Why are Fashion Retailers Struggling So Much?

PUT SIMPLY … most retailers have been in “Sale Mode” since the Global Financial Crisis.

However, there is a far more significant change going on behind the scenes.

The past 20 years have seen an influx of overseas fast-fashion retailers like UNIQLO, Zara and H&M. This additional supply of fashion goods has put even greater pressure on our local retailers.

As such, you are effectively seeing a structural decline in the retail sector – not only here, but in most developed countries around the world. And the surge in online activity certainly hasn’t helped.

All of this has resulted in consumers buying so much clothing that they now gain little (or no) additional joy from owning more.

In fact, they appear to prefer to spend their money going out for a meal … than buying more clothing.

Furthermore, there is a growing environmental concern.

In Australia alone, research shows that we buy (on average) 27 kg of new textiles every year. And then also dispose of 23 kg – which is going straight to landfill.

Bottom Line: Fashion retailers are being hit from all angles by the “perfect storm”.

Therefore, as a property investor, you need to be extremely careful of who your tenant is – particularly, as far as speciality retailing is concerned.

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