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Overseas fashion brands to flood in during 2014

Over this next year, Australian shoppers will be enjoying more international fashion brands setting up shop in Sydney, Melbourne and Brisbane as the first wave of overseas retailers have made a splash here already. Stores like Zara are catching the attention of shoppers, who soon will have Uniqlo, H&M, Dolce and Gabbana, and Marks & Spencer to choose from.

This month, OrotonGroup (ASX: ORL) announced a joint venture with The Gap (NYSE: GPS) to operate and open stores for the US retailer, and it also has the first rights to open Old Navy and Banana Republic franchises if The Gap decides to open stores here in Australia.

There have been news reports that representatives of these two brands are looking for store sites in Sydney, so OrotonGroup may be involved in operating those stores once opened. As reported previously, the company is taking on new international brands to replace revenue lost from the expiration of its sales agreement with Ralph Lauren.

The major retail department stores David Jones (ASX: DJS) and Myer Holdings (ASX: MYR) may benefit from this influx of business if they can make deals with the brands to sell from within their stores. If the foreign brands set up their own store fronts, then that means competition in the higher profit margin goods area.

Real estate investment trusts (REIT) and retail real estate managers like Westfield Retail Trust (ASX: WRT), GPT (ASX: GPT) and Charter Hall Retail REIT (ASX: CQR) could be some of the big winners here as they can fill retail space and earn more rental income from these higher-end retailing businesses.

CFS Retail Property Trust Group (ASX: CFX) along with the Government of Singapore Investment Corporation have a 50% stake in the Melbourne Emporium shopping centre currently under construction. New tenants like Japan’s Uniqlo and Muji will be just some of the new names selling there. In total there will be about 225 store fronts on eight levels, with the Myer department store as an anchor at what was previously its Lonsdale store site.

Foolish takeaway

When you read about changes in the way business is done or new competition entering a market, you want to first consider what companies will be the winners and losers in the situation, and in some cases it may not be the main actors. These larger stores will attract more shoppers who will visit other stores and eat at restaurants in the area, helping their sales, so small retailers and service providers can reap a windfall from the higher foot traffic.

Investors who can think quickly and consider the whole playing field now know where to focus their research to find the best buys.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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