Kiwi shoppers are increasingly in search of cheaper, fast fashion brands, leading to the demise of some big labels, retail analysts say.
With the rise of online shopping, consumers are now faced with more choices to “tempt their spending”, First Retail Group managing director Chris Wilkinson says.
In the past year, five fashion brands have collapsed in New Zealand, including Kimberleys, Topshop, Topman, David Lawrence, and Marcs. The latest is Kiwi fashion brand Andrea Moore.
Increased online competition from overseas retailers, changes in consumer spending, payment defaults, and extensive roadworks are among the reasons given for the downfall of these brands.
Wilkinson said Andrea Moore is “another sad situation”, which highlighted independent and artisan businesses were “finding it hard to compete against the proliferation of fast fashion brands that are shifting the consumer psyche”.
“Each situation has its own unique backstory, with the only commonality being a fairly saturated market and consumers no longer having the same degree of brand loyalty or following.”
In Australia, a proliferation of apparel brands had “fallen by the wayside” with fast fashion brands, such as Zara and H&M, being a key reason, he said.
“Shoppers increasingly blend cheaper pieces alongside high fashion in their wardrobes . . . [and] consumers now have less loyalty and more choices to tempt their spending.”
Online was a factor for most companies struggling to stay afloat, as a “substantial” amount of apparel was coming in from overseas retailers, Wilkinson said.
Retail NZ public affairs general manager Greg Harford said the retail sector was “very competitive”, meaning fashion retailers were operating in a “particularly difficult space”.
Kiwi consumers were increasingly willing to buy fashion over the internet, and those foreign firms selling over the internet to New Zealanders had substantial advantages, Harford said.
“[They have] greater scale, but also they don’t have to pay 15 per cent GST and 10 per cent duty to the New Zealand Government.
“The reality is that any New Zealand fashion business has a big disadvantage purely because of Government tax policy.”
In addition, consumer spending was increasingly constrained because households were facing rising costs, such as council rates and insurances, he said.
“[They] are therefore looking for the best possible deals in terms of more discretionary areas of spending such as fashion.”
In order to stay profitable, retailers needed to have a strong digital presence, Harford said.
“To be successful, it’s really important that retailers have strong brands, streamlined supply chains, good prices, and to make it as easy as possible for customers to make purchases, whether they are happening online or instore.”
So will 2018 see the demise of more fashion labels?
“Andrea Moore was in a fairly unique niche, however there will be others facing similar challenges,” Wilkinson said.