|Sambag Lexi Grey Dress, $80|
Sam Wagner, who started selling a small range of bags at Sydney's Paddington Markets in 1996, has evolved her brand into shoes, cashmere knitwear, accessories, kids and simple dresses, but also, importantly, a boutique online business, which Wagner says now accounts for 20 per cent of sales.
"It was in May last year that we introduced our new site and put a lot of money into developing it," she says. "Now we have two people working on it full-time and are looking at other ways to develop online, including Facebook, which is a good selling tool, as well as advertising on a New York blog, Trendland, which has so far been successful in terms of driving traffic from overseas."
The Sambag website is simple and updated regularly – it has a range of 'What's New' items, a blog, boutique store listing, seasonal portfolio and a shop. Emails are sent into inboxes of media and customers altering them to new items. Though Wagner says her seven retail stores have experienced a drop-off over the past 12 months, the Sambag story is quietly defiant of the current retail environment, refusing to discount more than every six months in order to maintain brand integrity.
Yesterday, the Productivity Commission released its Draft Report, "Economic Structure and Performance – the Australian Retail Industry", which noted that current industry conditions – intensified by online retailing and the influx of global retailers into the local market – are challenging for business owners, but good for consumers.
It's no secret: Australia has dragged its feet in the development of online retailing, watching on as savvy global retailers have infringed on their customer turf, all the while the Aussie dollar continued to rise.
"The Commission's best estimate is that online retailing represents 6% of total Australian retail sales – made up of 4 per cent domestic online ($8.4 billion) and 2 per cent from overseas ($4.2 billion)," notes the report. "In some other countries, online sales figures are higher and seem set to grow further, as will also happen here."
Given that the retail industry, comprising almost 140,000 retail businesses, currently accounts for 4.2% of Australia's GDP and 10.7% of employment, it is quite obviously vital that the industry remains resilient, though employment falls and GDP reductions might be offset by increases in other industries for workers.
But the report also notes that competition within the global online marketplace, in which overseas retailers are not required to charge GST on goods, is not solely to blame: consumers are trending out of the big-buying, discretionary spending habits of the 1980s, and are turning to non-retail services instead, including financial, property, travel and entertainment.
It would seem they key to survival, as with any business, would be to give consumers a good enough reason to shop while adapting to the environment in which they are prepared to part with their cash: online when the price and product offering is right, and in attractive store environments. This is something Wagner's Sambag has endeavoured to focus on with window displays and merchandise.
"I think we've got a good brand and deliver a good product," says Wagner. "We discount every six months, but not within the season. This year has been different than last year. You can't predict the customer. The customer has become the boss. They have so many different offers these days that they can pick and choose. You have to be different and focus on brand, quality and service."
While shopping in-store might become as retro as owning a record player, consumers risk losing out in experiential terms if retailers can't survive. There must surely be a greater impetus than serving as an optional extra for consumers who might want to shop in-store, but ordinarily shop online, with rising costs in rent, staffing, and other trading conditions not in their control, such as ultra-competitive pricing from oversees, to accommodate.
"What I keep thinking, as a retailer and designer, is that if there really is this cultural shift against buying things, or at least buying them full price, it will actually be the regular person in the (empty) street who suffers in the end, because beautiful boutiques will disappear [and] local designers will disappear," says Sydney designer Clare Press, who maintains a boutique store and e-boutique at Mrs.Press.com.
While the strong Aussie dollar isn't good for local operators looking to attract customers from overseas, and cost margins will continue to put pressure on retailers, there is potential to develop customer bases globally who might be attracted to a brand's specific identity through alignment with the right media outlets and the best social media practises.
Wagner name-checks J.Crew and Calipso when asked about comparable overseas brands with the right brand strategies, though she is realistic when it comes to the challenges presented by the next 12 months. "It's going to be tough. A lot of people are going to close in the next year," she says. "You have to keep things tight, focus on your product and not overspend."
Review backs GST for online goods @ ABC
A report that won't be PC with retailers @ SMH
Reith slams Liberal Party's silence on IR reform in retail sector @ The Australian
Satchelnomics: More retail store woes
Satchelnomics: Shopping in a new retail world
Girl With a Satchel