How to take on Amazon.
Are New Zealand retailers missing an opportunity, as the arrival of Amazon looms large? Instead of waiting to see what impact Amazon will have, retailers should focus on how they can re-shape their offering for today’s selective, time-poor and tech-savvy consumers. Frances Valintine, thought-leader and expert in disruptive technology is keen to see our retail sector foot it with the world’s best. “Right now the world of e-commerce and retail is changing so rapidly. It’s a race about connectivity…about the connection between the retailers, the distributors, the logistics. It’s a whole different way of thinking about what we sell and how we present it.”
New Zealand has yet to see the bricks-and-mortar ‘carnage’ that is happening in the US, where this year’s retail real estate closures are tipped to easily exceed 2017’s record, which was just shy of 10 million square metres.
Also in the US, on-line and mail order sales grew by 13% from 2014 to 2017, with in store sales growth averaging 2.5% over the same period. Business analysts BI Intelligence estimate e-commerce is growing four times faster than traditional sales. Closure of big, established brands such as Toys ‘R Us and RadioShack are shaking the foundations of the sector. Media discussion of the ‘retail apocalypse’ has spiked to heart-palpitating heights.
She’ll be right?
On paper, New Zealand’s retail market appears relatively healthy, with population growth and tourism still boosting foot traffic and demand for products and services.
A Colliers International Research report released in April 2018 pegged Auckland retail vacancy rates at a relatively low 2.6% (up from 2.6% last year) and Wellington at 6.9% (down from 8.8%). The report also showed that 149,877 square metres of retail space is under construction in Auckland alone, with another 96,625 m2 proposed through to 2023.
But is our optimistic Antipodean bubble about to burst? Are we busy building outlets for ghost chips? The good news is that, even in the States, in-store purchases still account for more than 90% of sales. But that doesn’t mean sticking with the same-old formula.
Physical stores have to add value to the online experience. The key differentiator is that the store allows you to engage physically with product - touch it, taste it, try it on - at least until virtual reality goes mainstream. Retailers have to start thinking of stores as places where this can happen freely, easily and to the maximum extent possible, while enabling customers to make purchases when and where they choose.
Retailers know growing e-commerce is a priority, but mistake that for focusing on their website and don’t invest in optimising site for mobile (let alone anything else). Non optimized sites are the top consumer complaint (31%) but only 38% of retailers plan to invest in this area. Customers leaving the store empty-handed are no longer lost sales: those sales could happen on their walk back to work, on the bus trip home or in their living room that night. It’s up to the retailer to make it possible.
Tips for leading-edge retail success
Get mobile (and be app-y)
Mobile phones are rapidly becoming the browsing tool of choice, with apps gaining popularity over mobile web. Yet few retailers focus on how their site works on mobile phones, let alone use apps to potential.
Use big data better
Data helps you understand your customer and not just for marketing. Analysing preferences can refine everything from design to inventory management.
Tech your values
Technology can be used to deliver or reinforce things your customers value, like authenticity, personalisation or ethical choices.
Integrate online and in-store
Create seamless relationships between internet marketing, social media, mobile apps and in-store shopping.
Make it snappy
Got an app? It had better load fast. Delivery? Next day please. Insta-shopping? Oh yeah. Deals? Keep ‘em coming (and relevant – show you know me). Payment? Quick, I’m over this bit already!
Want to know more?
Join industry experts at Auckland-based Tech Futures Lab for a retail focused Business Disruption and Innovation workshop on August 24, 2018, which will take you on a deep dive into the brave new world of retail and logistics.