Will International Retailers Disrupt The Australian Retail Landscape?
Retailers across the globe are seeking out new opportunities by setting their sights beyond domestic borders, unlocking new opportunities on the international stage. In recent months, many Australian retailers have made the leap in unlocking new avenues for growth by moving into new international markets (July, Decjuba, and Lovisa to name a few).
We’ve seen many international retailers both succeed and fail in expanding into Australia, but do we expect international retailers to disrupt the future retail landscape here on home soil?
Australia is recognised as a market with good prospects for business, hosting a stable and growing economy as one of the highest-income countries combined with one of the lowest overall tax rates of any high-income country in the world. According to the ATIC Benchmark Report (2023) the Australian economy is projected to grow 1.6%, outgrowing other advanced economies by an average of 0.3%. Although we may be small in terms of population size (0.3% of the global population), Australia contributes towards 1.7% of the global economy with the highest median wealth in the world. Australia is also an extremely diverse, yet predominantly English-speaking country with 29% of the population born overseas, providing significant opportunities for international retailers to tap into the Australian market with a well-established customer base.
While we recognise Australia as a market with significant opportunity, we cannot overlook that Australia is a difficult market to enter. We have seen an array of retailers fail in their move into Australia. Why? There are significant differences in Australian retail – unique consumer expectations and behaviours, contrasting operating costs and logistical challenges, and it is likely these failed retailers have overlooked our differences before entering the market.
The recent and upcoming arrival of household international brands suggests retailers are increasingly watching the Australian market with optimism. Let’s take a look at the strategies behind some of the latest retailers to tackle Australian retail.
eCommerce First
Thorough consumer research is critical to not only understand how locals shop, but also how their behaviour and demands continue to evolve. Retailers need to localise their whole offering for a new market, with consideration for the product offering, seasonality, and pricing.
According to Australia Post, around 38% of Australian consumers make purchases from overseas, suggesting the consumer demand for alternative, international brands, and products. However, it is imperative that international brands wanting to capitalise on this demand first engage in thorough customer research and testing. Entering the Australian market with an eCommerce first strategy provides retailers with an opportunity to trial their brand strategy in a new market.
Looking at Glossier, the US born beauty brand with a cult-like following who entered the Australian market in October. Their stores are like no other in the beauty realm, a true hyperphysical experience. Not only are the stores a haven for the Instagram obsessed, it’s a place to connect with the brand through immersive service and technology. While Glossier have entered the market predominantly online only, this could be a strategic move to test the market appeal and understand how the local consumer shops before (hopefully) launching an Australian flagship store, taking the beauty retail experience to the next level in Australia.
Image courtesy of Glossier
Partnerships
For retailers with less familiarity amongst the Australian consumer, partnerships with recognised businesses provide a seamless pathway to enter a new market. Most importantly, the partnership provides retailers with a trusted, local customer base which is critical when brand awareness across the Australian market is low.
Take & Other Stories, a womenswear H&M subsidiary with 73 stores across Europe, America, Asia known for considered womenswear pieces designed in ateliers in Paris, Stockholm and Los Angeles. The brand launched on The Iconic in May this year. The Iconic, who holds the largest share in the online women’s clothing market accounting for 14.2% of the market (IbisWorld), has likely provided & Other Stories with access to local insights, and established networks and infrastructure.
Image courtesy of & Other Stories
Market Understanding
When moving into a new market, research is crucial to ensure a true point of difference from the current offering to succeed in taking market share from competitors.
Luxury interiors retailer RH (formally known as Restoration Hardware) is making their Australian debut in Double Bay, Sydney in 2025. A true disruptor in the homewares space, RH are renowned as a destination store, merging unique and refined product, a premium design service and even upscale restaurants and wine bars.
In true RH style, a $140 million development application has been lodged with plans to enter the Australian market with a store spread across five floors, hosting a rooftop bar and an interior design studio (according to Broadsheet). Considering the affluent customer base across the Eastern Suburbs of Sydney (2021 Census Data), we expect a destination, luxury homewares store to be in high demand.
Image courtesy of RH
With these powerhouse brands making the move to Australia, it is likely that many other international retailers are going to be closely watching and considering similar expansion plans. While international entrants should look to integrate global innovations into the Australian retail landscape, a detailed understanding of the local market and customer is imperative to ensure a successful entry into a market which has been historically difficult to crack.
As we expect international retail competition to rise, domestic retailers need to do more to avoid being left behind. Historically the benchmark for retail in Australia has been low, but as best-in-class global retailers enter, this is set to change. Domestic retailers need to keep up to date with the latest, international trends and embed continuous innovation into their brand strategy to survive.