Emerging Markets

A closer look at Australian modern luxury brands. Spoiler alert: It’s not (just) about Aesop.

Geographically isolated between the Indian and Pacific Oceans, Australia is a several-hour-flight away from Paris, New York, and London, the world’s traditional shopping capitals. Despite the distance, however, Australia’s luxury market has grown strong, particularly in the modern luxury space: Over the last decade, it’s produced several key modern luxury companies (MLCs) at the forefront of their respective categories.

Though traditional luxury brands in Australia have relied on tourism to bolster growth—IBISWorld estimates about 30% of luxury revenue is from tourist spending—Australian MLCs are increasingly embracing the opposite approach. Instead of banking on the arrival of high-spending shoppers from China, the modern luxury leaders in this space are expanding outwards to reach new consumers in their home market.

Here are a few of the Australian MLCs that are on our radar: Aesop (beauty), P. Johnson Tailors (men’s tailoring), Mon Purse (women’s handbags), Matteau Swim (women’s swimwear), Tailfeather (leather bags), Banjo & Matilda (cashmere), and Aark Collective (affordable watches).

What makes Australia unique?

Economic stability and consumer spending. Despite the boom and bust of Australia’s mining industry, the country has gone 25 years without recession. Although the Australian economy contracted by 0.5% in the third quarter of 2016, it quickly bounced back by the end of the year, in part due to increased household spending. The GDP growth rate is currently 2.4%—higher than expected. About half a percentage point can be attributed to consumer spending.

A strong home market. “Companies starting out in Australia are advantaged by Australian consumers’ keen interest in brands and shopping, high disposable incomes and isolation from other countries, resulting in less fragmentation and competition,” says Emily Cox, a senior research analyst at Euromonitor International.

Language and culture. As a developed nation in the Commonwealth, Australia bears strong cultural similarities with the UK and US. Importantly, the lack of a language barrier allows for a smooth transition for Australian brands eager to tap these markets.

What are the reasons for success?

Domestic first. “Australian companies are able to build the success of their brands locally, before breaking out on a global scale, through successful marketing campaigns and the offering of high-quality and unique products,” says Cox. “For [Matteau’s] first season, we wanted to focus our energy on our home market in Australia and build and grow within our means.” says Peta Heinsen, co-founder of Matteau Swim.

Specialization. In some product categories, e.g. swimwear, the Australian lifestyle is itself a powerful marketing tool. “Australia has one of the strongest beach cultures in the world and spending time by the water is an intrinsic part of the Sydney lifestyle,” says Ilona Hamer, co-founder of Matteau Swim. This offers invaluable insight and an intimate understanding of what consumers want.

Customization. “Over the years, Australians have become more sophisticated with their retail consumption, favouring unique brands and customisation. The demand for unique and niche brands has supported the growth of Australian-owned brands on both a local and international level,” says Cox. For example, tailoring brand P Johnson Tailors partnered with Barneys to bring in-store offerings of made-to-measure and exclusive ready-to-wear garments to New York last fall.

Positive perceptions all around? Today, consumers are often enticed by the strong reputation of the Australian name, which has garnered respect worldwide. “Australian-made and owned products are well regarded both locally and internationally, with consumers willing to pay premiums for Australian brands due to perceived higher quality, authenticity and the country’s clean and green reputation,” says Cox.

E-commerce and wholesale. “We ship globally and have a strong customer base in the US, UK and Scandinavia as well as Europe,” says Heinsen. In addition to direct-to-consumer sales channels, brands like Matteau have also connected with the rest of the globe through e-commerce wholesale. “Matches Fashion was one of our first international stockists and remains one of our strongest international accounts,” says Heinsen. But when dealing with wholesale, it’s important to be discerning, she warns. “Quality over quantity is always the most important factor to consider, and that means we have made conscious decisions to control our distribution both locally and internationally.

The road ahead is abroad.

Last week, Topshop Australia entered voluntary administration after just six years of doing business in the country. Topshop’s woes down under are emblematic of greater retail challenges looming over the country. Today, competition is intensifying, and though perhaps the luxury space is less susceptible when compared to fast fashion, Australian MLCs are in no way immune from the circumstances. As the retail landscape in Australia becomes increasingly cramped, marked by the arrival and expansion of foreign brands in the country, native MLCs must continue to focus on outward expansion, doubling down on the international market to drive growth.

Pioneers include Aesop, which has opened numerous physical outposts abroad, as well as P Johnston Tailors, which has established multiple showrooms in key cities like London and New York. Looking toward Asia, brands like Matteau are aligning themselves with prestigious wholesale retailers like Lane Crawford, which has been stocking Matteau since 2016. “Several key Asian markets are now starting to gain traction with growing online sales as well as some really exciting wholesale enquiries coming through from Asia,” says Heinsen.

Identifying key challenges in expansion.

“Some of the challenges to Australian companies face when expanding abroad include recognising how to successfully tailor their brand to an international audience, understand international customs and regulations as well as managing stock from a country of relative geographic isolation,” says Cox.

Competition in a global marketplace. Despite its overwhelmingly positive reception abroad, sometimes, the Australian name alone is still not enough. For instance, “As an Australian watch brand, something [Aark] was conscious about was how to change the perceived value of a watch when most people discern Swiss brands as the pinnacle,” says Celica Austria, marketing manager of Aark. For these budding businesses, positioning themselves in the market was a primary concern. In response, “[Aark] distanced [themselves] from the heritage luxe market and play on our strengths pushing contemporary, conceptual and creative design.”

Isolation is a double-edged sword. “As an Australian brand, our biggest challenge is probably the distance from Australia to the rest of the world. Our team have to travel several times a year to New York, London, Paris to truly understand the market and connect with our consumers which requires an immense amount of resource,” says Joy Fong, international sales director of cashmere label Banjo & Matilda.

Logistics. The distance also contributes to logistic troubles, particularly for nascent brands. Shipping costs and conversion rates present potential frictions in the direct-to-consumer shopping experience, while tariffs also deter purchases in wholesale accounts. “Given we are a product based business, shipping and distribution around the world also proves to be a constant challenge,” Austria concedes.

Distance makes communication difficult. “One of the challenges we faced early on following the initial launch of our business was securing press from international media,” says Austria. As a small budding business, Aark’s activities were restricted to a single channel: the Internet. “While the Internet helps to bridge the gap, online communication can be easily lost amongst all the noise.”

Let's make it official, shall we?
You've made it this far. Time to commit. We make keeping up with the news and events in modern luxury super simple. We distill the important stuff, and send it right to you so you've got it all in one place.
Become a subscriber

Reporting Queue

Previous story

Panty Raid: A rundown of the new lingerie players putting the pressure on Victoria's Secret.

Next story

Modern luxury companies don’t win best-in-class face-offs. They offer better bundles.