US retailers Gap, Abercrombie & Fitch scout out Australian locations

A number of US retailers are scouting locations for future stores in the latest wave of international companies to try their hand in the Australian market, new reports suggest.

But international businesses must carefully consider how they will set up their stores and learn from the mistakes of others, one retail expert claims.

As reported in the Australian Financial Review, several large clothing retailers including Gap, Abercrombie & Fitch and Forever 21 are currently investigating locations for standalone stores, with some expected as early as next year.

BusBrands, the company which owns the license for Gap in Australia, did not return requests for comment before publication.

Several other international brands from Europe are reportedly scouting locations, including French sports store Le Coq and Dutch clothing retailer Scotch and Soda. Meanwhile, it is understood shopping centres are attempting to lure brands such as lingerie chain Victoria’s Secret, Top Shop and Swedish clothing store Hennes & Mauritz.

There are also reports food brands such as Pretzel Time, Great American Cookies and Shoebox New York could enter Australia.

Additionally, British luxury goods store Harvey Nichols has been given an invitation to open a store in the new $600 million Centrepoint development in Sydney.

International retailers could be convinced to enter the market by recent retail sales. In November sales increased by a seasonally adjusted 1.4%, according to the Bureau of Statistics – the fastest rise in eight months.

Over the past year, sales rose by 7%. While this growth has been stunted by the aftermath of the financial crisis, many retailers expect sales to increase as the economy recovers.

Retail analyst Rob Lake says international retailers, especially those from the US, view Australia as a prime target due to its remarkable similarity. 

“We speak English, we have a similar wealth profile and we’re easy to do business with. The only significant difference is the time gap between the two countries.”

However, says international retailers should think clearly about the reasons they are entering a market in order to avoid the mistakes of retailers in the past.

“There are examples of Americans who have come here and treated the Australian market as the same, such as the Disney Store. Very successful businesses in its country, but didn’t do well here because I think it was a misreading of our fascination with rodents. There just wasn’t enough business to sustain it.”

“I think Starbucks was the best example of that, they completely misread the Australian market and tried to impose American taste for coffee on Australia. They opened a Starbucks on Lygon Street where you can get good coffee in every shop.”

However, he says American clothing retailers should already have enough customer recognition in Australia in order to establish a good initial following.

“They should do a lot better because of the customer recognition. As an example, I have a Gap t-shirt. I think they just need to do their homework on the Australian consumer first.”