Bentleys Industry Research: SA retail – at the crossroads?

These are the findings of the inaugural retail industry research published by Bentleys SA and Business SA. The survey – SA retail – at the crossroads? – polled shoppers and retailers over 2016 to establish views of the local sector and to gauge their opinions in regards to technology-driven changes.

Michael Ruggiero, a Managing Partner at Bentleys SA, commented on the survey findings and said that with over half (52%) of shoppers saying their habits are changing, businesses need to plan for future changes to stay relevant.

“As more and more shoppers adapt their habits to suit their preference in terms of online versus in-person shopping, retailers will need to respond. With the rise of international online retailers as an aggressive competitor in the market, local retailers are anticipating a greater shift to mobile devices over the next 12 months and beyond. Consumers are clearly comfortable with this shift to digital also with 75 percent of respondents indicating they were turning to digital channels to either research or purchase products,” Mr Ruggiero said.

When asked about the future of their businesses, the overwhelming majority of retailers (93%) expect their retail business to grow either ‘moderately’ or ‘significantly’ over the next two years. However, at the same time close to half (40%) of businesses do not have a clear vision in place for their business in 2018, with 27 percent reporting that their business is unlikely to be sustainable in its current form.

“While change can often be difficult, we would advise local businesses to get on the front foot and to consider how they can adapt and innovate to remain viable in the future. Having a robust business plan will help retailers respond to external changes and to do so in a way that makes sense in terms of consumer behaviours, which will encourage repeat visits,” Mr Ruggiero said.

While noting a change in consumer behaviour, Mr Ruggiero said the importance of the in-store experience should not be discredited. Sixty-nine percent of shoppers’ still prefer to buy products in-store, placing greater value in the bricks and mortar experience where they can ‘see, feel and try’ the product before purchasing.

“South Australian shoppers feel more confident about their purchases when they physically buy the product. In this instance, it seems that factors that are unique to in-store shopping – such as in-person customer service and the physical act of visiting a store – add to the overall experience,” Mr Ruggiero said.

As a further positive for local store owners, supporting local businesses and manufacturers is high on the priority list for South Australian shoppers, with 66 percent of shoppers stating that it is ‘very important’ to support local retailers, and 62 percent indicating that it is ‘very’ or ‘extremely’ important to support local manufacturers. This provides the opportunity for retailers to make the most of this loyalty by adjusting their business plans to keep up with anticipated growth.

Business SA Executive Director, Industry and Government Engagement, Anthony Penney said: “there is no doubt that technology is disrupting entire industries and the retail sector is no exception”.

“We expect next year to be a landmark year in terms of change for the local retail market and while change can often be seen as a negative, our survey aims to point out the opportunities that retail entrepreneurs can seize in this context,” Mr Penney said.

“There are clear opportunities for retailers who are willing to use insights to drive their business strategy: staying abreast of market trends, as well as having a good grasp of customer data, feedback and business financials will enable retailers to construct an accurate picture of their current business position in the market, “ he said.

Mr Ruggiero said, “a business’s growth is ultimately dependent on its ability to engage and satisfy its customer base”.

”This can be achieved by the implementation of business strategies but the effectiveness of these need to be measured to ensure they are working. Seeking professional and independent advice around the best strategy for your business is often a good place to start,” Mr Ruggiero said.

Key findings:

• Almost half (47%) of shoppers surveyed had a positive outlook of the retail sector in SA today.
• 57% of retailers described their level of business confidence as ‘somewhat optimistic’.
• 21% of retailers pointed to the economy or the government as immediate threats facing their business.
• 66% of shoppers and 74% of retailers felt it was ‘very important’ to support SA retailers.
• 62% of shoppers indicated it was ‘very’ or ‘extremely’ important to support local manufacturers.
• 19% of retailers indicated that their ability to adapt and innovate will be the key to their ongoing sustainability.
• 82% of shoppers and 90% of retailers have a positive vision of the sector in two years’ time.

To discuss what these findings mean for your retail business, contact Bentleys today.