The retailers best placed to benefit from a changing marketplace will be those who proactively shape products, services and experiences for and with consumers.
The retailers best placed to benefit from a changing marketplace will be those who proactively shape products, services and experiences for and with consumers.
The retail landscape looks quite different today to what it did a decade ago, as consumers make fully informed purchasing decisions and levels of impulse or convenience buying falls.
People now stand in stores, using their smartphones to compare prices and check availability; they can even check and post reviews about service through social media and the internet in an instant.
Armed with all this information, it’s clear shoppers are increasingly choosing to buy products online, from the supplier of their choice, worldwide.
These shifts have led a number of industry observers and interested groups to forecast the end of traditional retail. Some predict brick-and-mortar stores will become a thing of the past; others feel that they will be swallowed up by the tide of the big players such as Woolworth’s and Coles.
My view is less pessimistic and far less dramatic, but I do believe that big changes are inevitable and that the retail industry must act now to survive and thrive in the long term.
There is a plethora of historical precedent for this kind of change, which ends with new winners and losers emerging in each industry. Within the past century, local grocery stores gave way to supermarkets, then to suburban shopping centres, then to discount chains and big-box retailers.
The same is true for hardware stores, bakeries and even service industries such as real-estate offices and banks, which have already started retreating to an online presence.
Each of these shifts unfolded faster than the one that preceded it, and each elevated new companies over incumbents. Indeed the new top players are largely the global online retailers such as Amazon. What lessons can be learned from such changes and be applied to the Western Australian industry?
For many years we have been protected by the bubble of state legislation and ‘tradition’; in my view, we should be preparing to evolve, to grow, to be pro-active – not re-active. We need to create a new business model that will allow retailers to deliver their skills, knowledge and experience to customers in new and innovative ways.
We may also need to re-examine the product offering and services we are providing. In this digital world, trying to compete with such products on price and convenience alone is becoming very difficult.
After shopping around the world on price from the comfort of your armchair, new and improved logistics solutions mean that online goods can be available at your door in a matter of hours – you can’t beat that for convenience or price. An item can arrive quicker from the UK than it does from Melbourne.
So, what to do?
Firstly consider your retail footprint. Costly square metres of shopfront may become an unnecessary expense. Scale back and maximise the chance of growing a sustainable and profitable business while embracing digital ‘shelf space’ if you wish to continue the retail model.
Secondly, embrace technology. In a time-poor society, many customers may balk at the idea of queuing in a shop or have lost the urge to chat to the pharmacist. A simple app could be the answer to making the most of your available time.
Similarly more targeted marketing through social media, blogging, and online advertising could enable your business to reach its potential customers more effectively than the traditional reliance on paper catalogues (when many now read their news digitally), high-profile (and costly) shopping centre locations, and signage.
Above all, it is vital to remember that change is inevitable. It is best not to be afraid, but to be prepared. Winning retailers will proactively shape products, services and experiences for and with consumers by bringing them directly into key merchandising decisions. They will rise above the tide by riding with the wave and they will shape the future of retail.
