Blog: The price of doing high-end business in Australia… Can we compete?

phoebe_soloThere may well be more than GST behind the ongoing overseas e-tail stoush, says Phoebe Garland.

Phoebe Garland is co-founder & co-owner of Garland & Garland Fashion Pty Ltd, a Sydney based fashion agency which also offers full project management of sales & marketing materials including sourcing, managing and appointing suppliers for digital campaigns and PR services for the fashion industry.

The debate over online shopping from overseas is now the hot issue in the media, with many large chains increasingly voicing their concerns about unfair competition, and lobbying for GST to be imposed on online purchases. However, there remains a question that is yet to be addressed: are we competitive enough with prices here? And specifically why are consumers paying so much for high-end designer goods in this country?

Last year, I bought the white Halston Heritage dress that appeared in Sex and the City 2 (pictured), online from the US. I did try and buy it from an Australian retailer, but sadly it was sold out and I was told there would be no further deliveries. Being a typical female, I simply HAD to have this dress, so I jumped online and purchased it from a US department store. By purchasing online, I saved $150, despite paying two lots of shipping, (I have a US postal redirection service that re-routes my packages due to some US department stores not delivering to Australia).

Garland_SATC_imageSpurred by my love of designer high-end brands I am savvy enough to know the price differences can vary greatly from Australian retailers to overseas ones. While I am totally pro-retailer, it does concern me that the core issue regarding the cost of these goods is not being addressed. However, there is also evidence that this also works both ways, with Australian high-end brands being sold for a premium overseas. While I was in the UK in 2004, I saw a pair of Sass & Bide jeans retailing at 275 UK pounds. With the Australian dollar at the time being fairly poor versus the UK pound, this worked out to be about $650 Australian dollars. In Australia they were retailing for about $275 AUD.

Retailers are always looking for unique brands, that key point of difference and something unique, and purchasing overseas brands is often the ideal solution. Sadly our high-end luxury market is fairly small in this country. The amount of high-end retailers stocking big international brands is very niche in comparison to our Asian neighbours or European. I would love to see more Australian retailers expand into this area, however I wonder realistically if it will ever expand? With most Australian consumers incredibly price sensitive and the majority of the population buying fast fashion, will it always remain a fairly small part of the market here? How can the high-end retailer compete against overseas prices, especially with the Australian dollar being so strong?

Ultimately many more questions remain. Do Australian retailers pay the same wholesale price as overseas retailers? Is the margin unrealistic to compete against online now? Are suppliers adding on too much margin? Will adding GST to goods under $1000 really work to deter consumers shopping online? Is the cost of having a distributor for these brands adding to the end price? Or is the distance factor a consideration?

Conversely, why should Sass & Bide jeans be retailing in the UK at over twice its Australian price? And combined with the strong Australian dollar, is this not doing major damage to Australian brands exporting?

We would love to hear your thoughts on this matter and any insights or solutions and answers so our Australian retailers can be more competitive against overseas retailers. Join our page on Facebook and have your say:www.facebook.com/garlandandgarlandfashion


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