tional heavyweights are able to manage stock at a refined logistical level. To combat such advantages in scale, the likes of Cotton On Group and Specialty Fashion Group are upping their investment in logistics. Cotton On is partnering with the Victorian government to build a $40 million world-class distribution centre at Avalon Airport in Geelong, while Specialty Fashion Group is partnering with Toll Group to build a 32,000sqm distribution centre at Prestons Logistics Estate in southwest Sydney. Both facilities will include automation technologies, e-commerce processing stations, automatic carton optimisation machines and tier one warehouse management systems. Cotton On says its new 35,000sqm centre will process 300,000 products a day, while SFG’s facility will despatch over 90 million units annually. “These big fashion players are not so much a fashion retailer, as a supply chain and logistics operator,” Leighton Hunziker, director of retail services, Savills, told Inside Retail Weekly. Backed by sophisticated technology, the likes of Zara and soon to be Cotton On in the fashion world are able to roll out an increasing number of collections, facilitating overnight changes in consumer demands or desires. So, where does this leave a specialty retailer on the high street who doesn’t have a supply chain on the scale of the fast fashion conglomerates? The answer could lie in brands trusting in and valuing their heritage. “You can’t compete on price, so the thing that they [fashion brands] differentiate themselves on now is going to be fashionabilty, service, brand or style – something where they basically control and own what the customer thinks of and sees,” said Hunziker. Size matters The international fast fashion leaders have not only forced a rethink on supply chain efficiencies, but also on how property landlords view tenancy mixes. Size matters, and just as department stores and supermarkets have bargaining power with shopping centres landlords, so too do brands such as H&M who also occupy large footprints and are now seen as preferred anchor tenants A typical specialty fashion store has rental costs greater than 20 per cent of sales, which means sales don’t have to decline much for profit margins to be decimated. Big box fashion brands are able to achieve rental costs that can fluctuate anywhere between a third to half of what a specialty brand pays. A specialty store might be paying $2000 per square metre, while next door a Zara could be paying $600-1000 for the same floor space. Coupled with the fact that Zara stores update their product range almost continuously and at low cost, retailers wanting to compete on price alone have their work cut out. The cheaper rents can be considered almost as a happy sacrifice. Landlords are happy to have major names as part of their tenancy mix as they serve as a point of difference. The benefits outweigh the costs, so landlords are happy to provide cheaper rental costs, in the knowledge that the effects will be mitigated by having thousands enter a centre. It’s not only in bricks and mortar retail that international fast fashion has had an effect. The constant turnover of new collections, supported by giant and efficient supply chain operations, have necessitated online fashion retailers also take note that fashion retail is no longer about seasons, but more about what’s newest and freshest. “The concept of fast fashion has had an impact on us in the sense that it has created a constant consumer demand for buying clothes and accessories,” Alexandra Mills, CEO, product businesses, Lux Group told Inside Retail Weekly. “10 years ago, updating your wardrobe used to be a seasonal project, whereas nowadays consumers will shop fashion items on a monthly or even weekly basis.” Alexandra Mills, CEO, product businesses, Lux Group Mills also asserted that because its value proposition is centred on luxury brands, online fashion platform, Brands Exclusive, is less affected by fast fashion retailers and the rise of ‘disposable fashion’, as it tends to work exclusively with designer brands and premium quality retailers. For online retailers competing with the onslaught of new products from H&M or Uniqlo, having something different still applies. “We are meeting this demand by having new sales go live every day, so our customers get the excitement of shopping new ranges all the time but with the bonus that the collections have been curated to feature timeless styles,” said Mills. So, do brands necessarily need to be able to differentiate to have success? According to Mills, this is no longer merely an option; it is necessity. “Yes, every brand – no matter whether you are in fashion or not – needs to have a point of difference,” she said. “Fashion retail is a very competitive industry, so you need to know who your target audience is, how to reach them and how to offer them something that no one else can – or offer it better than your competitors.”