Despite the urgings of local industry advocates, ‘buy Australian’ campaigns are not going to save local designers in a country of only 26 million consumers, many of whom (for either environmental or budgetary considerations) are trying to buy less. Australian brands are also steadily losing share to the fast and cheap international shippers on which local consumers are increasingly reliant. Consolidation and shutdowns may loom ahead for some.
Yet Australia itself provides the key to local brands’ long-term international success. Just like the Ozzie beachwear kings before them, local brands can continue to leverage the cachet of Australia’s confidently casual lifestyle into value propositions for international consumers and continue to use the tastes and habits of their customers at home as their R&D sandbox. Australian brands can then plot a course for global expansion similar to fellow Asia-Pacific cool-edge exporters from Korea or Japan—and in so doing, preserve a creative and dynamic fashion industry down under.