Survival of the fittest
Sydney Morning Herald
Tuesday June 30, 2009
Demanding consumers and a tough market are forcing retailers to be creative, writes Nina Hendy. Retailing used to be fairly simple. If the shelves were well stocked and an A-board promoting your specials was out the front, you were in business. But the rules of the game are changing as a new breed of consumer demands more from retailers than ever before.Exceptional service, tailored communications, a dazzling in-store experience and the ability to buy online are just the start. Not surprisingly, these new demands are stretching Australian retailers well outside their comfort zone.The managing director of the Retail Doctor Group, Brian Walker, says global uncertainty on the political, financial and retail fronts is driving consumer change."During good times, retailers can achieve growth with lazy practices but these days it's imperative they get fit in all aspects of business," Walker says. "That includes getting rid of excessive merchandise, doing away with untargeted communication, managing staff better and reducing operational costs productively."The bottom line is that if retailers aren't doing this, they won't be fit enough to survive."Overseas, retailers have been stepping up their efforts to meet the changing needs of consumers. But Australian retailers have been slower on the uptake. Walker says that once the economy improves, some retailers will be left behind."Australian consumers are placing higher demands on their favourite retail brands to be sharper and more focused and based on overseas trends, consumer expectations are only set to increase," he says.The program director for the Australian Centre for Retail Studies (ACRS), Stephen Ogden-Barnes, agrees: "Once upon a time, there might have been four bakeries in a strip of shops. But retailers struggle in a tougher economy and once things improve, only three might survive. Retailers have to ask themselves if they're in the top three or the bottom two in their market." Retailers also need to get online. Time-poor consumers want to buy everything from fashion, groceries and face cream both in store and online. Walker says retailers operating in any category must have both an online and physical store presence.Recent research conducted by the ACRS in conjunction with Google has also found that consumers use the internet as a research tool before hitting the shops. "We believe there's a misconception among retailers that the internet is only used for selling but it's also used by consumers to conduct research," Ogden-Barnes says."For a retailer not to have a presence online would be foolhardy."Getting the online strategy right is paramount, especially given overseas retailers are entering the Australian market in growing numbers via online sales. These companies include British fashion chain Top Shop, which now offers global online sales. And a US jeweller selling online will deliver to Australia free."Australian retailers need to understand that they're not just competing against other retailers in their local area any more," Ogden-Barnes says."One of the real wake-up calls is that retailers are increasingly competing on a global level."Retailers should also be looking into the rise of social media like Twitter and Facebook to see how they can tap into this phenomenon to promote their offering."Retailers crafting their own niche are also having considerable success. Melbourne's Mag Nation is a prime example. The retailer stocks only magazines, including hard-to-find titles from around the world, in a move that's proven incredibly successful. "Clever retailers segment their offering and don't try to be all things to all people," Walker says.Retailers picking up on consumers' growing preference for local are also experiencing stronger sales than their competitors. While Australian-made was all the rage a decade ago, consumers want items made or grown in the same postcode these days."Consumers are rediscovering the power of local," Ogden-Barnes says."They don't want to shop at the big chain down the road where nobody knows them. They want to go where they'll get value and good advice."Trading outside your bricks-and-mortar address for a while is also proving successful for some retailers. Overseas, brands such as Prada are creating pop-up stores in crowded areas for a few days in an effort to put their brand in front of a new market."Quality retailers are putting their brands in places they wouldn't have gone before," Walker says. "Lots of brands are doing this with remarkable success overseas."Value is also important to buyers. Bargain hunting as a pastime is increasingly popular, according to Sydney research and strategy firm, The Seed. Its managing director, Sean Adams, says: "Bargain hunting is a status symbol. Those looking for a bargain are just as likely to be high earners as battlers. Even at the low end of the market, good value should be at the core. Cheap doesn't have to mean nasty."Retailers also need to get to know their core customer base. "Retailers should know who their top-50 customers are at all times but many don't," Walker says. "There's technology available to help a retailer capture this sort of information and they should be using it."And environmentally conscious consumers will snub retailers not showing awareness of this issue. While getting rid of plastic bags is a good start, it's the tip of the iceberg.According to the ACRS, consumers want greener products from retailers.Consultants such as Village Green help businesses put their best green foot forward. Chief executive Doug Smith says green retailing can save money, with financial benefits often identified during an audit."A business can start being greener by simply creating a checklist of all their devices and making sure they're turned off when not in use, which is a simple place to start," Smith says.Turning green also presents new opportunities. "There's an opportunity to get some market leadership once you're a green company," Smith says. "Telling consumers you're green can in turn attract new customers."But Adams warns retailers there's a level of cynicism around green claims, with green beer, cars and even jeans flooding the market.He advises retailers to steer clear of "greenwashing", which refers to green claims that mislead consumers.
© 2009 Sydney Morning Herald
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