The Global Powers of Retailing 2015 report released by Deloitte identified that 37 – or 15 per cent – of the companies the consultancy deemed to be the 250 largest global retailers were currently operating within Australia. The retailers were determined based on publicly available data for the 2013 fiscal year and included companies such as LVMH, Richemont and Tiffany & Co.
According to the study, the fact that 85 per cent of the top 250 retailers were not yet operating in Australia could be cause for concern for local retailers as it meant that competition would likely increase.
“With major global players continuing to enter the market, and existing global retailers expanding their store footprint, Australian retailers across all segments will continue to face significant challenges and increased competition,” the report noted.
“The ability to innovate, drive improved processes and to connect with the consumer will be critical in order to remain competitive in both the existing and future Australian retail market.”
Opportunity for local jewellery industry
Peter Ryan, director of Red Communication Australia, told Jeweller that while the increasing globalisation of the local retail industry was not a new development, its recent intensification would create opportunities for Australian-based retailers working in the jewellery industry.
Ryan said that jewellery retailers could expect new international entrants to initially have an “exotic” competitive advantage due to their foreign origins but that after an 18-month period, once consumer “euphoria” had died down, the brands would settle into their “natural [market] share”.
He also suggested that pricing dynamics were changing rapidly and that jewellers needed to adapt: “You’ve [retailers] really got to make a decision about whether you’re going to compete in the volume commodity, low margin area; or the lower volume, high value, high margin area.
“You have to make that decision sooner rather than later and then retune your business around that.”
From a design perspective, Ryan warned that while jewellers who offered a point of difference would be rewarded, those that had been “slavishly copying international brands for years” would suffer because consumers would soon be able to purchase the genuine article direct from the original source.
For that reason, he believed the rise of international competition within the local market would be “the best thing to happen to the Australian market”.
“What we’ll see is the return of real jewellery designers and I think that’s a great thing,” he said. “What [globalisation] really says is, if you’re a signature and you’ve got a unique look, the world is ready for you. I think the true jewellery design business – which has been a bit dead for the past 15 years – is actually going to come back and flourish.”
The full Deloitte report, including a summary of the five key retailing trends of 2015, can be accessed via www.deloitte.com.