Analysis: The e-tail retail divide

Wednesday, 5 January, 2011 - 08:47

If anyone didn't already know that the internet is a powerful tool for retailing they do now thanks to Australia's best ever example of how to shoot yourself in the foot.

In a burst of advertising that did far more damage than good some of Australia's biggest retailers exposed their greatest weakness; a failure to develop an effective on-line internet solution to complement their traditional business.

Rather than embrace a true game-changing technology firms such as Harvey Norman, Myer and Wesfarmers have broken the golden rule of retail -- attacked their own customers.

The attack, cloaked in claims of protecting jobs, is in the demand that an Australian domestic tax be imposed on goods purchased overseas on the internet.

Rather than fight a revolution, and the internet is precisely that, Australia's retailers have followed King Canute's example and demanded that the government turn back the tide, something that even Canute knew was impossible

Retailers would be far better advised to lead the internet charge by finding positive ways to harness the technology to their advantage, rather than seek such a dreadfully negative solution such as demanding higher taxes.

Shops that do embrace a mixed marketing approach, offering both "bricks" in the form of a traditional shop, and "clicks" in the form of an internet offering, will win as one small example from a well-known retailer illustrates.

During December if you bought a gift on-line from Country Road, and it wasn't what you wanted, it could be returned during January to the on-line sales team, or at a Country Road shop. (


Other retailers offer a similar service in what is a perfect example of integrating bricks and clicks for domestic sales with the ability to use the local shop for returns infinitely better than mailing something back to a returns centre in Asia or the U.S.

Even if it is a return which gets a customers into a shop it is powerful reminder that the business cares and is making shopping as easy as possible by integrating the electronic and physical experience.

Retailers are not the first industry to be whacked by the on-line revolution so they have an opportunity to learn from past mistakes with the biggest of those being the futility of fighting a revolution rather than joining it.

Job, property and car advertisements which were once dominated by traditional newspapers have migrated to the internet. Why? Because of the power of the tool and the convenience offered to customers.

Owners of major media outlets initially adopted the same defensive strategy as that being tried by retailers today; they fought the internet rather than embrace it, and lost.

The argument over classified advertising was that newspapers had to defend their business, and the billions of dollars sunk into printing presses and distribution systems, exactly what retailers are saying today.

Ironically, the speed at which the retail revolution now moves will be accelerated by the attack launched on customers thanks to their "awareness campaign" because nothing wakes a dozy consumer faster than the threat of higher prices, especially those caused by tax hikes.

There is, amusingly, another irony in what's happening. The government to which retailers have turned for tax-help is the same government spending heavily to speed the internet revolution via its controversial national broadband network (NBN).

Supporting its $40 billion investment in the NBN is reason enough for the government to tell retailers to embrace the internet rather than plead for tax assistance.