After a "shit year" for Australian brands, local retail is about to get "severely fucked" by foreign competition, according to marketing guru, Mark Ritson.
Speaking at the fashion marketing seminar, 'Riston on retail' at Mercedes Benz Fashion Week Australia last night, Melbourne Business School's associate professor of marketing and consultant to luxury house Louis Vuitton Moet Hennessy described Australian retail as a "small town disco" on the brink of invasion by hotter, bigger, more innovative players.
The candid Ritson was quick to slam Australian retailers' excuses for the recent years' slumps, calling the often-cited recession as, "as we say in business school, total bullshit". Retail spend has, he stressed, increased consistently since 2010, it's just not being spent on local brands.
"We have weak brands, even weaker brand management and we don’t know how to compete," said Ritson. "The consumer is still spending the same amount of money, just not on Australian brands anymore, not in retail. We are on the brink of what will be an incredibly painful time for Australian retail."
Running through the year's low lights, he pointed to Pacific Brands' tanking share price and severe losses, the dive in Billabong's share price, the lack of buyers for FMCG brand Goodman Fielder, and the foreign buyout of iconic Australian brand Fosters by SAB Miller.
At the root of all our distress, Ritson said, is the Australian oligopoly which has generated laziness and low product and service innovation for decades. "Big retailers don't bother because they don't need to bother. They're going to get the market anyway," he said. "We've lived in an oligopoly where we've been allowed to get away with it."
But with the strong Australian dollar and our economic health in relation to a flailing European and a weak US economy, Australia is now an incredibly attractive market for the big dogs. "Foreign brands have started to come and cut through this country like a hot knife through butter. It's easy to make money in Australia."
Do you agree with Mark? Leave your comments in the box at the end of this article.
According to Ritson, Australian brands' "arrogant dismissal of competitiors" and the "arrogant disrespect for consumers" by Australian CEOs is not going to fly in a world where brands like Costco and Zara are infiltrating the market with nimble, 19 day sales cycles and high value propositions.
If Australian retail wants to survive, he proposed, it needs to stop being "vanilla" and truly differentiate itself. "The choice for Australian retail is either keep doing vanilla and getting the fonts consistent or start breaking some rules and being true to your position before it's too late."
Brands like Country Road, Witchery, Sports Craft and David Lawrence are, according to Ritson "all the fucking same". It's the exclusivity and specificity of a brand like US giant Abercrombie&Fitch which makes it successful; a prime example of how to triumph by going after a clear cut target audience.
Furthermore, Australia needs to learn to leverage its national brand equity to succeed overseas. "We are the strongest, most aspirational brand in the world. There is data from ten years showing that.
"We have the strongest country on the planet but we can't market it to save our lives," he said. "Like the old men in the discotheque, we don’t know where the other nightclubs are."
Going forward, its imperative local brands don’t succumb to cheapening their brands with discount promotions, but focus on creating value-based promotions and propositions that don't involve product price cuts. According to Ritson, we also need to put consumers ahead of stakeholders, reversing the current "cart before the horse" mentality.
"Australian retail will have to change and change fast. It must learn that what worked for it in the past, will not work for it in the future," he said.
The Ritson on Retail event was hosted by out-of-home media operator, EYE.
Do you think Australian retail will be suffocated by foreign brands if it doesn't pick up its game? Why/why not? Leave your comments in the box below.
To read more on the Australian oligopoly by Mark Ritson exclusive to B&T, click here.