Co-owner of Australian e-business Shoes of Prey, Jodie Fox, says although she does not have any partnerships in this area, the brand, which allows customers to design their own bespoke shoes, does have a ‘reasonable number’ of customers in this part of the world.
“We would like to be a bigger part of this market, however one of the tricky barriers is around the very high taxes for imported goods, that can sit around the 50 per cent mark,” Fox says.
High-end Sydney label Becker Minty, which sells luxury clothing, vintage jewellery, antiques, and other lifestyle goods, has just had to cease its dealings with Argentinian fashion brand Etiqueta Negra as business became too ‘problematic’.
After years of stocking the apparel label in-store and online, brand spokesman Cat Burke reveals the process just became too time consuming.
She says the Argentine import/export duties and procedures complicated things and created ‘massive delays’ in receiving shipments.
Burke says the high quality men’s and women’s garments were designed in Argentina, manufactured in Asia, then sent back to Argentina before being shipped over to Australia.
When the goods finally arrived at Becker Minty staff would have to unpick import labels which had been sewn into the garments.
“This was time consuming and sometimes we would just have boxes sitting there waiting for the labels to be taken out,” Burke explains. “We don’t know why the process was this way but it was very long and convoluted.”
One country that is keen to work further with Australia and improve trade relations is Peru.
In 2011 Peru exported more than $1.3 million worth of knitted garments and accessories to Australia, from a total of 54 Peruvian companies.
Head of the clothing industry sector at Promperu, the commission for the promotion of Peru export and tourism, Igor Rojas, says Australia is a ‘very important market with a lot of potential’ for Peru’s apparel industry.
“There is an interest in starting the negotiation process with the Australian Government to have tax preferences through the signing of a Free Trade Agreement,” Rojas explains.
“However, in parallel there is the need to schedule activities that allow us to identify commercial opportunities and to adapt our products to the Australian consumer.”
More than 11,000 visitors flocked to Peru’s fashion industry trade show, Peru Moda, in April.
The exhibition showcased the best of the Peruvian export supply in apparel, footwear, accessories and jewellery and attendees from across the globe included buyers from Carolina Herrera, Marc Jacobs, Guess and Polo Ralph Lauren.
More than $110 million worth of deals were negotiated at the event, but many exhibitors felt that the lack of visitors from Australia this year, and over the years, meant that Australia was ‘missing out’.
General manager of Lima-based company, Best Cotton Peru, Patricia Tessey, feels Australia is content to stick with the regions it knows and is too afraid to take a chance and explore South America further.
“We ship to China, we produce for Calvin Klein and we have the best quality Peruvian cotton - so why aren’t buyers from Australia more interested in what we have to offer? They are missing out,” Tessey says.
“Countries like Australia find that they are losing out to international apparel trade online and this may well be because they are not providing their customers with enough choice - so the consumers are looking elsewhere?”
Director of sales and marketing at Australian fashion distributors MMMC, Joseph Borchan, believes the future of fashion lies in South America and it should be explored in more depth.
“Our climates and seasons are the same and it makes perfect sense for our fashion industries to trade,” Borchan says. “I believe their brands would do well in Australia as the sensibility of their culture and their cities is Parisian with a Latin flair.
“I find their use of print, colour and fabric provides an exciting and eclectic feel to their sense of style and I do believe we will see more brands coming across – it has already started to happen with many high end stores looking to South America.”
Although names of some South American brands may not spring to mind, and its countries have a tough job competing against the likes of China for Australia’s business, countries like Peru and Brazil have a growing repertoire of fabrics and fibres and a host of big brand names such as Tommy Hilfiger and DKNY, are taking advantage of this.
What about bricks?
Retail Doctor Group managing director Brian Walker says it is the ideal time to introduce some of Australia’s unique brands into the emerging and potentially lucrative South American apparel market.
The continent,which contains 12 countries, may not be as well-known for its apparel offering as the USA, UK and parts of Europe, but according to Walker, its widening middle class consumer base and growing economy make for a prime opportunity.
“South America is a huge market opportunity for Australian retailers as it has a growing middle class – which is a powerful market,” Walker says. There are 1,338 shopping centres in Australia which serve a population of about 22 million, but in South America, which has an estimated population of 385 million, there are only a few hundred shopping centres.
“Rather than keep banging your head against the wall, retailers need to explore this option as there is a lot of activity in this region,” Walker says. Walker believes São Paulo in Brazil is a prime example of a growing ‘world class’ retail hub with a bounty of middle class shoppers and ‘sophisticated’ malls. He says that uniqueness, a point of difference and the Australian flavour that labels such as Cue and Peter Alexander have would ensure brand success in this overseas market.
“Cotton On has moved into the American market and I’m sure it’s inevitable they will soon move into the South American market too.”
IBISWorld senior analyst Naren Sivasailam says these emerging economies represent new opportunities.
“The industry revenue is forecast to grow strongly over the few years through 2016, as demand from growing middle classes in emerging economies becomes even stronger,” he said. “In contrast, demand from developed economies is expected to remain relatively steady. Industry growth will be accompanied by increased international trade, higher participation levels and wage growth.”
Walker says those with home-grown reliable and replicable retail models who want to make the move overseas need to establish a South American web page to first ‘test the water’. He says it is vital to understand how the brand translates in South America and suggests having someone on the ground who knows the market, or linking up with a South American partner as a good way to introduce the brand into the local area.
