Competition keeps coming for Myer and David Jones

First it was online now the high street, as traditional Aussie fashion retailers like Myer (ASX: MYR) and David Jones (ASX: DJS) face up to an onslaught of competition from low-cost European fashion labels. The latest to arrive in Australia will be Swedish fast-fashion brand H&M when it opens its flagship 5000 square-metre store in Melbourne’s GPO building in early 2014.

H&M’s launch follows on from those of low-cost fashion phenomenons Zara and Topshop, both of whom have opened mega-stores in Sydney and Melbourne.  It’s not just the European labels looking to head down under, with U.S label Gap and Japanese fashion-giant Uniqlo also having entered or reportedly planning to enter the Australian high street.

The cutthroat price competition may please fashionistas but its tough for traditional retailers like Myer and David Jones who have seen share price slides in the last few years.

Foolish takeaway

As a symptom of globalisation Australian retailers can expect the foreign competition to keep getting stronger. The iconic status and brand awareness of retailers like David Jones will likely one day be a part of history, as generational changes take hold of Australian consumer culture. The online shopping phenomenon is another that poses problems, as overseas retailers digitally compete for consumer cash. The overall outlook remains tough and innovation will be needed.

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Motley Fool contributor Tom Richardson does not own shares in any of the companies mentioned in this article.   

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