Canadian lingerie retailer La Senza has opened its first flagship store in Sydney’s Pitt Street Mall, joining a number of other international brands that have made their way to what is becoming the country’s biggest hotspot for brand-name shopping.
The La Senza brand is being rolled out under the direction of Speciality Fashion Group, which also operates the Crossroads, Millers and Katie’s brands. It intends to open 100 La Senza stores across the country within three years, with 15 already operating on the east coast.
However, despite the aggressive plan, Speciality Fashion Group chief Gary Perlstein says he is still concerned about rents. Experts have continually said Sydney’s rents are some of the highest in the country, even the world, and many retailers are complaining that landlords have unrealistic expectations.
“La Senza aside, I’m concerned about rents,” he said.
“However, I believe that pressure on rents is going to come off because of the current consumer client. We believe sense will prevail among landlords, and we will only open stores if the deals are right.”
Retail property expert Simon Fonteyn, managing director of Leasing Information Services, says La Senza has a key advantage – its small-box format will allow it to grab cheaper deals than other stores.
“There aren’t very many small roll-outs that are happening right now. For the La Senza brand, it’s a lot easier to get smaller shops than it is larger.”
“It’s not a bad time to do it, actually, because there’s quite a bit of space around now and it’s a bit cheaper than it was two years ago.”
New figures show retail vacancies have continued to rise across the country, especially in the Australian Capital Territory. Insolvency experts are predicting more collapses in the retail industry, which will free up space.
Fonteyn also says rents will come under pressure over the foreseeable future, creating favourable conditions for retailers looking for aggressive expansion.
“Rents are under a lot of pressure. If you wait over the next six months I believe there will be a number of chains declaring they will close shops because they don’t need them.”
“Rents are still too expensive, but there is downward pressure that will continue. That’s healthy and a good sign for the whole industry, because it really needs to realign with what is affordable and sustainable.”
Perlstein says the brand is expecting to leverage some of its international recognition, along with the fact he believes the intimate apparels market is “very under catered”.
“La Senza is in 48 countries around the world, so whoever has travelled to London knows all about it. There is an online presence as well, although certainly I think there is a job to do to get it more fully known in those 100 locations across the country.”
The La Senza business is owned by Limited Brands in the United States, which also operates the Victoria’s Secret, Pink and Bath & Body Works businesses as well. It owns more than 2,600 stores in the United States.
La Senza is available in 48 countries, with more than 750 stores worldwide. It was sold to the US-based Limited Brands for $US710 million back in 2006.
Such an aggressive expansion in Australia is necessary, Perlstein says, in order for the brand to leverage its popularity.
“I think if you open your stores over a 10-year period, you water down the effect of what it can bring and consumers are out there wanting it. We’re essentially satisfying a need.”
“For us, we don’t think that’s a lot of stores to roll out given the size of your business. From a logistical point of view, certainly it’s very manageable. You need to get that full leverage there.”
The move to Australia for the La Senza brand comes as several other international fashion retailers, including Gap and Zara, have opened up local stores. Fonteyn says the continued arrival of these stories may see Sydney become an internationally recognised fashion capital.
But despite the arrival of such well-known brands, Perlstein says the Victoria’s Secret label, which is also owned by Limited Brands, may not be out for awhile yet.
“They are launching the first store outside of North America in London.”
“We don’t have an agreement with Limited Group, but we certainly believe that we will have every opportunity to bring Victoria’s Secret to Australia… La Senza is certainly the conduit to that.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
