By Francis Farmakidis Partner, Vobis Equity Attorneys

Despite being a relatively small market, Australia has continued to attract the attention of major global retailers over the last few years. Big brands such as Zara, Sephora, H&M, TopShop, Scotch & Soda and COS are just some of the many iconic international names to have established presences in Australia in recent years.

But how much value do these global retail giants really add to the Australian retail space? And is it worth the unseen price the sector pays as a result of unscrupulous tactics often used by some of these big brands?

Often big brands play dirty. Usually they engage local partners in distributors and retail chains to leverage goodwill and established market presence. However, once market penetration has been reached the big brands often turn off the tap with little notice, leaving retailers and chain stores without big brand offerings.

Having given up their own manufacturers in favour of a greater co-branding opportunity, those retailers can be left with little inventory, lost market share and dissatisfied customers.

Why do we give big brands access to distribution via our retail chains so unconditionally? Retailers with key locations need to be more discerning by not risking their entire business model on a new alliance.

The luxury goods market is another case in point. Luxury global brands are establishing direct retail outlets in high and main street locations throughout Australia’s capital cities.

Omega has now established a combined total of six Omega watch boutiques in Sydney and Melbourne. Ten years ago their products were distributed solely through luxury retailers, high-end jewellery boutiques and duty-free stores. Independent retailers now hold barely any product, with Omega having made the switch-out into their own stores with very little lead times.

Quite simply many of the big global retail brands are out for what they can get from Australia. They use our people and distribution channels and then discard the retailer to open up their own independently branded stores.

Our retail sector is already a highly competitive and cramped marketplace and rather than add value, the dynamics of big global brands can leave retailers stranded and with no certainty.

Australia’s retail bodies need to find ways to align the interests of retailers and their landlords so that firm rules can be imposed on international retailers before they enter our local market, so that they don’t leave our local retailers stranded.