The cost of doing business is making it “increasingly difficult” for retailers to operate in Australia, an expert says, as more shops close down physical locations.

According to leading retail expert Gary Mortimer, businesses are re-assessing the need for brick-and-mortar stores, with some offering a hybrid-style online-offline model.

“Margins are getting squeezed and I think that’s why we’re seeing more retailers closing some physical stores and pushing more of their business online,” Mortimer said.

“In the same way that households struggle with that cost-of-living crisis with increasing electricity, gas, rates, household costs – businesses are facing those same costs.

“Rents are going up, wages are going up, electricity is going up and security services are going up.

“Fashion, generally between 25 to 30 per cent of their revenue is now online, which tends to suggest you could potentially close 25 per cent of your stores, move that revenue from an online channel and not actually experience any net loss to your revenue.”

Country Road is the latest brand to reassess its retail portfolio after it closed its landmark store inside the Queen Victoria Building in Sydney in a move the company said would ”ensure we’re continuing to meet the needs of our customers”.

“We are committed to delivering great experiences throughout our networks and we are investing in our stores, with 10 new or refurbished stores opening by the end of the year,” the spokesperson said.

“This includes our beautifully renovated Mosman store reopening in September, a new Country Road flagship store in Queen Street, Brisbane opening in August and three new stores opening in Chatswood Chase in October.”

Mortimer said the cost of rent at flagship locations could come at an “astronomical” cost for some businesses.

“Flagship stores really only work now today for global brands that can afford the commercial real estate and you can underpin those costs with global sales,” he said.

“If you’re an Australian fashion retailer, you don’t have a global revenue stream, it’s a very costly exercise to maintain those premises.”

In order for brands to withstand challenges in Australia, Mortimer said must evolve and widen their range to cater to a range of consumers.

“RM Williams readjusted their range several years ago to target that younger market, the 25- to 35-year-old market to replace an aging consumer group,” he said.

“I think good fashion businesses, particularly those that are 50 to 60 years old, need to constantly reinvent themselves so they are always attracting a new market.”