Australian retailers face worrying future as global competition increases

Local retailers are beginning to be edged out of the Australian market by their global competitors, according to a report from economics firm Deloitte released on Tuesday.

The Global Powers of Retailing report of Deloitte shows a 3 percent increase in international retailers in Australia over 2014, accounting for 15 percent of the local market.

A total of 37 of the world's 250 largest retailers are now trading in Australia, a sizable increase from a year earlier.

It follows a host of global retailers, including Swedish fashion company H&M, Japanese clothing brand Uniqlo, American chain Forever 21 and French cosmetics brand Sephora, opening on Australian shores throughout the past year.

The report suggests more international competition could soon follow, with a strong Chinese presence expected in the near future.

"It's important to note that there are only eight Chinese companies in the top 250, none of which are currently operating in Australia," the report says.

"With the growth in the middle classes in China and a rapidly growing domestic retail market, it's only a matter of time before we see more Chinese retailers appear in the top 250 and, of course, their entrance into the Australian market."

Deloitte's report presents a worrying future for local Australian retailers, with Woolworths and Wesfarmers the only Australian-based companies listed among the top 250 global retailers.

Meanwhile, the loss of former Australian companies David Jones and Country Road, both to a South African takeover, has increased the concern regarding Australian-based retailers.

"What should be of concern to Australian retailers is that 85 percent of the top 250 retailers currently aren't operating in Australia, meaning that competition is only likely to increase," the report says.

A handful of the remaining 213 top international retailers could be on Australian shores by the end of 2015, with British department store Marks and Spencer, as well as U.S. furniture company Ashley Furniture, expected to arrive this year.

"With major global players continuing to enter the market and existing global retailers expanding their store footprint, Australian retailers across all segments will continue to face significant challenges and increased competition," the report predicts.

"The ability to innovate, drive improved processes and to connect with the consumer will be critical in order to remain competitive in both the existing and future Australian retail market." Endi