First retail collapse of 2018 prompts expert warnings of more fashion pain to come

Insolvency and retail experts have warned fashion brands should expect to be crunched for yet another year, with womenswear brand Maggie T the first high-profile Australian retailer to enter administration in 2018.

An insolvency notice from the Australian Securities and Investments Commission confirms Maggie T Corporation appointed voluntary administrators Cameron Gray and Justin Holzman of DW Advisory to the company on January 3.

The plus-size clothing business, launched in 1981 with actress Maggie Tabberer as the face, lists 28 bricks-and-mortar stores on its website.

The company’s administrators did not return SmartCompany‘s requests for comment about the administration prior to publication.

However, the news comes after a bumpy 12 months for Australia’s retail world, as insolvency experts warn there are more tough times to come in the next year.

At the end of 2017, insolvency and business recovery firm Jirsch Sutherland released predictions for 2018 highlighting that “we haven’t seen the worst” of troubles in the world of retail.

“Many of those who are not selling consumables are having a particularly tough time. We’ve already seen a number of high profile retail brands collapse in 2017, including 80-year-old brand Oroton,” Jirsch Sutherland partner Andrew Spring said in December.

Predictions for Boxing Day sales for 2017 were slightly up on 2016, with $2.4 billion predicted compared with $2.3 billion the year prior.  Australian Retailers Association chief executive Russell Zimmerman told news.com.au the sector believes the $2.4 billion had been reached after the sales took place.

However, these figures could do little to shelter incumbent retailers against a variety of forces including the effects of online retail, Jirsch Sutherland predicted.

The firm suggested last month the “declining trading base” that some local brands in the world of fashion are seeing will not be enough to sustain them after the holiday period ends.

“There are only so many consumers”

Retail expert and associate professor at Queensland University of Technology, Gary Mortimer, says news of companies like Maggie T entering administration so early in the new year speaks to the continued challenges many local fashion brands will continue to face this year.

“I think 2018 is going to be a very, very challenging year for fashion, accessories and footwear,” he says.

While the rise of fast fashion in Australia is not a new trend, Mortimer says recent global sales figures from the likes of H&M and Uniqlo shows interest in these kinds of retailers is not slowing down.

“The challenge is still really in the middle of the market, because there are only so many consumers,” Mortimer says.

Local brands that have traditionally catered to customers wanting to buy mid-market clothes in store will likely lose more ground to companies like Kmart, Mortimer says.

“Target and Kmart are really starting to look to fashion for the mainstream,” he says.

For local fashion stalwarts, one of the only options for 2018 appears to be to look at streamlining or downsizing stores, Mortimer believes.

“I think there will be some that look to close stores.”

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