The next wave of international retailers into Australia is about to hit with the Swedish H&M set to open its doors in Melbourne within the next few months and Sydney within 18 months.
To show its support for the market, H&M has leased a site in The Strand at 250 Elizabeth Street for its COS brand.
The brand is known as Collection of Style and is aimed at an older clientele to the traditional H&M buyer. It was launched in 2007 and has emerged as H&M’s most popular in-house brand.
Marie Honda, overall manager responsible for COS, told Inside Retail, the company was looking forward to opening COS in Australia.
The COS site was chosen to complement the first Australian H&M store which will open at the adjoining Melbourne GPO in Bourke Street. The company has also ear-marked 345 George Street, Sydney for an H&M store. All three properties are owned by the ISPT superannuation fund.
Last month the chief executive of H&M, Karl-Johan Persson said at the group’s sales update that ”our strong expansion will continue in 2014, we plan to open around 375 new stores net and Australia and the Philippines will become new H&M countries”.
The new stores come as Stephen McNabb, the head of research, Australia for CBRE, says while the international brands have led to a rejuvenation of CBD retailing, the draw to the overseas brands could stem growth in rents as landlords offer substantial incentives to secure the associated foot traffic.
Slower rental growth may not just be a factor for CBD retailing with some regional and sub-regional shopping centres also in the firing line, a recent Savills Australia retail report said. ‘
‘Changes in consumer spending patterns since 2007 appear to have had an adverse effect on department store, apparel and discretionary retailing turnover generally,” the Insight: Key Australian Retail Transactions report said.
Lower turnover combined with increasing rents has led to specialty occupancy costs rising to an average of 18 per cent in regional shopping centres. ”This is a level that could generally be described as unsustainable,” the report noted.
A likely consequence of the high costs would be a fall to more sustainable levels, or landlords would provide more incentives to offset the higher costs, or turnover would increase as consumers return, the report said. ”The returns from this sector of retail appear to be constrained for the foreseeable future,” the report said.
But some cyclical issues were starting to move in the sector’s favour. ”Consumer confidence is improving and the cyclical falls in interest rates are certainly helping,” Savills said.