Legacy stores have been closing but physical retail is not 'dead'

Katies, a women's fashion retailer that once competed with department stores like David Jones and Myer by offering affordable, stylish clothing, is set to close its remaining stores in January 2025. The brand, which began in the 1930s and was a staple in Australian shopping centers throughout the 80s and 90s, struggled to rebrand for younger shoppers at the turn of the century, leading to decades of falling sales.

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massive overhead with nothing that differentiated them.

The closure of Katies marks the end of an era for the brand, which was part of the Mosaic Brands group. It follows the demise of other retailers within the portfolio, including Rivers, Noni B, Rockmans, and BeMe. Mosaic Brands faced significant challenges, including fines, court actions, and a general slowdown in consumer spending, contributing to its collapse.

Katies' demise is part of a broader trend impacting Australian retail. In the past year, numerous established stores like Lincraft, Glue Store, and Barbecues Galore have announced closures or scaled-down physical presences. Shoe store Betts is also closing 20 of its 35 locations, pivoting towards an online-first strategy. These shifts are driven by rising costs and weakening demand, exacerbated by factors like the Middle East conflict, pushing chains to prioritize online business models to remain competitive and reduce overheads.

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When consumers tighten spending, they don't shop generic.

Fashion retail expert Caroline Tan from RMIT points to a common issue among these struggling retailers: "massive overhead with nothing that differentiated them." She explains that when consumers tighten their budgets, they either opt for cheaper alternatives or seek unique products. Stores occupying the "middle ground" with mid-range prices and no distinct identity are finding it particularly difficult to survive in the current economic climate. The focus is shifting towards either budget-friendly options or distinctive offerings, leaving generic mid-range retailers vulnerable.

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The 'middle ', which are stores with mid-range prices with no clear point of view, simply do not survive in this climate.