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How can landlords attract top-tier international retail brands?

Australia is fast becoming a mecca for international retail brands.  What’s behind this modern-day gold rush and what do landlords need to do to attract these iconic global brands?

The retail landscape in Australia has changed forever.  With the rise of online retailing, Australian consumers suddenly realised there was more out there – greater range, greater variety and faster access to the latest fashions, electronics and a whole host of consumer goods.  And of course there’s the value question – the economies of scale available to those brands that started out in Europe and the US, meant that they could offer their products at far more competitive prices.  All these factors meant that Australian consumer started demanding change.  They wanted more variety and they were seeking value.

In response, we saw an initial wave of truly international brands coming to our shores.  Fashion brand Zara was one of the first, along with iconic technology brands Apple and Samsung.  These three brands have been highly successful in Australia.  Their global counterparts watched closely and they were keen to get a slice of the action when they saw what a successful move it was for these pioneers.

The second round of international retailers is starting to migrate to our shores.  Brands like Gap, H&M, Uniqlo, River Island, Mango, Pottery Barn and Williams Sonoma have either recently opened their doors or have announced their intention to do so shortly.

So what is it that differentiates these brands from a landlord’s perspective?  As a landlord, you’re probably used to the demand for 125 square metre ground floor retail spaces from Australian retailers.  With these international brands it’s time to think again.  These retailers are looking for spaces of 600 square metres and upwards, and they’re not afraid to take on multi-level spaces.  Just look at the Zara shop in Westfield Sydney, which is over three floors.  They’ve cleverly designed it to draw the consumer in on the ground floor with women’s fashion, but once you’re in your drawn to the other levels, which offer their entire range of products from men’s wear to kids, tweens and so on.  This is another differentiator.  Few Australian brands offer the variety that these international brands offer.

It’s also important for landlords to be sympathetic towards the international brand itself.  These brands have a proven concept that is tried and tested across the globe.  They don’t compromise on their look and feel and it’s important that local landlords respect this and work with them.  Be it floor space, layout, street frontage or a myriad of other complexities, it’s important to realise they do things differently and there are certain brand attributes that they simply won’t be flexible with.

For most international brands their first site is generally the CBD flagship brand awareness store – their greatest tool in launching the brand into the country, and then they’ll look at super regional centres.  For landlords wanting to attract these tenants, the key is to demonstrate they have the customer base who will be attracted to this brand.  It’s all about having a strong market share, the right customer base and ultimately volume of sales.  Hollster moving into Bondi Junction is a great example of this.  Chadstone has also done a phenomenal job of positioning themselves for these retailers, and with such a stable of international brands already in residence they are the natural choice for the second wave coming in.

The outlook for these international brands coming to our shores is positive.  With a number of significant new CBD projects launching in the next two years, we’re estimating there will be more than 30 new stores launched to host a range of international retailers including many premium and luxury brands.  The time is right for local retail landlords to change the way they think to accommodate these new players.


Michael Bate is head of retail at Colliers International.

 

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