Melbourne Herald Sun 8th May, 2010
Sometimes I'm a bit slow at finding things, despite my pretence to expertise in marketing and advertising. So it was that just last weekend I visited my first DFO.
In case you're one of the four people out of today's million and a half readers who hasn't yet heard of them, they are Direct Factor Outlets. And they are unbelievably huge.
If you've been around long enough to remember a time when there were factories manufacturing goods in Melbourne, you'll remember factory outlets. Round the back of the shoe or clothing or leather factory there would be a small inconspicuous door leading to a large room stocked with racks of the factory's produce.
If you had a friend who worked there or had some other connection, you could buy the goods at a wholesale price. But it had to be secret because the whole structure of retail price maintenance depended on goods only being available through proper retail stores.
Well that was long before the dismemberment of retail price maintenance, before huge monopolistic supermarket and retail chains destroyed the normal give and take of manufacture and trade, and before Australian industry shut up shop and moved to China.
The modern DFOs - huge complexes of 20,000 sqm and with 100 or more stores inside - claim to be the modern factory back door. But once you get inside you find a very familiar shopping mall, not as classy as Chadstone but with many of the same retailers.
Yes, all the usual suspects - Just Jeans, Country Road, Adairs, Boost Juice, Matchbox - are there. So is there any difference?
They claim that their goods are seconds, display merchandise and end of season goods. Some of them are, but most of them are retail products bought to sell at discounted prices. It's like the department stores pretending that their Boxing Day sales are just goods that didn't sell at Christmas, even as you see the containers unloading at the back gate.
DFOs as we know them started in the US and the first purpose-built Australian one arrived in 1997, at Moorabbin. It evaded state and municipal planning laws - which would have stopped such a big centre being built so close to Southland - by using Federal land. It comes under Moorabbin Airport jurisdiction, which is why most of these centres are built near airports.
DFO is the brain child of two very rich, very clever men. David Goldberger and David Wieland first made their pile nearly 40 years ago with Solo petrol stations. These have now evolved into Liberty Oil. The oil business bought the two entrepreneurs identical mansions next to each other in Toorak. They used their wealth to generate even more when they formed Austexx, owner of the biggest chain, DFO.
This financial muscle has been necessary because their development has been fought every step of the way, particularly by Frank Lowy's Westfield Group, and the state governments in Queensland, NSW and Tasmania.
Do they actually harm other traders' business? Well certainly seeing the crowds milling through Moorabbin last weekend clutching armfuls of large shopping bags, they cast doubt on the retail recession.
Their estimated penetration is $1 billion, or 0.5 per cent of the market. However in the clothing and softgoods market it's more like 4.5 per cent.
I asked a friend, a long-time Chapel St retailer, if his business had been affected by them. "No, they have more affect on the outer suburbs than down here, where sales are more fashion conscious." But he'd heard that the Spencer Street Station outlet had hurt some City stores.
Not Myer though: "People shop at Myer for the new season's fashions. They don't get that at factory outlets," said Myer spokesman John Gillman.
Well my new sneakers don't have a fancy brand name, but they're very comfortable and boy they were incredibly cheap.
Ray@ebeatty.com
1 comment:
Great article!
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