The Australian retail industry has gotten off to a rough start in the new decade, presenting local retailers with challenges, but also with numerous opportunities, if you know where to look.
The world is an entirely different place to what it was at the start of the last decade, and today, many industries have evolved so much that they’re almost unrecognisable.
Ten years ago, there was no Instagram, Uber was just an early-stage startup trying to prove a concept, people were marvelling over the iPhone 3G, and on-demand food delivery companies like Deliveroo weren’t even a thing.
As all of today’s wonderful tech has emerged, industries have been transformed – none more so than the retail sector.
If you’re a retail business owner looking out at the seas of negativity, we have the insight that can help you turn the situation from lemons to lemonade.
The below article shares four tips for turning common retail industry challenges into opportunities (including product range, political and environmental issues, advertising costs and general complacency). But first, let’s take a closer look at the broader problem at hand.
Across the globe, storefront retail trends have dropped due to the increased use of eCommerce solutions, with retail tech giants like Amazon and eBay changing the way people around the world purchase their goods.
Locally, Australian eCommerce giants like Kogan and Catch Group have boomed, and local retail trends have caused business owners to make significant changes to their retail businesses.
But these changes have in turn caused pain for other Australian retailers. January 2020 was a particularly tough one for retail in Australia, with more than 160 poplar stores tagged for closure, including the likes of EB Games, JeansWest and popular women’s clothing brand Bardot.
Navigating one’s way through dramatic market shifts and changes in industry trends can be extremely difficult.
Knowing how to react to the different events that take place and adapting to the constant flow of change can be difficult while also trying to keep your business open and your employees paid on time.
If Australian retailers are to thrive while faced with the ongoing rate of change in the new decade, it’s crucial for them to recognise what specific challenges they face.
It’s also important to remember that, when change occurs, new ideas and opportunities are born.
Retailers must therefore embrace opportunities as they become apparent and use them to their advantage.
Before working through some of these challenges and opportunities, it’s important to maintain perspective.
The retail industry might be changing, but it certainly isn’t disappearing.
So long as there are people to buy things, there will always be the need for retail.
Technological advancements may change the way people shop, but the basic economic rules of supply and demand will always exist, one way or another.
Headlines might call it ‘doomsday’ or ‘apocalyptic’, but ultimately, it’s all about adapting to change. And it will be those who rise to the occasion and embrace that change who will stay in the retail game throughout 2020 and beyond.
From all the horror retail stories that have come to light over the last few years, there’s one message that has become blatantly clear: putting all your eggs in one basket just won’t cut it.
Diversity of product is the only way to ride the retail paradigm.
In years gone by, it was easier to get away with relying on one type of product in order to create a profitable retail business. Today, retailers who don’t diversify their range are being challenged the most.
The mass closure announcement of EB Games stores in Australia illustrates this point clearly. Their entire offering has been dedicated to the video gaming vertical, and now that online gaming has become mainstream and people have become familiar with purchasing hardware online, the demand for a service like EB Games is significantly reduced.
Many older Australian retailers have built their businesses in such a fashion, and this will prove to be an ongoing challenge for them in the new decade.
But, recognising this challenge is the first step on the journey to survival. Flipping it into an opportunity is the next.
What other product or service verticals might you expand into in order to bolster your business?
The retail industry relies heavily on consumer sentiment. When people are happy, they tend to purchase more, and when things are tough, they put their wallets away.
Between the devastating bushfires that our country continues to endure, and the complicated, divided political climate both locally and around the world, morale is low and retail spend is depressed.
The reality is that there are no simple solutions to these issues.
What we can say is that, social and political challenges can offer plenty of opportunity to retailers that approach them in an authentic fashion.
For example, boosting environmental credentials has become a sure-fire way for retailers to differentiate themselves from their competition – and becoming more sustainable can even lower your costs.
Alternatively, retailers are in a unique position to help rejuvenate logistics and supply networks in the wake of disasters like Australia’s recent bushfires, bringing jobs and trade back to the places that need it most. It’s certainly not an easy task – there’s a lot to think of in terms of being sensitive regarding timing and communications – but that doesn’t mean retailers can’t strike a balance between altruism and business growth.
Whether it’s through Google AdWords, Facebook Ads, or search engine optimisation, if a company wants to successfully promote its offering to consumers, digital marketing is a must.
And, due to that popularity, the costs of digital marketing have increased.
For example, data from Hochman Consultants shows how pay-per-click costs increased 312 percent between 2012-17 – and that value for money equation continues to dwindle as digital marketing platforms mature.
As ROI decreases, retailers have instead lowered their profit margins to reach more eyes and stay competitive, but this is a defining feature of every ‘race to the bottom’.
This should be a huge ‘green flag’ for retailers as, if your competitors are engaged in a race to the bottom, now’s the time for you to break the cycle.
Keep in mind, the most powerful marketing tool of all is word of mouth advertising (and in today’s world it is both a virtual and physical channel). Retailers that can leverage their service offering and brand to convert their best customers into genuine advocates stand to gain in the years to come.
There are also new digital marketing platforms, channels and trends arriving on the scene that aren’t yet subjected to heavy competition, and some retailers may find value in experimenting at the bleeding edge of marketing tech, rather than toughing it out in the tried-and-tested section.
Potentially, retailers may also start to see the costs of digital marketing methods begin to stabilise as more brands look to other methods to cut through the noise and reach new customers.
With all the changes taking place in the industry, there’s an opportunity for retailers to place their business models under a microscope and start looking for ways to improve their processes.
Some industry pundits have made the case that, until recent disruptions, many Australian retailers had grown complacent in continuing to run traditional models without feeling the need to innovate.
Today, ‘set and forget’ is no longer a viable strategy.
Retail business owners currently have a unique chance to learn from the mistakes of others and protect themselves from facing the same fate.
One of the big shifts in the global retail industry is that many of the dated processes that have been used for decades are slowly becoming obsolete and being replaced with novel tech-based solutions.
But some retailers have avoided making the transition from old to new, creating a unique opportunity for ambitious retailers to get ahead of the game and begin using innovative technologies to replace their dated processes.
Whether it’s through the use of logistics tools, data analytics or machine learning, using technology in retail is still something that many business owners are yet to embrace.
If there was ever a time to embrace technology and take part in ongoing retail trends, that time is now.