There’s no doubt Australia has become a major focus for international brands – especially European ones – wanting to expand their markets. Previously, a presence in the land Down Under was not considered worthy of the necessary investment, but now, international companies are increasingly turning to Australia and, to a lesser extent, New Zealand in search of new markets.
It’s a trend widely tipped to continue, both at retail and wholesale levels.
In fact, so strong is the consumer’s appetite for high-profile international brands, some retail categories such as fashion are now almost besieged by overseas competitors.
Interestingly, when an overseas brand expands its retail operation to Australia, the whole local supply channel is affected, even if the retailer is a vertical operation like Zara, H&M or Topshop. Such businesses have a strong effect upon Australian retailers, which affects the local supply channel because demand can decrease for local product.
Perhaps what is more interesting is that the Australian jewellery industry has to date only seen international competition from the supply channel. Unlike other consumer categories that have had to contend with international competitors at both the wholesale and retail levels such as fashion and accessories, jewellery is yet to see international retailers entering the market – apart from brand-only retail competition.
More choice
There is no doubt that these international brands offer Australian consumers more choice, but is this good or bad for local businesses?
“It’s a two-edged sword,” says Alison Ray, head of strategic planning at Brand Agency. “A little bit of competition isn’t a bad thing – it usually makes most businesses step up to stay in the market. Our ever-increasing access to brands and products, both locally and via online shopping, means [as consumers] we have greater choice and buying power. This can be a huge hindrance on local brands, especially with the emergence of free international shipping, as they can’t compete on price and availability.”
David Ansett agrees local businesses are under mounting pressure. As founder of Truly Deeply, an independent strategic brand and creative agency, Ansett says, “The increasing presence of these global aspirational brands in the Australian retail landscape is a real threat to Australian brands. The opening of flagship stores for newly arrived global luxury brands, or even for mass luxury brands such as H&M, Uniqlo & Sephora, are supported by heavily funded PR campaigns that have local consumers queuing around the block.
“Whilst this challenges local brands to continually lift their game, the new playing field is far from level, with many local brands forfeiting their hard-won and previously loyal fans to the new arrivals.”
While this is true, Australia remains a small market, so local companies must compete harder to gain the same share.
“All competition is good in my opinion; it wakes up Australian brands and keeps them on their game,” says Simon Dell, director of strategic marketing firm Two Cents Group. “If local brands can’t compete on home turf then they’re going to drown when they try and sell overseas. There is no reason why Australian brands can’t talk about their quality, limited availability, celebrity association and heritage, if they have any.”
Heritage or provenance is an important issue for businesses creating brand identity in many retail categories and it’s becoming more significant internationally.
According to Ben Lazarro, consumers are taking a far greater interest in the origins of products, which he says is where Australia is in good stead. Lazarro is a marketing and communications manager responsible for promoting Australian-manufactured products via the Australian Made, Australian Grown logo, a not-for-profit organisation established in 1999 by the Australian Chamber of Commerce & Industry and he believes country of origin is important for almost all products, including jewellery.
“People want to know about their jewellery: who’s making it, what’s the story behind the particular piece, if it’s a family business or if has its origins in this region – even whether the materials come from a particular area and are processed in a certain way,” he says. “There’s a real interest in provenance of the product and our consumer research is telling us that they are looking to buy Australian. The challenge for our business or for our campaign is to convert that intention into an action.”
Compete on every level
It’s no secret that Australian manufactured jewellery has been in decline for the past two decades. As almost all manufacturing-based industries have shifted offshore, the emphasis has shifted to Australian branding. Regardless, as new brands enter the market, local businesses must learn to compete on every level.
“I think there are two ways for local brands to compete,” Ray says. “Firstly, embrace and support the ‘shop local’ movements where consumers are back-lashing against mass-produced, super-store selling. This can be done online as well as on sites like Etsy, which is ideal for unique clothing and jewellery.
“This links into the second point, about the [customer] experience, and which cannot be replicated by online shopping or big international brand stores. The American author, Maya Angelou, once said, ‘People will forget what you said, people will forget what you did, but people will never forget how you made them feel.’ This is true for brands as well.”
Ansett clearly believes the brand name will always be important for some, while others will seek quality and the ability to express their own uniqueness. He points to successful Australian companies that have not only built wide brand recognition but have learned to compete with much larger brands.
“Australian retail brands such as Mecca (cosmetics) and Kikki.K (stationery and gifts) have worked hard to create envious customer relationships based on product differentiation; strong, clear and evocative branding; exceptional customer service; and customer engagement integrated through every layer of brand experience,” he says. “If there’s a template for competing with aspirational, global luxury brands it’s through intimate customer relationships built over time through highly valued brand engagement.”
Simon Rowell is another branding specialist who believes the local market has been impacted largely by the expansion of international companies. “There is no doubt that the incursion of luxury brands into Australia in recent years has impacted local retailers,” he says. “Although this does cause short-term stress, this competition will force local brands to become more innovative in terms of range, quality and service delivery in order to survive.”
As managing partner of Brand Intellect, Rowell advises clients to look for customer segments that are both profitable and under-serviced.
“Pandora has done this very well in recent years in Australia and around the world,” he continues. “Segments could be based on aspects such as cultural background, socio-economic status or lifestyle, or a combination of these. Once you have a grasp on the segments you are chasing, your communication strategy can be designed so as to communicate as directly as possible. Secondly, continue to innovate products and service to show the market that your brand is differentiated and worth your price premiums.”
Take shortcuts
For smaller Australian companies wanting to compete with the ‘big boys’, Dell says there’s nothing wrong with taking shortcuts: “Some might call it cheating, but look at what other successful luxury brands do to engage their consumers. There is no point in reinventing the wheel when you can learn from others. There are lots of good case studies out there – look at them as your first point of call.”
Dell’s point is valid. If someone else has been successful in an area, there is much information to be gleaned from them but there is no sense in just replicating similar products.
Jack Perlinksi is an advocate of being very clear about your target market and more importantly, their desires.
“One of the primary universal principles that applies when building any kind of brand – but particularly if you want to build a brand of distinction – is to be clear about what the brand’s performance is. People are more likely to connect to why you’re developing a product and to its essence, than to the product itself, technically speaking.”
Perlinski’s brand consultancy, DAIS, emphasises an important point that is often overlooked by entrepreneurs – the brand does not create the demand.
“We as developers of product and developers of brand don’t necessarily create desire for that product in the market,” he says. “The desire for a particular product – or style of product – already exists in the marketplace. What we need to do is simply tap into an understanding and clarity of what that nuance of desire is, and express a clear commitment and passion to meeting that desire through the craft of whatever it is we’re delivering.”
Rowell supports that assertion, saying, “The first step should be to succinctly articulate your brand positioning. Brand positioning defines your primary target customers, what you are doing for them and why your brand is the superior choice for the customer.”
He believes that brands that are both distinctive and authentic require a smaller spend on marketing and advertising over the medium to long-term in order to generate income and maintain brand awareness. In other words, the customer not only understands the brand’s message but also connects with it.
As consumer-buying habits continue to change, along with the way people shop courtesy of the internet, it’s increasingly important for all businesses to build their own “brands” whether that be a product’s brand or a store’s brand at the retail level.
“People don’t buy what you do; they buy why you do it,” says author Simon Sinek, which is perhaps a succinct way of understanding how consumers and shopping has changed. Therefore, as long as a business can identify a niche and target it properly, then deliver on the brand’s promise, they will be able to compete, whether against local or larger international rivals.
3 PART Aussie brands report