September 2026: Mix of pressure and investment.
Updated: Oct 6
September brought a mix of pressure and investment to the table.
On the one hand, consumer confidence and inflation were back to negative positions. Inflation went up, dragging morale down. On the other hand, luxury brands continue to invest in their Australian presence, both in terms of footprint and visibility.
In parallel, the growing challenges faced by Australian department stores continue to raise fundamental questions about where local and international players choose to sell and invest.
Market Pulse
Inflation took a turn, from an easing in July to a sharp increase in August, reaching 4% vs. 3.5% the month prior. The main driver: increase in housing price of +5.7% year-on-year. [Australian Bureau of Statistics]
The Australian Dollar showed a downturn, falling about 3% against major currencies and sliding below the US$0.70 physiological threshold to hit a nine-week low by the end of the month.
Consumer confidence fell in September by 2.3pts, down to 71.2, after a brighter look in August. With growing inflation, Australians know the drill and brace for the latest interest rate increase announced by the RBA at the end of September. [Roy Morgan ANZ]
Discretionary spend stayed stable at +8% year-on-year in July, with consumers largely taking advantage of end-of-financial-year sales. [Experian]
SKALE's Perspective
The Department Store question.
Following a similar trend as in the US, Australian department stores are facing a period of significant change and challenges.
David Jones recorded another year of pre-tax losses (A$95.5 million last fiscal year) and is expect to decline even further as its fails to re-invigorate its tactics. The constant discounting approach might be driving immediate cash, but ultimately is pushing key luxury players away. In recent months, the David Jones Sydney flagship has lost several major luxury relationships including Gucci, Dior and Chanel pulling out of the premises.
So, beyond the performance of one retailer alone, what role should department stores play in luxury today?
Luxury brands are increasingly investing in their own boutiques and fully control their environment, the client experience and relationship. The value that multi-brand stores offered, through customer reach and traffic, is now being reconsidered.
This constant struggle opens a bigger strategic conversation: where luxury brands choose to meet their customers, and what they expect from the environments in which they do so.
Boutique Openings
Riedel, the specialist glassware brand, unveiled its first Australian boutique in North Sydney.
Bang & Olufsen, the Danish audio brand, opened a 3-level flagship, in Sydney Martin Place.
Brands Highlights
VAN CLEEF & ARPELS - Celebrates Spring with Sydneysiders
For ten days, the Fine Jewellery House transformed the Sydney CBD by Martin Place, into an enchanting spring garden. The installation was animated by a series of creative workshops, floral installations and many family-friendly activities. A way to embed and engage directly with customers in their day-to-day.
MERCEDES-BENZ
The Studio.
Opened earlier in September, in Sydney Martin Place, bringing the global concept to Australia for the first time. An immersive space where design and culture converge.
HUBLOT
Luxury meets the new social sport.
The Swiss watchmaker celebrated the Australian arrival of its new collaboration with Jeff Koons - the Ballon Dog watch. A colourful cocktail with Sydney-based press and creatives.
LA PRAIRIE
A Day in the Studio.
The luxury skincare house partnered with former ballerina Brooke McAuley to celebrate healthy skin through the art of movement.
ADELAIDE BURNSIDE VILLAGE
The Fashion Highlight.
The new shopping mall marked the Spring-Summer season with a 4-day fashion program. The Art of Fashion brought together luxury fashion & jewellery houses for a dedicated showcase.
Also in our radar:
Prada new collection trunk show preview in Sydney ; Australian Fashion Rooms in Paris for the Fashion Week.
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Until next time,
The SKALE Australia team
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