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H&M and Other Fast-Fashion Chains Are Hurting Australian Retail

Cheaper prices are allowing international fast fashion chains like H&M to thrive in Australia, while its local businesses fall by the wayside.
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H&M announced recently it plans to open, on average, more than one new store every day this year -- and it isn't wasting any time getting started not only on new stores, but also entering new markets.

On Saturday, the Swedish retailer will open its first Australian store in Melbourne, a country that has surprisingly few international fast-fashion stores within its borders. The Melbourne store kicked things off in typical H&M fashion with an exclusive party Thursday including a performance by Haim and the unveiling of a new Australian line exclusive to the market.

Just as H&M followed Zara into India, the retailer is trailing Zara into Australia, which has been in the market since 2011. Topshop arrived the same year and now operates three stores in the region. Uniqlo, too, went down under recently, opening a pop-up shop in January, with plans to open a proper store soon. H&M said it plans to bring Cos to Australia at some point this year as well.

Australia is a natural target for international retailers given its healthy domestic economy and proximity to Asian tourists. However, they pose a serious threat to Australia's already embattled local retail landscape.

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Simply put, most Australian retailers can not compete with fast-fashion retailers on price or value. Real estate and manufacturing are expensive in Australia, and so fast-fashion stores like Topshop and ASOS have thrived, especially online, says Samantha Aldenton, assistant editor of womenswear at WGSN.

"Over the last few years Australian brands like Kirrily Johnston, Colette Dinnigan, Lisa Ho, Marnie Skillings, George Gross and Harry Who have each had to shutter the brands that the public and the industry have known as institutions of Australian design," she says. Once-buzzy Ksubi went into liquidation recently as well. Even Myer and David Jones, "the country's largest retail chains" are feeling the competition and have been in talks for several months over a potential merger.

"Not only is the consumer's dollar moving increasingly online but also into the pockets of multinational fast-fashion chains like Zara and Topshop," Aldenton says. "[They offer] cheaper runway carbon copies too irresistible for fashion-conscious Australians to resist."

H&M will only add to the rapidly growing competition local retailers are now facing.