Extract from ABC News
Despite a number of businesses collapsing in the fashion sector, some fashion brands have been moving into physical stores. (Supplied: Princess Polly)
In short:
A growing number of fashion and beauty brands are moving into physical stores despite a wave of legacy brand collapses.
Brand executives and retail experts say the experience between online and in-store is becoming more integrated.
What's next?
Retail experts expect more e-commerce businesses to move into the physical store space.
Australian retail is experiencing a strange phenomenon: brands with strong online footprints are moving back into bricks and mortar.
The wave of legacy Australian fashion brands falling into insolvency has not deterred Princess Polly, which has been opening stores on the Gold Coast and in Brisbane.
"I think there is going to be that bit of a changing of the guards for the brands and retailers that are maybe downsizing or reducing their footprint," chief merchandise officer Courtney Dres said.
"Then the younger, newer brands are coming in and starting to make a little bit of a splash."
Courtney Dres says customers are telling the company they want physical stores. (Supplied: Princess Polly)
In the past few years, Mosaic Brands, the owner of Katies, Millers and Noni B, has collapsed.
On its tail was Cue Clothing Co, Veronika Maine, Betts and Jeanswest, which have entered administration. Country Road Group has downsized its physical presence.
Even 188-year-old department store David Jones is reportedly on life support and weighing cutting store numbers amid the exit of numerous brands.
The outlook for retail is not rosy. Data from CreditorWatch shows the retail insolvency rate has been increasing since June 2022.
Chief executive Patrick Coghlan expects that to increase in the fashion sector due to its reliance on discretionary spending.
"Conditions are likely to get still tougher in the fashion retail space before they improve," he said.
Mr Coghlan said moving from online to in-store trade needed "to be carefully managed".
Experiencing the brand
Beauty brands Oz Hair and Beauty, Adore Beauty, activewear brand Kikiva and furniture company Mocka have opened physical stores in the last few years.
When Princess Polly opened in Pacific Fair on the Gold Coast in July hundreds of customers queued up in the early hours, drawn in by prizes and the chance to be seen at the launch.
Princess Polly's Gold Coast launch was well-attended. (Supplied: Princess Polly)
"[The customers] are just so excited to be there and so excited to experience the brand in person," Ms Dres said.
"I think that really tells us all we need to know about continuing the rollout of our retail stores."
Princess Polly, which is owned by US-listed A.K.A Brands, opened more than a dozen shops in the US before expanding into Sydney last November, the Gold Coast and, as of this weekend, Brisbane.
Physical space can add value
Queensland University of Technology retail expert Gary Mortimer said moving into omnichannel trade could add value, provided the transition was handled properly.
"You wouldn't expect an online pure-play retailer to suddenly open 64 stores, because it wouldn't be sustainable," he said.
"But they may open three stores, or they may open a bunch of stores, but only temporarily … and that will then create a level of experience and excitement and entertainment which draws people to the online site."
Gary Mortimer says speed of delivery is a key value for customers. (Supplied: Gary Mortimer)
Dr Mortimer said value was not just about price.
"Speed is now becoming the currency of retailers," he said.
"It's not about shopping online because that's convenient — it's consumers' desire for immediate gratification."
Ms Dres said that was part of the Princess Polly strategy.
"Basically, as soon as you buy it online, it almost immediately is packed and shipped out," she said.
"But of course, retail is a way to be able to be instant."
VRG GRL's store locations have been informed by customer feedback and data. (Supplied: VRG GRL)
Shifting expectations
VRG GRL co-founder Daniella Dionyssiou says returning to in-store trading feels like a return to the brand's roots.
The business started trading as Verge Girl in 2008 with one Brisbane store and opened a second store in 2014 before moving fully online in 2019.
Daniella Dionyssiou and Natalia Suesskow launched their business when they were 17 and 19. (Supplied: VRG GRL)
Ms Dionyssiou says customer expectations have shifted since then.
"It's no longer just about the product, but the experience and value a brand brings beyond the transaction," she said.
"The brands seeing the greatest success are those that understand their customers and have a clear sense of what makes them unique."
An abundance of sales data is available to e-commerce businesses, but social media can also help to inform strategy and create a "brand halo", or the in-store experience leading to online purchases.
"You look at a brand like Mecca … they've done an excellent job in really blending both the social media side of their business, their online business and the physical business together," retail analyst James Stewart said.
Customers shop differently
Ms Dionyssiou, whose business has opened stores in Sydney and plans to open more in Queensland, says the process has its challenges.
"Physical retail brings a different set of considerations, from managing stock across locations to understanding what customers are drawn to when they can see and try on our collections in person," she said.
Ms Dres said every store opening had been a learning experience.
"We can't ignore the fact that obviously retail is a very competitive environment, and customers, of course, will vote with their wallets," she said.
James Stewart says the biggest risk businesses face is losing the interest of their customers. (Supplied)
Mr Stewart does not believe insolvencies in the sector necessarily mean retailers opening physical stores are putting themselves at risk.
He said the number one reason retail brands failed was because they lost relevance.
"Retailers have been opening and closing for generations," Mr Stearrt said.
"I don't think that just because you're in a physical environment that's necessarily a sign that you might fail, or alternatively, a bad investment. It could be an excellent investment."
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