Why so many global brands fail in Australia

new merchandise brands haven’t kept Australia from becoming a dead end for some major international retailers. In some cases, the failed Australian ventures were part of a flawed strategy to breathe growth into struggling home market operations. In other instances, the ventures’ failures had more to do with retail store concepts that simply didn’t work in Australia, poor market research and an attitude that Aussie consumers will buy ‘what we want to sell’ rather than asking what they would want to buy.  Like many local retailers, the foreign entrants have not understood the multicultural market dynamic and lifestyle differences from their home markets, let alone the structure of the retail industry. The structural aspect of the Australia retail sector has been substantially shaped by town planning schemes, a handful of dominant local retailers and relatively concentrated ownership of shopping centres and major retail properties. The international entrants have also often underestimated the operational costs and logistical challenges across a country of vast empty spaces and not managed the reverse seasons from the northern hemisphere markets. Aldi, Apple, Ikea among the survivors There have obviously been success stories among the foreign retailers entering Australia, including Kmart, Aldi, Costco, Apple, Ikea, H&M, Uniqlo, Zara, Decathlon, JD Sports and TK Maxx, along with fast food giants, luxury retail brands and specialty chains. The list of casualties is remarkable, however, and is not simply a product of the Covid-19 pandemic, the growth of online retailing or volatile economic conditions. The roll call of failed international retail brands includes the Masters Home Improvement stores, Debenhams, Daimaru, Gap, Toys ‘R’ Us, Mothercare, Topshop, Benetton, Borders Books & Music, HMV music stores and Virgin Music. Food retail brands that have been unsuccessful include Quiznos, Denny’s and Sizzler; meanwhile, Starbucks, Krispy Kreme and Taco Bell have survived, but have failed to duplicate their success in other markets. The German hypermart chain Kaufland, and potentially the Lidl supermarket chain, were sizing up the Australian market in 2017 but decided not to proceed. British department store chains Marks & Spencer and John Lewis have both similarly opted not to launch Australian operations after testing the waters with local partners. Local partners have not provided any certainty of success for foreign retail entrants, with Debenhams and John Lewis failing to gain any traction in licence deals with Harris Scarfe and Myer, respectively. The Masters Home Improvement chain was a joint venture between Australia’s largest retailer, Woolworths, and the American hardware powerhouse Lowe’s. Wesfarmers’ Bunnings Warehouse chain swamped the 63 Masters Home Improvement chain, just as it had earlier overwhelmed local rival BBC’s Hardware House. The Woolworths-Lowe’s venture closed in 2016 after five years. The popular American brand Gap also lasted five years, with its six Australian outlets closing in 2018 and the possible launch of stablemate brands, Banana Republic and Old Navy shelved. Gap was introduced to Australia in a franchising deal with Oroton, which also brought the American menswear brand Brooks Brothers into the country, in a joint venture launched in 2014 that lasted two years. Brooks Brothers took over the venture Brooks Brothers International but, with mounting financial losses, exited Australia during the pandemic, re-emerging with an online presence and David Jones outlets this month. Toys ‘R’ Us has also been revived under Australian ownership, with an online platform and  bricks-and-mortar stores, after it struck trouble amid financial turmoil in the American chain that owned the brand. Topshop failed despite a deal with Myer, while the iconic British chain Mothercare failed at two attempts to secure a foothold in Australia, even with the support of the Gandel Group on one of the market entries. Interest in the Australian market was quite strong before the pandemic, underpinned by the availability of space and lease deals in major centres after local retailers reduced floorspace or exited underperforming locations. However, the cautionary tales of some of the unsuccessful and often costly failed ventures, local partner mismatches and global market conditions have dulled enthusiasm in the short term. Australia is a tantalising prospect for international retailers but cookie-cutter operations are a risky prospect in a highly competitive market.