Consumer spending world wide seems to be decreasing with a huge amount of competition in most industries due to a globalisation of the market. A report was tabled by IBISWorld forecast which showed that the clothing industry would feel the brunt of a more cautious consumer. IBISWorld determined that the Australian retailing industry would only grow by a rate of two percent annually through to 2018 and 2019. This low growth figure was not only affected by increased competition but also a more reserved consumer attitude and rising costs of rent, especially in major shopping centers.
Cotton On being a global player, is greatly affected when consumer spending dips and rises. Within the Australian market, it is not completely clear how Cotton On is performing as the company has various legal structures set up which make it’s performance locally not very easy to interpret. They also are not required to lodge any financial information with the local regulators.
It has however, indicated that it’s performance overseas has been less than ideal with performances in key expansion countries such as Brazil, Thailand, Nambia, UK and the US coming in lower than anticipated. In these markets, Cotton On has opened over 140 stores. Penetrating these markets would always be a big challenge with the existing competition from Zara and H&M already being established.
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