A footwear company goes into administration, the latest in a string of troubles. Is the industry hanging by a thread?
Footwear company Ziera has gone into voluntary administration, leaving the future of its 45 stores uncertain. The family-owned business was founded in 1946 as Kumfs and currently employs 250 people across its stores here and in Australia.
Insolvency expert Conor McElhinney of McGrathNichol, who’s now in charge of managing the company, told Stuff it struggled in a changing retail landscape. “Globally, independent footwear retailers have been closing as larger competitors and online sales take more market share, limiting Ziera’s wholesale market.”
Haven’t I heard this story before?
Yep – it’s been a tough few years for Kiwi fashion brands.
In August, Oosh announced it was folding. Suzie Johnson, who started the business in 2007 with $5 in her pocket, told Stuff the closure was in part due to competition from cheaper, imported items.
Last year, fashion designer Andrea Moore’s label was closed, failing to find a buyer after being put into liquidation and receivership. Boutique shoe brand Minnie Cooper also shut up shop last year, after 30 years in the industry. Its shop in the Auckland suburb of Avondale was the last of its stores, as its Ponsonby, Wellington and Christchurch branches had shut their doors to focus on online years ago. Back then, brand owner Sandy Cooper told Stuff that offshore, online competition contributed to the closures.
Is it only tough for Kiwi stores?
International businesses with stores in New Zealand are also feeling the pinch of greater competition and cheaper alternatives. Much-awaited British retailer Topshop opened its first New Zealand store in Auckland in 2015, and another in Wellington in 2016. Both closed in 2017. The same year, Australian fashion retailers Marcs and David Lawrence closed all 10 of their New Zealand stores as the brands went into administration.
How are the big brands doing overseas?
Not great. It turns out behemoths aren’t immune to changes either. American teen fashion staple Forever 21 just filed for bankruptcy, having lost shoppers to e-commerce. The company has 800 stores worldwide and will close 350 of them while it figures out how to pay its creditors.
Earlier this year, Topshop announced it planned to close all 11 of its US stores and several in the UK, as a part of an attempt to hold off administrators. Its profits took a hit in part due to consumers moving towards cheaper online stores like ASOS.
What’s being done to help Kiwi businesses?
Ziera’s administration comes as the new Amazon tax, a 15% GST charge on online purchases under $400, kicks in. It means you’ll probably pay more for your ASOS hoodie, though some items may be made cheaper as the tax removes Customs tariffs, biosecurity fees and cost recovery charges.
The tax is long-awaited by local businesses that have felt disadvantaged by offshore products not being taxed. But as the Spinoff’s Jihee Junn explains, it’s hard to tell whether Kiwi companies will benefit.
Can fashion retailers’ woes be blamed only on e-commerce?
While cheaper, online alternatives for local clothing stores have increased the competition in a cut-throat industry, the growing distaste for “fast fashion” may also be a factor. In evidence in brands like Forever 21, Cotton On and H&M, fast fashion relies on customers being sold cheap imitations of catwalk trends, with quick turnaround. Endlessly refreshed product lines are key: UK chain Topshop boasts that it launches an average of 400 new products every single week. As the Independent details, it’s a business model that pollutes water, uses toxic materials and contributes to greater textile waste.
Increasingly, consumers are concerned about sustainability and buying from brands making an effort to be more environmentally friendly, or buying secondhand. Secondhand clothing retailer thredUp says thrifting is getting more popular, driven by millennials and Gen Z, while a 2015 study by Nielson showed most millennials and baby boomers were willing to pay more for sustainable clothes.
It’s also adapting to the market in social media, with Instagram stores like Good Ol’ Vintage and Fruit Bowl Vintage, both based in New Zealand, selling curated secondhand clothes.
So, what does it all mean?
The fashion industry is competitive, and it’s not getting any easier. Online shopping, high rent rates for traditional storefronts and consumer concern with sustainability are contributing to a field in flux.
The Spinoff Weekly compiles the best stories of the week – an essential guide to modern life in New Zealand, emailed out on Monday evenings.