As we continue our exploration of the discussion coming from Product Bash 2011, our panel of Mark Rowland, Co-founder of online shoe retailerStyle Tread, Andrew Rechtman, Product Director of PayPal Australia and Daniel Roberts, Head of Online for the Woolworths non-food businesses Dan Murphy’s, Big W and Dick Smith, shared their thoughts on “The Internet Super Mall and the Future of Retail” in relation to how to stay afloat in the increasingly competitive retail sector.
Brainmates Nick Coster’s choice of topic for Product Bash 2011 was inspired by the eerie echoes of concerns and complaints by large retailers as they bemoaned the increasing competitiveness of online retail and the plot of the Tom Hanks film “You’ve Got Mail”. The story saw Hanks’ character face off against the giant chain stores that threatened his business, an independent bookstore. His gripe was the mall, just as bricks and mortar retailers now gripe about the appearance and continuing growth of online. Certainly, it is very obvious to consumer and retailer alike the nature of shopping is changing. But does that mean it will spell the end of the traditional shopping experience?
Dan Roberts believes customer facing businesses such as Telco’s, bookstores and businesses more reliant on the traditional retail model have some major transitions to make in order to remain competitive. The focus on buying product, offering it in store, measuring the labour hours and providing a fairly uniform and homogenous service will no longer suffice. Online has created the need for much faster turnaround of promotions and sales, customer service response and changed the ability to interact with products markedly. Giving the customer’s exactly what they want is the first step to working towards a successful retail strategy.
“Traditional retailers have to respond so we (Woolworths) now have hourly deals, daily deals, and weekly deals and we have to match what customers want. It really puts the customer at the centre. But go out to a buyer and say ‘I need ten deals next week and they are going to be 30% off’ and they will look at you as though you have suddenly arrived from a different planet. Trying to get retailers to think differently unfortunately is a major challenge but fortunately for me, Woolworths is taking those challenges seriously,” said Dan.
As an online only shoe retailer, Mark Rowland’s main competitors are bricks and mortar shoe stores, with only 5% of the current shoe retail market coming from online sales. Even future predictions see online taking only 20% of the market share in the most ideal circumstances. So meeting the consumer’s qualms about buying shoes online with robust solutions is paramount to the success of his business.
“You’re going to want to try a shoe on even if you buy online. So free delivery, free returns, 100 days to send it back if it doesn’t fit- those are the things you can offer to entice people to buy online. What you sell is confidence,” explained Mark.
Andrew Rechtman had this frank yet timely advice to share with any retailers. “If you are playing a strategic game you will say to yourself yes I make a higher margin when somebody buys in-store but I will let the person buy online even when they are standing in that store because that’s the way the consumer wants it to be. If I have to readjust my margins, business model and fulfilment model then I have to do that because if I just sit here with my hand in the sand and pretend that nothing is going to change, I will get pulverised. The answer to your question is do not charge people to come in for a trying on fee, which is where some retailers have suggested we go. You have to wear it. At the end of the day if the people want to come into your store, and they want to buy online price, match it. Flight Centre has made a business out of price matching. Of course you can get better prices than Flight Centre but who can be bothered half the time so it’s actually the fact that they have the price beat guarantee and that they are pretty good on price are all the reasons you will shop there.”
The message is clear. To maintain a successful retail business and stay afloat in the current climate, you need to be smart, nimble and customer centric. Match your customer’s desire for competitive prices with flexibility, overcome your customer’s objections and concerns with genuine solutions and guarantees, and do not be afraid to embrace the multichannel retail experience.
For more coverage of Product Bash, check out the brainrants blog