Customer Connectivity – 2010 and Beyond

Published on August 4, 2010 to www.insideretailing.com.au

I have a view that some of our leading retailers are very vulnerable to competition arriving from off shore retail - such as Gap and Zara. 

That along with the revolution in online sales growth.

Both of these forces are transforming the world into one large global shop and some of our retailers will not be simply ‘fit’ enough to compete.

Let’s apply a simple test to that view. Think of some of the top retailers in our country. Now consider how many of these retailers have created exciting new formats, merchandising systems, brand representations or simply put, have reinvented their offer in the last five years?

Last week I started to list some 20 of our leading, nationally distributed retail brands and it occurred to me that their brands, fit outs, internal merchandising and internal experiences were pretty much the same in the year 2005 and in some cases as they were in 1995.

Why is it that innovation, exciting new formats and experiential retail invariably comes from new entrants to the marketplace?

It is interesting to observe the discussions regarding Zara in the past few weeks. The question was not whether or not they would take market share from our existing retailers, rather by how much.

So why does this vulnerability exist? Is it fundamentally a lack of capital reinvestment by retailers faced with boards that demand short term profit numbers, increasing pressure of rising rentals and wages or reduced margins?

Did you hear the one about the visionary CEO who convinced his board to reinvest the following two years profit into a complete reinvention of the branded offer, supply channel, information technology, innovation, format and customer experience in order to compete with the new order of retailing? I didn’t think so.

The other aspect to consider is whether the speed of retail is now much faster than the standard property lease term. Many retailers invest their capital on shop fit outs to spread over a typical five year period.

Let’s look at the last five years and see what has happened in retail:

• A new generation of shoppers.
• A new revolution in multi channel retailing.
• The rise of online retailing.
• New emerging categories in retail from fast fashion to technology experience retailers.
• The birth of social media and shopping ‘communities’.
• Growth of other formats such as Pop up retail.
• Large changes in consumer trends.

So the fit out, look and feel for many retailers is exactly what it was in 2005 yet the world of retail as influenced by changing consumers has changed irrevocably.

Last week we held a breakfast event in Melbourne called Customer Connectivity 2010 and Beyond. One of our speakers, Robbie Robertson (MD, e2 Experiential Environments) had some great ideas as to how we can create exciting store fit outs and designs that entice customers into the store by stimulating all five senses and hence encouraging them to buy from us. (This event will also be held in Sydney on 31st August www.retaildoctor.com.au/events).

I wonder if some of the mainstays of Australian retailing will be with us in another five years time. Being competitive, sharp and ‘fit’ is now a month by month proposition that requires reinvention, recapitalisation, innovation, speed and changing customer experiences.

Perhaps you have a different view and we’d love to hear your thoughts?

Contact us to get ‘Fit for Business’ today phone 02 9460 2882, email businessfitness@retaildoctor.com.au or visit our website at www.retaildoctor.com.au.

An invitation...

As regular readers of the Doctors Diagnosis, I would like to invite you to our next Retail Doctor Breakfast Event, Customer Connectivity – 2010 and Beyond.

This breakfast seminar will explore trends in consumer behaviour and draw on global and local best practise to give you the tools and knowledge you need to connect with your all important customers. The breakfast will be in Sydney on August 31.

Visit www.retaildoctor.com.au/events , email louise@retaildoctor.com.au or phone 02 9460 2882 for more information and to register today.

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