There will be no relief for Australian clothing retailers in the new year, according to a new IBISWorld report, which shows industry revenue is expected to contract by 1.4% in 2012-13.
The Clothing Retailing Market Research Report provides industry statistics and analysis, measures market size, and analyses industry trends.
According to IBISWorld, the Australian clothing retailing industry is made up of 14,199 businesses, which employ 83,067 people. But that could change, the report suggested.
“Until late 2008, Australians flocked to shopping centres around the country and spent freely on all types of items, including clothing,” IBISWorld said.
“However, since the economic downturn, consumer spending has changed and clothing retailers have suffered.
“The clothing retailing industry has faced several tough years with cautious consumer spending, lower prices, higher rents and the global financial crisis driving down revenue.”
Over the five years through 2012-13, industry revenue is expected to contract at a compound annual rate of 2.3%, the report revealed.
In 2012-13, revenue is expected to contract by 1.4% to total $11.6 billion, down from $12 billion.
IBISWorld described the industry as “fragmented and diverse”, with a large number of small, independent operators.
“In 2012-13, the three largest participants (Country Road, Premier Investments and Specialty Fashion Group) are expected to account for 17.6% of industry revenue,” it said.
“There are also a large number of second-tier clothing retailers with market shares of between 1% and 4.5%.”
Despite an increase in M&A activity in the past five years, IBISWorld said concentration “has not changed materially”.
“This has mainly been because most major acquisitions have involved private equity or players outside the industry,” it said.
But Country Road’s acquisition of Witchery went against this trend, IBISWorld said, and competition is expected to strengthen as industry participants fight for the consumer dollar.
According to IBISWorld industry analyst Ricky Willianto, consumers are now more informed about spending, while Australia’s private savings rate has grown to its highest point since 1984.
Local retailers are also up against the increasing popularity of online shopping, and a decline in prices as a result of fierce competition and the surging Australian dollar.
“The high value of the Australian dollar means that for many retailers, especially the larger operators, stock can be purchased at significant discounts,” Willianto said.