Tyre Kicking Still Rocks

Current Trends in Retail

The car industry tried for many years to promote online buying. With a few fringe exceptions (Tesla is one that may have escaped Australians’ notice because its electric products are suited least of all to our wide open spaces), it has failed. Yes, there are vested interests behind the dealer chains of developed countries, but there is another factor; customers want to kick the tyres, sit in the seats and admire the paintwork before they sign the contract – and they want to experience these sensations in reality, not virtuality.
Pan out, as the TV director says, to retailing in general. The ‘high street’, that largely mythical Main Street of every regional centre, is endangered by changing consumer tastes and more up-to-date methods of shopping. Or it isn’t. Depends who you ask.

According to a Euromonitor International report (Retailing in Australia, June 2014), the online sector is strong. “Internet retailing saw the best performance within retailing in 2013,” reads the report. “High growth was the result of a number of factors including increased usage of the internet and internet-enabled mobile devices (iPad, iPhone, Android) and increased confidence and familiarity with online payment infrastructure, as well as the development of new online platforms and enhanced user experience. All of these factors encouraged consumers to shop online, which had a positive impact on internet retailing. Consumer appliances and video games hardware saw the fastest growth within internet retailing in 2013.”

No doubt, in-store retailing in Australia is expensive compared to most other developed countries. Remoteness, vast geographical distances and a relatively tiny and dispersed population add up to a logistical nightmare for the world’s best known consumer brands. You might think e-commerce was born to serve this market. And yes, it’s great to be able to order that computer cable online and have it delivered next day instead of hauling out the ute and driving around a half a dozen shopping centres to find it. But the current growth of outlets and brands arriving in Australia and its malls and high streets strongly suggests both that consumers still prefer kicking the tyres or trying on the frocks in person, and that global retailing has caught up with this country.

Take Swedish garment colossus Hennes and Mauritz. Its H&M brand has reached Sydney and Melbourne (with reputed plans for more stores) and for those unlucky enough not to live there, it has an online service too. Mixing the product offer makes for optimum customer relations, but wasn’t that always the Scandinavian way – to work out what the customer wants, then find a way to deliver it, rather than the other way around? The presence of truly global brands like H&M is changing the landscape of Australia’s retail sites, and for the consumer it’s for the better.

But for the store owners? Surely this new foreign competition is unwelcome, to say the least? Not necessarily, because the very same logistic difficulties can provide better opportunities for franchising. A growing number of retail brands (many in Food & Beverage, but by no means all) are expanding their bricks-and-mortar presence via the franchising model, providing brand coverage coupled with viability for the brand owner and the franchisee if the sums are right.

Mention of F&B brings us to the argument that restaurants, bars and coffee shops are propping up the entire retail landscape. But isn’t it a bit facile to propose that Mr and Ms Australia are merely going out to get a coffee and – as if by coincidence – happening to drop by H&M or Coles to buy a shirt or a pair of shoes? F&B and the other elements of retailing exist symbiotically – they need each other.

The conventional ‘department store’ is generally poorly regarded; many retail gurus give them low marks, pointing to their inability to move with the times. Their physical footprint works against them for a start; you can’t just up and move a Myers to a new shopping centre. But the original department store concept is returning in a modified form to breathe life into all sorts of other retailing formats: many stores – from DIY to fashion – now have floor areas that can be changed relatively cheaply and quickly (and with minimal interruption to traffic, which is vital), where different items, ranges or brands can be introduced, tested or featured. The ‘pop-up’, as it is known, means it is not necessary to refit or rebrand a store so often.

As noted above, good retail brands offer the choice of both bricks-and-mortar and e-commerce. The experiences of automakers in Europe suggest strongly that most new-car buyers so strongly dislike ‘car dealers’ that they have almost 100 per cent made their buying decision by the time they enter one; but they still want to inspect the goods before signing the contract (incidentally, this is a reason behind the general failure of ‘build to order’, which would be a massive advance in carmaking but has proved unacceptable to a public unable to envision its intended purchase even with sophisticated online software).

Buying a vacuum cleaner is not such a big lifestyle decision, but it is still good to feel and compare in person. A number of leading edge brands have embraced the concept of mixed shopping – choosing specifications online before checking out in the flesh – and in many cases now have high-profile retail outlets that are little more than showrooms for people to wander round and ‘experience’ the goods before, in many cases, returning home to close the deal online. There is an overwhelming case for spreading the eggs across more than one basket.

A Euromonitor International report (Internet vs Store-based Shopping: The Global Move Towards Omnichannel Retailing, August 2014) noted that, “as consumers continue to blend their off-line and on-line activities, from ‘showrooming’ and retail apps to sofa shopping and click-and-collect, the lines between internet retailing, e-commerce and physical retailing are becoming increasingly blurred. Big retailers are taking an ‘omni-channel’ approach by merging their offline, on-line and mobile capabilities to create a seamless experience for shoppers.”

An effective, presentable and user-friendly web presence is today a prerequisite even for B2B companies, let alone those facing the general public. Today’s consumer is checking out the menus for his or her intended restaurant online before even starting the journey – and if the website is good enough, the customers are salivating already, selecting their dishes as they drive. Yes, many F&B outlets offer online ordering; but that’s just another way of saying ‘take-out’, with a laptop replacing the landline.

The business of retailing is so dynamic because it has so many interwoven factors. Take, for example, hotels. While the traditional ‘motel’ still exists, the trend is for smaller, more stylish, ’boutique hotels’ downtown – many of them right on the high street. They have the challenge, and very much the opportunity, to help change consumers’ retail experience by – probably for the first time in the entire hospitality sector – attracting non-residents with a product offer that convinces. It’s happening in Europe already, where consumers who previously would never have considered a hotel as a place to walk in and take a coffee, or to dine. Many frequent travellers have a policy of never eating in the hotel because it’s a sign of a failure to get out and about, but today’s hotel chains are ambitious not only to end that view but to start mixing it with the Gloria Jean’ses and Zambreros. It’s part of making use of your bricks and mortar for more hours in the day, not just during the evening when guests are checking in.

For all the money spent, much of it wisely, in providing ambience for real shops and other consumer environments, there is always something that comes up and pokes the stereotype in the eye. Step forward the “fish ‘n’ chip Mecca” of Darwin: the small, red van of Jetty And The Fish that has just out-rated well-known Darwin restaurants on review website TripAdvisor to become the city’s premier restaurant experience. It’s a trailer on the seafront, for goodness’ sake!

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

December 19, 2018, 5:30 PM AEDT