It was just days into the new year when we saw the first big retail casualty of 2018, with iconic plus size brand Maggie T
– a company established in 1981 with almost 30 stores around Australia – entering administration.
It wasn’t the positive start to the year that Australia’s retail sector would have been hoping for, and in subsequent weeks, we’ve seen other well-known brands, Diana Ferrari and Mountain Designs, announce the shrinking of their network of bricks-and-mortar stores.
In what has already been a tough few years for retail, which has seen the demise of household names like Marcs, David Lawrence, Dick Smith Electronics, Rhodes & Beckett and Pumpkin Patch, it begs the question about what 2018, and the immediate future, holds for Australian ‘bricks and mortar’ retail, particularly in face of rising competition from global behemoths like Amazon.
It’s overly simplistic to believe that the solution lies in moving operations into an online environment, just as it is to cite competitors like Amazon as the primary cause of recent retail failures.
But if I was to give retailers in Australia three pieces of advice on how to avoid a similar fate, here’s what I’d be telling them.
1. Be different
Sounds obvious right? Unfortunately, in a crowded sector it’s not easy to put into practice.
One of the biggest threats for retailers in the current retail environment is being too similar to competitors. If you are, you run the risk of one or more of your competitors doing things better than you are.
We’ve certainly seen this at the big-end of town, for example in the United States, where Amazon has trumped the ‘big-box’ retailing style of companies like Toys ‘R’ Us. While its operating model was effective in the 80s and 90s, Toys ‘R’ Us came up against a online competitors who could carry larger inventories and offer them at discount prices.
Think about what your competitors aren’t doing, or don’t offer, and use that as a starting point for finding your point of difference.
The ability to constantly evolve your offer over time depending on what the market dictates and your customers want prevents your offering from becoming too one-dimensional or out-dated.
2. Understand your customer
In some ways, retail is absurdly simple – buy or make something and sell it at more than it cost. The complexity comes with customers, and trying to continually stay ahead of their wants, needs and desires.
So the most successful retailers are those who strive to understand their customers’ needs, and respond to them.
For example, the rise of e-commerce and digital competitors is often cited as the reason for the demise of more traditional bricks and mortar operations. But e-commerce didn’t appear overnight. Retailers should have recognised more than a decade ago that customers wanted to shop online and implemented the transactional and logistical infrastructure required to respond to this need.
Department store Myer is a prime example of this point. It’s recent focus on its online offering, including increasing the range of products available and improving fulfilment of orders, have seen online sales rise by more than 40 per cent. One could ask the question why it has taken one of Australia’s largest retailers until 2017 achieve these results. .
The fall of Dick Smith Electronics is another good example of the importance of customer focus. Almost six months prior to the collapse of Dick Smith Electronics, it came under fire from angry customers for taking weeks to deliver orders and poor customer service.
I’m not for a moment attributing its failure to this one event, but it shows there were underlying issues with their customer service. It also highlights that consumers have more power than ever before, so it pays to listen carefully. The rise of social channels and the immediate feedback these platforms offer make it easier for them to assert their power.
3. Create an experience
I’m not the first to say it, and I won’t be the last, but in order for retailers, particularly bricks and mortar businesses, to create a point of difference it’s important to focus on creating an experience for customers.
Things like raising your service levels, introducing pop-up activations based around food and drink, or implementing live performances and appearances in-store creates something that is difficult to replicate by competitors, particularly those online.
At the same time, you’re making your business a destination, which is something that leverages the benefit of having a physical presence.
We’ve covered this topic previously, highlighting the point that malls and shopping complexes in the US are offering much more than just shopping. Even Amazon has recognised people are seeking a physical shopping experience and opened a number of book stores where customers can buy the book right there and then, or order it for delivery later – the most recent being a store in Columbus Square, New York.
In the fast moving environment of retail, there are no certainties. But focussing on your customer, and delivering them an experience will go a long way to helping you navigate through these difficult times.