If there was ever going to be an end to the battle over which Australian city is the fashion capital, 2014 will be the year that decided in favour of Melbourne.

In the last month two international retail giants, chains H&M and Uniqlo have leapfrogged Sydney to open first in Victoria’s capital.

To rub salt in the wound, data released this month by the ABS reveals that February’s Australia-wide lift in retail spending was led by Victoria (0.5 per cent increase), with New South Wales trailing behind Western Australia in third place on 0.1 per cent.

That Melbourne is the retail king is now accepted by the industry. Though, in Sydney’s defence it secured GAP, Zara and Williams-Sonoma before its interstate rival, and will get its own belated H&M outlet soon.

“I don’t think that’s just a glib statement,” Australian Retail Association executive director Russell Zimmerman says. “I really do believe that Melbourne is the capital of fashion in Australia.”

“They’re both great cities to do business in, but right at the moment I think Melbourne probably has a little bit of an edge.”

Melbourne’s underground is a breeding ground for creativity, fostering exciting local labels such as Verner, Dress Up, Búl and Kuwaii.

Joanna Berry, director of content agency The Word Collective, has lived and worked in both cities, and agrees that Melbourne is “without a doubt our nation’s style capital”.

“It’s not just the fast-fashion empires that are drawn to the city,” says Ms Berry. “Melbourne’s underground is a breeding ground for creativity, fostering exciting local labels such as Verner, Dress Up, Búl and Kuwaii.”

She says this is the city’s true strength.

“We are hailed for our boutique shopping in a way that Sydney isn’t. Just take a stroll down Chapel or Smith Street if you don’t believe me,” she says. “Though Sydney has sporty, beach-ready attire down pat, Melbourne is much more understated in its approach to dressing.”

Director of Aero Design Rob Whyte has furniture design outlets in both capital cities. On the basis of his 40-years of experience in the retail sector, Mr Whyte agrees that Melbourne is the best starting point for a new brand, with Sydney a close second.

“I reckon it’s a logical choice to start in Melbourne, absolutely,” he says.

Mr Whyte has good reason to think so – his profit margins in Melbourne have been better “by quite a big difference” compared to Sydney.

So why does Melbourne trump it’s larger rival?

Cooler climate

Rob Whyte says Melbourne’s dominance boils down to its cooler climate, as least in terms of fashion.

Melbourne retailers can sell clothing and other goods in all seasons, whereas Sydney is warmer all year round, he says.

“Go south of Naples and it all disappears and it’s exactly the same from Melbourne to Sydney and especially Brisbane.”

But Australian Retail Association’s Mr Zimmerman thinks that the climate differences cancel out.

“From the winter perspective, Melbourne is certainly the place to do business, but if you’re doing business in the summer, well, one is as good as the other.

“Melbourne does get very hot, and Sydney certainly gets very steamy and hot.”

Government support

Mr Zimmermann says Melbourne has the Victorian government to thank for its retail edge.

He says it is the state government’s drive to attract retail that makes the city so attractive to the sector, especially in terms of flexible trading hours.

“Melbourne virtually offers unlimited trading hours,” he says. “Pretty much every other day [apart from Christmas, Good Friday and Anzac Day] is open for retail trading.”

“You’ve also got extended trading hours in Melbourne coming through now. Retailers are now open until 7pm.”

In Sydney the flexibility isn’t there, Mr Zimmerman says.

“On Boxing Day, you can only open up in the CBD and in certain areas like Bondi.”

After-work shopping

Mr Zimmerman says more Melbournians spend money after clocking off.

“Melbourne is an interesting one in that when 5 o’clock comes around the city doesn’t empty out, whereas I think Sydney has more difficulty retaining those people who commute into the city,” Mr Zimmerman says. “They want to get out and get home.”

“It’s just easier in Melbourne to get people to hang around in the city and do that shopping directly after the close of business.”

Cheaper staff

Mr Zimmerman thinks that wages for frontline staff are similar in the two capitals, but higher for management-level staff in Sydney due to the higher cost of living.

“As you start to look at your more senior staff wages, your next levels up, wages in Melbourne would probably be a little bit more palatable than Sydney because Sydney tends to be more expensive to live in,” Mr Zimmerman says.

Sydney wins on weight of numbers

“It’s got a bigger population, most definitely, so that would be one of its attractive features,” says Zimmerman.

He also thinks that Melbourne’s Emporium, where H&M has opened its first Australian outlet, is an imitation of Sydney.

“I think Melbourne has done a fantastic job on the Emporium,” he says. “That’s very much a replication of what Westfields did.”

Sydney also has more major shopping centres, according to Mr Zimmerman.