Big Overseas Fashion Brands Don't Need Rent Discounts And It Sucks For Australian Retailers

Brooks Brothers Brooks Brothers is the suitmaker to 39 of 44 American presidents. Photo: Getty/Michael Nagle

Brooks Brothers is the latest international fashion house to announce it will set up in Australia. There are many reasons why this is bad news for local retailers, with increased competition the most obvious.

Though, as the comment below from an unnamed Melbourne-based agent speaking to the AFR shows, there are peripheral issues that will also put the squeeze on local brands.

“These international companies are more likely to pay market rent for the right site [because] they work on a bigger picture where $30,000 doesn’t make that much of a difference to their bottom line; they just want to plant the flag.”

Retail — along with several industries — is being disrupted by technological innovation. In short, there are increasingly less reasons to walk into a store and speak with a sales assistant.

Though this means shop space is less valuable, as more stores throw in the towel. But as the agent points out, the overseas powerhouses are able to spend big for commercial properties, interested more in exposure than cheap rent.

According to the AFR article there are more big deals like the Brooks Brothers one in the works, and investments in major commercial space are nearing a three-year peak.

As Knight Frank retail leasing director Gary Loo said in the article: “Rents are likely to rise and incentives will fall during the year.”

There’s more here.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at