The Retail Leaders Forum was held in Sydney 2nd to 3rd of March 2015 and covered a plethora of leading edge information regarding the retail industry and our future direction. The event was attended by senior executives from some of the largest retailers in Australia and around the world such as Aldi, Apple, Freedom, Google, Country Road, Myer, Super Amart, Tiffany & Co, Toys R Us, Woolworths and Wal-Mart covering the most important topics facing retail today. Most importantly, intriguing case studies were broken down to bring light to some very important areas we can learn and grow from.
From all the information shared at the event, these are the ten most pertinent topics facing the retail industry today and if understood and applied in businesses within Australia, we can ensure we remain on par with some of the most successful retail giants in the world.
The concept of big data can and does often blur the boundaries between privacy and social oneness. And it certainly does give off the unsettling vibe of the famous story 1984 by George Orwell. Whether you’re a fan or not, Big Brother is most definitely here to stay with personalised advertisements and messages following you to your home and every site you visit around the web. And this is just the beginning.
We are all in business, in one shape or another and big data, as it’s commonly called, could be the most underutilised tool of our now technologically advanced time. Michael Tyne, Head of Sales & Channel Marketing at Australia Post openly admits that despite having over 4000 outlets, they know very little about their customers. There is so much data to collate, that the most important element has now become not, what data they have, but what questions to ask to get the most valuable answers.
And Luxotica agrees, “we now have so much data at our fingertips, it can be extremely powerful if used correctly”. They say that all retailers should employ data scientists. Why? Because mass marketing no longer works and nor does previous experience or assumptions. Retailers need to be analysing their clients’ spending patterns and undertaking very personalised offers. Luxotica receive a 7% return on their campaigns because they have targeted and personalised their marketing clearly.
“Data scientist are the sexiest jobs for the 20th century”
Alec Gardner, General Manager Advanced Analytics, Teradata ANZ
In a forum devoted to matters of the economy, Roy Morgan, ANZ, Luxotica and Oracle covered how up till now, household debt was fueling the retail economy. Given that Australia has one of the highest levels of household debt in the world, this debt will no longer fund retail spending going forward.
Overall, non mining states including New South Wales and Victoria are doing well in retail. However, post-mining states like Queensland and Western Australia who experienced the largest effects of the mining boom are not faring as well in retail.
We find that with an increase in unemployment and job insecurity in times of high household debt can affect consumer confidence and retail spending. With this in mind, economic growth is expected at only 2.5% (so no boom ahead) and despite the low sounding figure, other countries such as Europe are worse off with a 0% level of growth. Comparatively speaking, Australia is still a primary location for growing a retail business both on and offline especially with the increase in overseas spending in our market (see Part 2 – coming on Thursday).
The most important factor in this growth will be our ability to embrace the change hitting our doorstep in the next 5 years.
As the saying goes, change is the only constant in the world. Change is inevitable and yet we’re somehow surprised when we hear from Peter Wilkinson, former Managing Director of Myer and David Jones report that they once had 27% of the non-food retail market share 20 years ago and today, they have only 8%. The worst part being 20 years ago, there were 18 players in the market and now there are 2.
An important topic that requires a little more explanation. Hungry Beast has put together an animated infographic explaining the two friendly giants and their tactics (Woolworths and Westfarmers). The video was made in 2010 with a stated figure of 23c in every dollar made by Australians going straight to their pockets. That number has since grown to 40c in 2015.
So now, it’s not just non-food, it’s all areas of retail.
So how do rivals like Aldi and IGA stand out from the crowd?
Aldi now have a 15% market share in Australia with a steady growth. Tom Daunt and Stefan Kopp both Co-Group Managing Directors of Aldi shared their strategy:
There have been many examples of great Australian retailers who were once relevant but failed to embrace the change that is now part of our everyday lives like: Colarado, Fletcher Jones, Darrel Lea, Borders, Angus & Robertson, Whitcouls, Crazy Clarks to name a few.
So we agree, change is inevitable and occurring at a very fast rate here in Australia but exactly how fast?
Mentioned at the Innovation Stream lead by several speakers at the event, the next five years will see the most amount of change in retail compared to the last fifty years. This is being driven by both consumer behaviour changes and technology innovation.
This is a huge concept and one we can all gain from if embraced wholeheartedly. And by this I mean, if something isn’t working, stop, reassess and relaunch. What worked even several months ago, may not work in today’s ever changing online retail world. As leaders in our businesses, we are the ones who can ensure we stay ahead of the game by testing initiatives and being open to failure and success.
Being open to new ideas and concepts is key to innovative change. For example, some totally new retail business models are emerging whereby in New York, you can pay a monthly subscription and gain access to the latest fashions to wear all season and then return them at the end of the season in exchange for a whole new wardrobe!
As Andrew Jennings stated, the answer lies in knowing your customer – match the innovation of your customers.
Embrace technology. Innovate. Hire the best talent and empower them. Embrace change or die. – Andrew Jennings, Former CEO of some of the worlds great retail brands and now Global Advisor & Board Member
Your consumer network is your future. Your list, your customer base, it’s the living, breathing heart of your business. Grow it, nurture it and value it. For example, creating effective loyalty programs where those who purchase from you receive discounts and special offers can greatly benefit your bottom line if used correctly. You can do this by capturing your customer data right at the point of sale as they’re already committed to you. By giving your attention to the customers who have already purchased from you, you’re already half way there.
Last year, Microsoft purchased Minecraft for $2.5 billion. Despite being a free game, they bought it for its deep consumer network value.
So how do you nourish the lifeblood of your business?
Change is now unprecedented and customers are so well connected, they often know more about a retail product than the retailer themselves. So how can we stay relevant when communicating with our customers?
As mentioned by Michael Burgess from Hudsons Bay, the customer experience is the number one priority in retail right now. Your business revolves entirely around people – those who serve and those who buy. The relationship is far more intricate now than in the past and the big data we now have access to can enlighten us so that we can truly understand our customers. Jennings stated quite clearly, “you won’t succeed by operating in a retail vacuum”.
“If you have the data, you have the foundation for success” Geoff Andrews, Retail Teradata, ANZ
And then applying insight and action creates the success.
So, the question to be asking now is ‘how easy was it for your customer to get what they wanted?’ Are you getting in the way of the transaction with too many irrelevant offers and questions? Use your data to get to know your customers, how they buy, when they buy, what they’re looking for and why. They’re not just numbers but mothers, daughters, fathers, brothers – real people with real wants and needs. This is where your retail business can easily connect the dots, bringing real value to the customer and ultimately growth for your business.
What do YOU think? Did you attend the forum? What do you think are the biggest topics hitting the retail industry over the next 5 years? Please share in the comments below.
For more information on Australia’s market-leading cloud based retail operating software, Retail Express, please drop us a line www.retailexpress.com.au/getstarted or call 1300 732 618
Author of Post: Bamik | Date of Post: 2015-03-11