Christian Dior SA opened its first dedicated store in Australia’s largest city today, seeking to capitalize on demand for fashion goods that’s luring Inditex SA’s Zara, Arcadia Group Plc’s Topshop, and Prada SpA.
The store, on a corner of Sydney’s central business district close to outlets of Chanel SA and LVMH Moet Hennessy Louis Vuitton SA’s Bulgari brand, is fitted out with Louis XVI chairs and a private salon on its own floor. Strong consumer demand in Asia makes up for weaker performance in European markets, Dior’s chairman and controlling shareholder Bernard Arnault said in a Jan. 31 investor call.
The reduction of interest rates to a half-century low in December leaves Australian consumers better off than peers in other countries, even as unemployment and cost-of-living pressures rise, JPMorgan Chase & Co. analyst Shaun Cousins wrote in a Jan. 23 note to clients. High- and low-end retailers are best positioned to benefit from the spending, he said.
“Some of the luxury goods retailers have done extraordinarily well over the last few years,” David White, national retail leader at Deloitte, said by phone from Sydney. “While in general consumers are cutting back, where they still see real value, they’re willing to continue their purchases.”
Overseas retailers have been attracted by the strength of the Australian dollar and the relative health of the only major developed economy that didn’t enter a recession after the 2008 financial crisis. With a population of 23 million people, it outstrips Europe, Japan and China as the second-largest market for FiftyOne Inc., which helps U.S. stores including Saks Inc., Macy’s Inc. and Bloomingdale’s sell products overseas through their websites.
Williams-Sonoma Inc. in August said it had leased 22,000 square feet of space in Sydney’s Bondi Junction suburb to open its first four owned stores outside North America.
“The Australian consumer is well positioned relative to the consumer in many other countries,” Cousins wrote.
While Australia’s spending on clothing and footwear has stalled since 2009 amid household savings rates that have been more than double those in the U.S., OrotonGroup Ltd., a bag-maker that’s the country’s largest listed luxury goods company, has lifted sales by 38 percent.
“Major markets, the United States, Asia, China in particular are expected to bounce back,” Dior’s Arnault said in the investor call Jan. 31 for LVMH, the world’s largest luxury goods maker which he also controls. “The world is growing.”