Articles

After International Brands, What Next?

The make-up of retail tenancies and precincts is changing more rapidly than at any point since the 1980’s. Competitive behaviour fuelled by the constant and never-ending quest for greater profit has seen a global and local reaction to changing market conditions. With reactions to the ‘Global Financial Crisis’, online and currency movements changing business sentiment and decision-making, many local retail businesses have either retreated or failed.

The need to expand globally, combined with the need to reinvigorate retail precincts has seen the current wave of global brand expansion rise up to a height not seen since the heady days of the Ronald Reagan era.

From a consumer perspective it represents real excitement. Brands that they could previously only immerse in when overseas or buy in part online, now have stores opening locally. It has led to queues around the block for the opening of Zara and Topshop almost as long as those for creditors of some of the local retailers who have passed away to make space for them.

The interesting psychology about anything we can’t get access too is that it creates a magnetism that makes us crave it. Prohibition was a good example of this. International brands entering a new market fit into the same category. They have a flash about them – because they have been previously unattainable – that puts them on a pedestal. However, as the flash wears off and they are more accessible as part of the everyday shopping choices, they begin to be evaluated on more mundane criteria.

When the flash goes, the product better stack up or their sales plateau and in some cases decline.

Today international brands are taking more and more retail space and weaker domestic retailers are surrendering space. But the good news is that the stronger domestic retailers are also taking more space.

The next wave after this – as markets adjust to lower, but steadier growth rates globally – is a renaissance in locally relevant retail brands and domestic retail brands that can actually compete on a global basis.

We are moving into an era of fewer domestic retail brands with larger footprints, more immersive and engaging customer experiences and an attitude and DNA that makes them globally competitive.

This is what makes the next era after the one we are in so exciting. A renaissance is coming. One that needs to planned for and geared up for. One that makes surviving the current era not only important, but worth all the blood, sweat and tears.