Industry heavyweights have warned Australia’s fashion sector is facing a perfect storm that threatens to collapse iconic brands like a “house of cards”, crushed by cost-of-living pressures and global online giants.
It comes as household Aussie fashion brands go under at a rapid rate, with Cue, Veronica Maine, Betts, Wittner and Jeanswest entering administration in the past 18 months, following the collapse of Mosaic Brands the year prior – the giant behind Katies, Millers, Noni B and Rivers.
Renowned Australian fashion designer Alex Perry revealed he was forced to shift his business focus overseas to stay viable, warning domestic labels are being choked by heavy taxation and soaring operational costs.
“(You have to) find where your place is. I’ve found that my place in business, unfortunately, is not home. It’s every other country,” Mr Perry said. “If I hadn’t done that, I wouldn’t have a business today in Australia because it can’t support my business.”
Falling consumer spending was compounding the pressure on local retailers.
“We’ve got a real cost of living crisis and people are really feeling it. Anything that is a luxury spend or anything that’s not necessary, people cut back on,” Mr Perry said. “Fashion is one of those things. People tighten their belts.”
Australian Fashion Week founder and ORDRE Group CEO Simon Lock warned the retail carnage will only deepen as global online platforms target Australian shoppers.
“It’s a real combination of things, and quite frankly, unfortunately, I think it’s only going to get worse,” Mr Lock said.
“We all saw the impact that Shein had, and the other international cross-border retailers who see Australia as a prime target because of our high spending capacity.”
Shoppers are also backing calls for a crackdown on foreign e-commerce platforms.
New research by the Growth Intelligence Centre found 56 per cent of Australians polled support a “fast fashion tax” on ultra-cheap giants like Temu and Shein to protect local stores.
To survive, Mr Lock urged Australian retailers to focus on brand value and in-store experience rather than competing on price.
“Don’t focus on a race to the bottom on pricing because the Australian industry will never win on a race to the bottom. It’s all about adding value to your brand,” he said.
Mr Lock stressed that physical stores must evolve into places of experiential “theatre” to entice shoppers back into brick-and-mortar locations.
He highlighted Byron Bay surf label McTavish as a masterclass in retail theatre – where stores offer coffee, hospitality and community rather than a hard sell – while pointing to powerhouse label Zimmermann as proof that clever local brands with a distinct identity can still flourish.
Retail experts said middle-market labels were caught in a trap between changing habits and high physical store costs.
Retail Doctor Group CEO Brian Walker said legacy retailers were facing a brutal reality as consumer preferences evolve away from traditional office attire toward casualwear.
“The customer essentially has moved faster than the retailer,” Mr Walker said.
“The traditional tailored corporate wardrobe became less central. Fashion became more casual.
“Australian retail isn’t killing these brands at all. What’s happening is their customers are progressively withdrawing permission for them to exist in their old form.”
Queensland University of Technology marketing professor Gary Mortimer said remote working habits and inflexible commercial leases were also accelerating the wipe-out.
“I don’t think we can discount the impact of work from home where even if you’re working from home two days a week that’s two days where you’re not necessarily getting dressed up to go to the office,” Professor Mortimer said.
“One of the biggest costs are wages, but also rent and lease costs. Many of these stores are tied into five or ten year leases, which means if you’ve got 60 stores across Australia and 20 of those stores are running at a loss, you can’t just exit those locations.”
Despite his frustration, Mr Perry admitted fashion couldn’t expect special treatment when the government was grappling with broader community issues.
“I don’t know that we can put our hands up and have a boo-hoo moment. It’s like, ‘Oh, you’re not looking after the fashion industry’, because they’re not looking after a lot of industries,” he said. “We’ve got more important things with youth crime on the streets and people being unsafe. You just keep your head down and keep working.”
He pointed out that iconic labels started on grassroots launch pads that are far harder to come by today.
“I remember Zimmermann used to have a stall at the Paddington Markets. They started in that way, and now they’re arguably the most successful Australian brand,” Mr Perry said.
“That would be a very different story for a young designer starting today. I don’t know how they begin because we don’t have these multibrand stores. I don’t know that the environment here is conducive for them.”
The Back Australia series is supported by Harvey Norman, Ampol, Bunnings, Qantas, AAMI, Journey Beyond, Gippsland Critical Minerals and News24.