The Online Issue – Premiere Blog

The Online issue …

June 30, 2011
With Internet retailing still on the hot agenda, there is one distributor who has been very supportive of Australian retailers and doesn’t mind lobbying on behalf of them either. I (Phoebe Garland) spoke with David Mendels, C.E.O of International Fashion Group and his National Sales Manager Joseph Borchan about their thoughts on the increase of online retailing, what it means for Australian retailers and also what it means for their business as a distributor?

While consumers obviously want the best prices possible the current government legislation is having a devastating effect on our existing Australian retailers.
While speaking to Joseph Borchan, he provides some insightful reasons why Australian bricks and mortar retailers need high margins. As someone who speaks to them on a daily basis I was keen on his thoughts. Joseph gave me a thorough insight of what retailing is like today in Australia for his retailers.
On the question of retailers unable to compete with online discount retailers at times, Joseph laments the unlevel playing field for his retailers with the loophole in the Australian tax system.
According to Joseph Borchan, “Overseas retailers enjoy no barriers to entry into the Australian Fashion market. With the Australian government lifting the tax or duty on imports under $900 we find that many consumers can save up to 30% duty and GST, making it highly uncompetitive for Australian retailers to compete against the overseas retailers”.
Borchan also went on to state, “The other major issue for Australian fashion importers and retailers of branded product who pay the duty and GST is the massive overheads they have to deal with a bricks and mortar business. Many of my retailers are struggling as a lot of customers come into store to try on garments, write the style number and shop it online.
While some price match for most it’s not possible due to the margins they need to pay staff wages, rents and other overheads”.
Discussing the topic of maintaining sales figures for his retailers as Borchan said he had noticed a shrinking of accounts from a sales perspective as retailers move towards brands that either Australian and not available for sale by online retailers. “We are trying to secure with our suppliers – exclusive Australia only styles for Australian retailers that are not sold into major online shops” .
While David Mendels, C.E.O of International Fashion Group, who has a significant understanding of these issues gave me further insight about the impact on distribution and how competitive the market had become.
David, for Australian retailers to become competitive with online retailing will they have to rethink their margins? Especially on the branded labels which seem to sell well online in order to stay competitive?
David Mendels: I don’t believe that any retailer should have to drop their margins in order to compete with online retailers. Our government needs to rethink their tax strategy for online retailers. Of course online retailers are a competitor, but so are the big department stores, specialty boutiques and all other retail stores. This issue just makes us aware that our industry is extremely competitive and in order to remain competitive we have to be at the top of our game.
What strategies should Australian retailers do to promote innovative retailing to compete with the internet?

David Mendels:
 I am not a retailer and therefore don’t profess to know all the answers as to how retailers can implement strategies that will keep them profitable in this current market, however as a wholesaler of fashion labels we are constantly looking at ways that we can improve as a company and provide a better service to our customers. From our experience the best strategies a company can undertake in order to not only retain their current customers but also introduce their product/service to potential new customers are;
• Provide the best possible customer service at all times.
• Personalise your service and build good relationships with customers by dealing with their enquiries professionally and efficiently every time.
• Tailor your product to meet the needs of the Australian market, for example sell for the current season and not for the Northern Hemisphere seasons.
• Research and supply product that is EXCLUSIVE for the Australian market, so product that is not sold online and that you can only buy in Australia retail stores.
Do you find your suppliers support the Australian retailers or compete with them?
David Mendels: Our suppliers definitely support us, however there are always circumstances that are beyond their control. For example they cannot stop online sites from selling their product to Australian customers, but they make sure that they themselves do not sell online direct to our customers and if there is a situation where they do they will charge additional fees and freight charges. They offer us product that is specific to our market, ensuring that our retailers can sell exclusively. We are constantly being made aware of the products/styles that every online site is purchasing and therefore our sales team try and sell alternative options to those purchased by the online retailers.
Do you think a try on fee will be part and parcel of normal retailing? And how can this be administered? Is it viable?
David Mendels: I would think this very hard to administer and would change the retail industry dramatically.
How has your business been affected as a distributor with online retail?
David Mendels: Previously we were the exclusive distributors of our brands and now we compete with the online retailers, which was inevitable. Much like the publishing industry where their books and magazines now readily accessible to more customers, we will see changes within our industry. Those offering the most efficient and professional service with the best selection of products will survive and prosper. Obviously with any new competitors in an industry, sales and profitability will be hurt, however we are surviving, evolving as a company and constantly sourcing new great product to offer our customers.
Thank you David and Joseph.
International Fashion Group is one company that is certainly practicing the term “innovation” and continues to work hard in supporting Australian retailers through these trying times via lobbying the government to change the tax loophole and in continuing to provide product that is exclusive to Australian retailers.
International Fashion Group distributes True ReligionPaige Premium DenimDoma LeatherDa-NangFine CollectionNot Your Daughter’s Jeans, and B.D Baggies.
Tel: (02) 8987 3400 or visit here.

Garland & Garland Fashion Pty Ltd Fashion Agents Sydney Australia http://www.garlands.com.au/

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