IT’S BEEN a treacherous few months for the fashion industry.
First Payless Shoes and Pumpkin Patch went under, and now two of Australia’s best-known clothing brands are facing an uncertain future.
Marcs and David Lawrence have been placed into voluntary administration citing deteriorating sales, poor cashflow and difficult market conditions.
Owned by reclusive entrepreneur Malcolm Webster, the brands have long been a mainstay of high street fashion in Australia and New Zealand.
But the future of the 52 retail stores, 11 discount outlets and 140 concession stores at Myer and David Jones hangs in the balance, along with 1172 jobs, after Mr Webster appointed administrator Rodgers Reidy to examine the company’s books and hunt for a buyer — a daunting prospect given that neither Marcs nor David Lawrence was able to secure buyer when they were put up for sale last year.
So what went wrong, and how did the once-popular brands fall so far?
RISE OF THE BARGAIN HUNTER
According to IbisWorld retail analyst Lauren Magner, the influx of global fast fashion chains had massively disrupted Australia’s clothing industry — forcing the older labels to adapt or die.
But many, like Marcs and David Lawrence, instead fell into a discounting trap that damaged their brands.
“Consumers now have the global chains such as Zara, H&M, Uniqlo, Topshop, who all offer really fashion-forward clothing straight from the catwalks, and it’s all at an affordable price,” Ms Magner told news.com.au.
“It’s something in Australia we didn’t really have access to before. People still want to buy clothing that is on trend and in fashion, but they can now do so at a much lower cost.”
The arrival of fast fashion on our shores coincided with the post-GFC trend for bargain hunting, as shoppers turned their noses up at full-price clothing in a bid to reduce debt and increase savings.
What began as a response to subdued sales turned into a vicious cycle as “consumers have become accustomed to price reductions; now they expect items to always be on sale,” Ms Magner said.
“A lot of clothing retailers have had difficulty adjusting to this massive shift in consumer spending behaviour.”
The rise of online shopping had also put pressure on retailers in recent years, she said, with consumers getting more comfortable with online transactions and being increasingly lured by the lower prices and convenience of sites like ASOS and The Iconic.
DEMISE OF THE MIDDLE MARKET
While everybody loves a bargain, style-conscious shoppers are still willing to fork out for a statement piece by one of the major designers, Ms Magner said.
It’s the guys in the centre who are struggling to keep afloat, as consumers abandon middle-market fashion labels.
“There has been a bit of a polarisation in the industry,” she said. “People are either opting for the affordable, cheap price clothing, or on the opposite end of the scale you have the extreme luxury premium brands like Chanel, Louis Vuitton and Hermes ... What consumers do is purchase the majority of their clothes from the lower end of the market and then pair it with a couple of things from the luxury end of the market. So they get the best of both worlds.”
To survive in the upper end of the middle market, brands must find a way to stand out.
“Where a retailer can differentiate themselves and sort of operate in a niche, that’s where they will find more success and be able to beat these challenging market conditions,” Ms Magner said, pointing to Cue’s competitive advantage in manufacturing its women’s clothing in Australia and using imported Italian materials.
WHO ARE THE WEBSTERS?
Malcolm Webster co-founded the British label Jigsaw in 1972, but came to Australia after it failed to take off in its early years and started his company Webster Holdings in 1992.
The fashion industry veteran, who rarely gives interviews, built a fortune on the clothing industry — but his success has been mixed.
Three years after buying iconic Australian label Morrissey from Oroton in 2006, Webster Holdings closed its stores, blaming the global economic downturn.
Once stocked at premium department store David Jones, the label is now stocked at beleaguered discount chain Big W after its eponymous designer Peter Morrissey bought back the rights in 2011.
The Australian rights for Jigsaw, which Mr Webster held since 1991, were last year handed back to the main British company in the face of a consumer perception that its local iteration was lacking the “great design edge” that set it apart.
Webster Holdings bought David Lawrence from South African company Truworth in 2000 and Marcs from Oroton in 2006, at a time when the brand was already struggling.
He and his wife Eileen sold their Goulburn farm for $6.06 million in 2015, and Webster Holdings’ business premises at Richmond in Melbourne sold for $6.45 million in the same year. The company has an office in Sydney’s Waterloo and a facility in Shanghai, China.
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