Analysis Of Australia'S Textile And Garment Retail Industry Development Bottleneck

In May 18th, the Australian Competition and Consumer Council (ACCC) announced an investigation into the sale of clothing by some overseas websites to Australian consumers. At present, it is initially agreed that some agreements have been reached between Australian garment agents and international suppliers, urging them to stop selling their agent products to Australian consumers.

ACCC said that it would be fined millions of dollars if it was confirmed that the supplier had such actions.

Why do Australian retailers who are already expecting the dawn of the consumer market come to such a bad move?

What is the bottleneck of textile and apparel retailing?

Online shopping concessionary sales

In recent months, consumer spending has increased significantly in Australia, and the growth of real wages and savings rate have led to a rise in the retail consumption index.

Because of the change of consumer habits, more and more consumers choose to turn to online shopping platform.

According to data released by DDT (Deloitte) Economic Research Institute in March this year, Australia's per capita wage level will rise again in 2012~2013, which will help to boost local consumer spending power. At the same time, driven by the increase in Internet consumption, Australia's retail sales will increase by 1.2% in 2012 and 2.6% in 2013.

Australian consumers are keen to purchase goods from suppliers around the world through the Internet, because the difference between local product prices and online selling prices.

Australian clothing brand Politix a wool coat store sells for a more than 400 Australian dollar (1 Australian dollars, or about 0.98 dollars), while on some overseas websites it sells for only more than 320 Australian dollars, and some sellers even sell only 250 Australian dollars. Consumers can save a lot of money by just a few more mouse clicks.

It provides consumers with cheap and inexpensive enjoyment, and it also has an impact on the sales of solid stores in Australia.

According to an industry insider who often travels to Australia, due to the small capacity of the Australian market, the profit margins of traditional clothing retailers are not large enough. The development of online shopping makes them face greater challenges.

In the increasingly globalized market, the primary task faced by Australian traditional retailers is to deal with competition between network providers.

Bart, a clothing seller in Sydney, has a personal feeling.

He said that as a small business shop, the purpose of selling online is to gain more profits on the basis of less investment and to gain more popularity of its stores.

Nevertheless, his pressure has not diminished.

Bart said he used to run a brand of clothing on the Internet, but recently he discovered that the brand clothing manufacturer started selling online, which made his last hope almost shattered.

He said, on the Internet, the actual distance between buyers and sellers is not important. From a cost advantage perspective, a small shop can not compete with producers.

Retailers play a trick on consumers.

Faced with the growing popularity of online shopping, traditional retailers complain that shoppers can evade goods and services tax through shopping on foreign websites.

So, in order to force consumers' attention back to store consumption, some Australian costumes.

Agreements with international suppliers have been made to increase the price of overseas websites or stop selling related products to Australian consumers.

Jackie, a sales representative of an international brand clothing agency group, reached an agreement with the famous American cowboy clothing PaigeDenim and AGAdrianoGoldschmied in April this year to prohibit the main international Internet stores, including all Amazon's Shopbop and Revolve websites, serving Australian customers.

Celebrities' favorite jeans brand TrueReligion says they will still serve Australian Internet users, but only to charge higher prices.

Jackie pointed out that this is a helpless move. If we don't take action, many Australian stores will be closed.

At present, the purchase of a pair of jeans on the overseas famous brand website is cheaper than the retail store in Australia, which is 100 US dollars ~150 dollars. Such a big price difference makes it impossible for them to compete with overseas online stores.

"We have to pay import tax, consumption tax, shop management fee, rent and so on.

Online merchants do not have to pay these fees.

Mathias, the director of the Swedish brand Dr.Denim, said that the prohibition of selling products from overseas outlets to Australian customers is the best way to prevent the flow of retail capital to foreign countries.

He has consulted with the British fashion shop giant ASOS to ban the sale of the brand product to Australian consumers.

Mathias said that if a Dr.Denim brand agreed to restrict sales or raise its selling price, it would help protect the physical retail industry in Australia and enhance the integrity of the brand and retailers.

The industry calls for a reduction in the threshold for import duties.

Higher taxes and cost pressures have caused Australian retailers' operating pressure, and the physical sales market is growing faster than expected.

In fact, in order to awaken the vitality of the consumer market, the Australian government has been making frequent moves recently. It has just announced the 2012~2013 budget recently, including a number of subsidy projects.

But the main retailers in Australia do not think the federal budget will help much in stimulating consumption.

Mike Leo, chief executive of Coles, points out that although the combined effect of the budget plus the central bank's interest rate cuts will provide consumers with a subsidy of 7 billion ~80 billion dollars, most consumers will still use the money to save or repay their debts.

"I doubt if this can promote a consumption boom.

Australians may save and spend money in parallel, but that does not mean that they will return to the financial crisis before the extravagant days.

The price war has benefited Coles and Woolworths of chain supermarkets, but the pressure on other non essential consumer goods markets is still hard to alleviate.

Solomon, a retail billionaire, pointed out that although the government's cash subsidy could play a role, it failed to achieve the promise of lowering corporate taxes.

At the same time, carbon tax and unpredictable NBN projects and other government measures can only continue to suppress consumer confidence.

Brooks, chief executive of Myer, agreed that the benefits of the budget for Australian retailing could be ignored.

"In principle, we support the government policy to alleviate the pressure on consumers' cost of living, but we are disappointed by the lack of government assistance to the business community. We are also facing additional cost pressures, including carbon tax, wage burden and logistics costs."

Stephen Kangnipis, chairman of the Australian Fashion Wholesalers Association, pointed out that the reason why retailers restrict consumers' online shopping in this way is that the government refuses to cut down the threshold of goods and service tax for overseas purchases. At present, only goods purchased at a value of more than 1000 yuan are required to pay the goods and services tax.

Stephen said that the solution to this matter is very simple. If the starting point of goods and services tax for overseas purchases is reduced to 50 Australian dollars or 100 Australian dollars, the cost of online shopping products will increase. In this case, the product prices of physical retailers are more competitive than that of them.