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Gloves off in retail VS online

By Tony Eades

THE 131-year-old film pioneer, Eastman Kodak recently filed for bankruptcy protection as the company struggled to adapt to an increasingly digital world.

Kodak had become the latest giant to falter in the face of advancing technology.

The Borders Group liquidated last year after having failed to gain a stronghold in e-books, while Blockbuster – the video store network - sold itself to Dish Network last year as its retail outlets lost ground to online competitors like Netflix. Australia’s retail environment has to change or face imminent extinction.  

The internet and in particular social media can pack a pretty powerful punch - four billion views per day on YouTube, the average Twitter user boasts 126 followers most of whom they’ve never met and over 10 million Australians claim to use Facebook each month.

Welcome to the world of the new consumer where time and place are a thing of the past. When was the last time you queued in a bank to pay a bill – most of us do it online at anytime, time is no longer important.

Booking tickets for a movie or concert, a hotel room or a case of wine delivered to your door are now all done via your mobile device whether it be a smart phone, iPad or tablet – in today’s digital world a physical place is no longer relevant.

Now that all sounds great for the time poor consumer but it’s a real challenge for traditional, bricks and mortar retailers who operate from a single location, six days a week from 9am until 5pm.

Online retailing has grown while traditional retail struggles because they offer 24/7 convenience and in most cases attractive cost savings too.

Apple has embraced the new consumer with the roll out across the country of their flag ship Apple Stores.

Tech hungry purchasers of all ages swarm on their miminalistic, modern stores to try-out, discuss and experience the latest the brand has to offer but there’s not a cash register or ‘in your face’ sales person insight.

The store is instead full of more tech savy, t-shirt wearing staff armed with an iPad that instantly turns into a transaction terminal when you are ready to make a purchase and purchase they do.

Consumers could easily test-drive the products at the physical Apple store and then go and buy them online or direct from other leading resellers – so why don’t they?

Apple’s unique business model allows for other competitors to stock their products but they control the recommended retail pricing.  

So, when it comes to the purchase is price really the only deciding factor for the new consumer?

For starters online retailers can only provide effectively a ‘transaction’ whereas bricks and mortar retailers offer a great deal more of added value.  

This is the point of difference traditional retailers have over their online competitors and it is so much more than just a mere discounted price.

After sales support, real product warranties that can be serviced, experienced staff who can assist with your purchase, real-time delivery and of course the hands-on, personal shopping experience with ‘physical’ products not just a picture and a brief description.  

All of this is worth something tangible in the minds of the new consumer and whatever its real value its certainly valued at much more than the price saving of buying the product online.

Now that doesn’t mean that traditional retailers don’t need an online presence - statistics show that 80% of mobile users prefer local-based ads and 75% say they are more likely to take action after seeing a relevant local ad.

With this kind of activity you would think most businesses would want to be a part of it yet in Australia a recent MYOB survey found that nearly two thirds (64%) of small to medium businesses don’t even have their own website.

Add to this the fact that three quarters (75%) don’t use social media for business purposes and we have to wonder if Australia is falling a little left behind in the digital age.  

Social Media growth in Australia has continued to take the headlines with Facebook leading the way.

The social media kingpin announced last August that it had 9.5 million subscribers in Australia with 1 in 4 Australians ‘liking’ or interacting with a brand through Facebook on a weekly basis - according to Stat Counter that accounts for about 65% of internet social media use across the country.

It’s vital that traditional bricks and mortar retailers embrace new technology and start playing in the online space of their competitors.

A prominent online presence with an interactive website that allows consumers to search for and purchase product - especially during the times that the store is closed – is the key to meeting cyber retailers head-on.

An active Facebook page can be used to build customer loyalty, a regular e-newsletter to build customer relationships and a content driven, interactive e-store to capture customers when they are ready to buy or at least connect with them when they are doing their online research prior to making their buying decision.

Traditional retailers can then bridge the gap between online and offline by offering in-store discounts or incentives that need to be downloaded from the website, Quick Response (QR) codes that when scanned by a smart phone will take a consumer to a landing page of ‘secret’ daily specials or email invites to a ‘sneak preview’ of a new product release prior to it going public.

The new consumer is here – they’re called ‘Gen Y’ and there are currently 4.65 million of them comprising 21% of our workforce.

However, by 2020 that will almost double to 35% whilst the traditional retail loving, Baby Boomers will decline from 36% of our workforce to just 15%.

Our new consumer is a digital junky with 93% of teens 12-17 and young adults aged 18-29 going online regularly and they’re the ones spending the money.

According to American Express, 18-29 year olds continue to purchase high-end goods ramping up their spending on premium brands by 33 percent last year.

To satisfy this new group of big spenders, retailers must stay on top of e-commerce, mobile apps and social media, in addition to keeping the brick and mortar experience as customer-service driven as always.

So with the gloves off and the battle lines drawn here’s five ways traditional retailers can win against their online competitors:

Enhance the shopping experience

Take a leaf from Apple and their new Apple Store shopping experience with some of the most beautifully designed hi-tech gadgets neatly displayed, screaming “come and try me” and a customer team right by your side in seconds who know how to translate technology into value. Then there’s Nespresso’s ultimate coffee experience with some 270 boutiques worldwide as at the end of 2011 from just one in 2000. The Nespresso boutique boasts a ‘Discovery Wall’ that showcases their range of coffee machines whilst the ‘Coffee Room’ invites you to discover the art of Nespresso tasting. As with Apple, trained Nespresso coffee specialists are on hand to answer questions and provide expert advice.

Build your online presence

The online space is not just for the big players – customers need to find you and buy from you 24/7. $23 billion was spent online last year and online sales are expected to grow 9% this year - faster than sales from traditional stores.
Research shows that half of Australian shoppers are going online before they go into a shop so if they can’t find you on the web there is a good chance they won’t be coming into your store.

Own the customer

Customer loyalty is paramount to building repeat business and referrals from happy consumers. Innovative in-store promotions with incentives to ‘bring a friend’, VIP evenings to launch a ‘summer sale’, Facebook competitions, weekly email updates on the latest trends in your industry and so on go a long way to building a relationship with your customer. Online retailing is generally driven by the ‘sale’ and not the ‘experience’ so traditional retailers need to capture this void and exploit it.

Embrace technology

Australian retailers need to bridge the gap between online and offline by embracing new digital technology like mobile device apps, QR (quick response codes), NFC (near field technology) and in store technology such as magic mirrors – the new 3D digital fitting room which allows shoppers to sample outfits without actually putting them on - with the help of a 58-inch plasma screen and a depth-sensing camera.

Social, Local and Mobile (SO LO MO)

Identify and then create the social media channels that are the best fit for your
retail business with the must haves being Facebook, Twitter and Foursquare – that’s the ‘social’ part. Next claim your stake on the web – having a website is one thing but being found locally is another. Your website must be search engine friendly with relevant keywords, you need to be included in any relevant localised or industry specific directories and engaged in targeted online campaigns like Google AdWords and Search Engine Optimisation so as to generate both local search engine related traffic and referral traffic.  Then finally you need to get ‘mobile’ – from an app to a mobile friendly version of your site, you need to be found and accessible from a mobile device.

Traditional retail just doesn’t work anymore in today’s modern world and it has to change for your brand to continue to engage with its customers, stay relevant in an ever changing and competitive digital market space and own its rightful place in the minds of the new consumer.

Tony Eades is the creative director of BrandManager, a creative, marketing and digital communications agency based in Sydney and Perth. He is a business branding expert with more than 25 years experience in brand design, marketing, advertising and media production. Visit www.thebrandmanager.com.au



editor

Publisher
Michael Walls
michael@accessnews.com.au
0407 783 413

Access News is a print and digital media publisher established over 15 years and based in Western Sydney, Australia. Our newspaper titles include the flagship publication, Western Sydney Express, which is a trusted source of information and for hundreds of thousands of decision makers, businesspeople and residents looking for insights into the people, projects, opportunities and networks that shape Australia's fastest growing region - Greater Western Sydney.