Where is Australian Retail At?

Late last year I wrote about the retail revolution that is currently going on – this piece largely focused on the changes to environment that are causing retailers to adapt; the internet has brought on the need for retailers to modify themselves the same way that the industrial revolution created an urban middle class and traders created department stores, or how the introduction of motor cars led traders to build supermarkets.

eNOTQUITE 300x199 Where is Australian Retail At?I mentioned in the revolution piece that online retail offers the most efficient model of sales possible, business agility, high level reporting, supply chain redesign are all only possible with an online only business. So it was not that surprising when listening to Ruslan Kogan speak at a recent ShopTalk event that there is no such thing as ‘multichannel’ that the competitive advantages that each retail model has are not compatible. This means the benefits that an in store seller has – such as service, advice, expertise; do not translate well to online. If your business is online and has cheaper prices than in store – the customer will haggle for a bargain in store; if your online store is too expensive to competitors they will not buy from you.

Kogan has a point and much of the basis for his point of view comes back to that fact that consumers believe everything online should be cheaper. Helping this believe in Australia is that fact the leading sites are eBay.com.au, catchoftheday.com.au, Kogan.com.au, dealsdirect.com.au – all of these sites are focused on one thing – price and being low price at that. So it is little wonder the consumer thinks everything online should be cheaper.

There is more to this perception from the consumer – and that is power. The consumer now has more power than ever before, comparing items based on service or price has never been easier or quicker – no longer is a Saturday wasted going to multiple bricks and mortar stores for the best price TV, 15 minutes on a Friday afternoon will give the consumer the answers they need and even the chance to buy – leaving the Saturday free. You only need to look at the drop in insurance prices; prior to the Internet – agents could charge high fees and get away with it; with the ability to compare and present online – insurance businesses have had to adapt. Power to the consumer.

The consumer who has recently discovered this power and with the perception that products are cheaper online was met with a third component – for nearly 3 years our Australian Dollar was above parity. Some local retailers were able to use the higher dollar to present items cheaper – others had a negative effect and had to pass on extra costs; however the real issue with the high dollar was the access to overseas variety via the Internet. US and UK retailers have been cheaper forever, scales of economy, purchasing power, proximity to supplier and established supply chains help with that – adding to the revolution groundswell.

As consumers went online in droves – some who had this medium brought to their attention by Gerry Harvey – they were presented with a range, price and accessibility never seen before. This was the perfect time for local retailers to invest in their online strategy – instead we saw campaigns on GST, equality, wages and a few other acts of outcry that to the consumer appeared as whining. With all the consumers going online – why was it so hard to convince bricks and mortar sellers this is what the consumer wants? After all when the middle class emerged from the industrial revolution keen to ‘keep up with the Jones’s’ departments stores were built at record pace – similar to the way supermarkets popped up with great speed as consumers spent much of their weekends in their automobiles. The delay from the traditional retailers only added to the market share of the only online players.

Imagine if the traditional retailers had invested solidly over the past years into an online presence; now the dollar drops below parity and shows signs of further decrease – the local retailer would be in the space where the consumer is – presenting a local option that delivers quicker than overseas, allows returns, has a local warranty, and may be about the same price as someone overseas.

Getting back to Kogan’s point on bricks and mortar and online not being compatible and that there is no such thing as the much loved ‘multichannel’ term used by all and sundry for the past 18 months. – is he right?

Part of me agrees with him – yes the advantage the bricks and mortar store has is difficult to present online – however it is not impossible. Are there pricing issues – yes they can exist – but again it is not an impossible aspect to overcome.

We are seeing ‘multichannel’ take place in the US and UK, Nordstrom in America and John Lewis in the UK are great examples of combining there in store and online offerings. Both these retailers have been early adaptors of technology and are seeing the rewards financially.

To present a store online in a similar manner to that of the traditional operation requires a clear strategy and time and effort – resources similar to that you would put into your physical store – after all would you invest $10k into your physical store appearance and think job is done?

Much like the consumer has power, retailers too know more about the consumer activity – we know they research online before shopping, we know they use their mobile in store – important to make sure that your website is mobile friendly, and if you want to charge a lower price online and allow pick up in store – do use using a coupon or voucher to make easy for the consumer. Encourage the practices you know are occurring – you are then able to control them more. Part of the power retailers have is now being able to view competitors and their offerings, their specials – many of the competitors will have specials at the same time of the year – using the internet you are able to understand these offers and alter yours as needed.

Much has been and will be reported in the media about the Australian Dollar value, GST, trading laws, supply chains, worker wages and you what at the end of the day – the consumer doesn’t care about these discussions. As much as things change – they stay the same; they want to know how you will serve them better – how you will match their expectations – the revolution of retail is still progressing – how it affects your business is up to you.

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  • wp socializer sprite mask 32px Where is Australian Retail At?
  • wp socializer sprite mask 32px Where is Australian Retail At?
  • wp socializer sprite mask 32px Where is Australian Retail At?
  • wp socializer sprite mask 32px Where is Australian Retail At?
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One Response to Where is Australian Retail At?

  1. Micheal Bian says:

    Online business is a big advantage in promoting your products because you can easily negotiate with customers.

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