I visited a Canberra photography store in search of a particular item because I wanted to support a local retailer before venturing online. Being a specialist outlet and part of a large chain, I was certain they would have it.
Quoting a hefty price and saying it would take several weeks to arrive, the salesperson sensed my interest waning. Realising they were losing a sale, he tried recommending a product on special in the corner instead. It was old stock covered in dust that they needed to clear, still very expensive and nothing like the product I had asked about.
I chose to order it online instead from a retailer in New York charging half the price and able to deliver in later he same week. Not only was the overseas retailer more competitive, their advice was invaluable; the staff member knowledgeable and attentive. This example is far from unique.
ED NOTE: Apologies, a technical hiccup meant the comments on this post were not open previously. You may now comment.
And it’s indicative of the changing environment Australian retailers face and why they now find themselves in trouble..
Many local retailers view their task in simple terms. Consumers are perceived as sheep to be led - not valued customers to serve and be attentive to. Is it any wonder then that in recent times, the flock has begun to wander?
People who have worked in retail a long while speak of a different time. A time when there was less competition, online trade was in its infancy, and the market wasn’t in a relentless race to the bottom.
From their perspective, retailers said jump and customers asked how high? Occasionally businesses felt the pressure of a downturn, but the balance of power in that relationship between consumer and retailer prevailed in the latter’s favour… Until now.
Retailers are realising that the paradigm that worked yesterday isn’t likely to be the paradigm that works tomorrow. That as consumers become more savvy, better informed and increasingly able to access alternatives, the practices that once sustained their businesses are sinking deeper into obsolescence.
Yet rather than reflect on new ways to innovate, to compete, to make a stronger proposition and attract customers back, major retailers and industry advocates have focused elsewhere, working hard to characterise the retail sector as a hapless victim of circumstance.
Ignored and left out in the cold by government, betrayed by consumers and unfairly usurped by a growing tide of overseas businesses who are unencumbered by Australian tax and regulation. Their solution has been to advocate protectionism and invoke the rhetoric of patriotism and a fair go, hoping to compel the flock back to familiar pastures.
Consumers and their advocates like Choice are right to label such tactics as absurd.
Not only does it distract from what retailers need to do to improve their circumstances, it ignores the hard truth that many of the challenges retailers now face are of their own creation.
The internet has democratised retailers for consumers. Transcending the barriers of time and distance they’re offered more choice and information than ever before.
Its effect though has been overstated, serving as a convenient scapegoat for the retail sector, yet accounting for less than 6 per cent of Australian retail turnover.
It is only a small part of a much larger picture, one in which retailers must recognise their own role.
They must recognise that they have done little to remedy, and have often tried to profit from, the significant inequality in pricing between Australian and overseas markets. That’s undermining local business and alienating consumers.
They must realise that a relentless and narrow focus on price and market share expansion to secure customers, has been unsustainable and created increasingly unrealistic consumer expectations.
The massive discounting of products has forced businesses to rely on so called value adding high margin accessories and clever financing options to try and recover margin – tactics detrimental to and increasingly shunned by consumers growing wise to them.
Retailers must instead innovate and adapt to the changing environment, offering value and competitiveness, but also investing in the customer experience, investing in their product range, their stores, and above all the knowledge and expertise of their staff.
Retailers no longer exist in a small, comfortable marketplace. They exist in a global village, an environment in which the power s increasingly in consumers hands. Protectionism isn’t an answer. Only innovation, attentiveness and renewal will enable local retail to thrive in the long term.
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