Zara could establish up to 40 stores in Australia during the next few years, a retail consultant says, as the Spanish fashion retailer prepares to open in Brisbane.
Brian Walker of The Retail Doctor Group estimates Zara’s stores in Sydney and Melbourne are likely to turn over about $45 million in their first year of operation, with the Sydney opening said to have been the second most successful in its parent company’s history.
Walker says Zara is a “huge success story in what is reported to be a cautious market” and that its growth is sustainable. There are 1700 Zara stores worldwide.
“Zara wouldn’t contemplate setting up without settling in the major cities as a bare minimum,” Walker says.
“It wouldn’t surprise me if they had between 20 and 40 stores (in Australia) within the next five years.”
David Gordon, partner in charge of the national advisory practice at WHK Group, agrees.
Gordon says Zara might end up with 45 stores, about the same number of stores as Country Road has in Australia.
Walker says even with Australia’s relatively small population Zara could find at least 100 good sites in shopping centres across the country and might set up some of its other brands here.
According to The Australian Financial Review Zara is looking for at least 800 squares metres in the Queensland capital, with the main target the Queen Street Mall precinct, home to high end retailers including Tiffany & Co and Swarovski.
Another site reportedly of interest is a nearby store that once housed a Borders book chain outlet.
At 800 square metres the Brisbane store would be much smaller than the 1400 square metre Sydney CBD Westfield store but Walker says going on conservative turnover estimates of $35 million for Sydney the Brisbane store could turn over between $20-$24 million.
Walker says he is not surprised by reports that Zara is demanding turnover-based rent, saying as an anchor tenant it has arrived with plenty of bargaining power, similar to department stores.
The arrival is somewhat of a mixed bag for competing retailers, Walker says, with a store such as Zara generating much-needed traffic and providing a destination for shoppers who might otherwise shop online.
“With Westfield Sydney the whole ambition is bringing people into the centre,” Walker says.
“But if you’re trying to sell fast disposable fashion next door, with less contemporary offerings and at less attractive prices, it’s a wake-up call,” Walker says.
Gordon agrees that Zara will be good news for cheap and cheerful retailers such as Bardot and Forever New, but is likely to nab market share from department stores and Country Road.
Neighbouring retailers offering complementary food and goods are expected to benefit from Zara’s presence.
Smart Company is a sister publication to The Mandarin, catering to Australia’s entrepreneurs, small and medium business owners and business managers.
