Switching over – why retailers need to get online
The retail industry is hurting. Just about every news outlet is reporting depressing times for retailers across Australia. Some alarming reports suggest that retailers are experiencing the worst retail results in 50 years.
But, it looks like Australian consumers are still spending, just not in-store.
According to new research by Frost & Sullivan, Australians will spend more than $13.6 billion online in 2011, an increase of around 13 per cent on last year’s $12 billion. Almost half of this, or an estimated $6 billion, will be spent with offshore online retailers – an increase of 25 per cent on the $4.8 billion spent offshore last year. The report also predicted online spending would grow at least twice as fast compared with the total retail market over the next four years.
Australians are adopting social media and online retailing faster than any other country. 50 per cent of all our retail decisions are now made online. We are the biggest users of social media on the planet and we spend more time online than any other media – including TV.
And we are doing it on the move with 60 per cent of mobile phone users accessing the internet on a mobile device last year while Smartphones have now reached 46 per cent of the population and are revolutionising the way we live and the way we buy.
Australians have not switched off, they have switched over, and we are now collectively scratching our heads as to why retailers haven’t followed.
In their recent report Economic Structure and Performance of the Australian Retail Industry, the Productivity Commission noted that ‘Australia also appears to lag a number of comparable countries in its development of online retailing’.
So with such an online shopping frenzy, why do Australian retailers seem resistant to take their businesses online, especially as it has proven to be such a gold mine in other markets?
The way a consumer interacts with a brand is now determined by the consumer. The problem for retailers is consumer preferences have shifted up several gears, harnessed by technology and expanded beyond the physical realm of bricks and mortar retail with catapulting speed.
And mobile is acting as the glue between the online and offline worlds. Consumers are looking to their mobile devices to research and interact before they go in store. They are looking for the switched on retailers to provide them with an engaging experience that will drive them to purchase in store OR online. The simple fact is that too many Australian businesses are losing customers because of frustration with clumsy or non existent online, mobile and social shopping experiences.
Innovation is always driven by people, by consumer-demand, and the online retail revolution is no exception.
Noted American author, Isaac Asimov once said, ‘The only constant is change, continuing change, inevitable change – that is the dominant factor in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be.’
Today change is happening at an accelerated rate.
It is not enough for businesses to simply shift the way they think about connecting with their customers, they must continually re-shift and re-think to match the twists and turns of their customer’s needs.
If we can only buy from a retail store – a single-channel approach – and factors like the location, opening times or queues make it difficult, we will simply seek out alternatives, including online or even overseas stores.
Retailers have to build many complementary channels – such as online, e-commerce, mobile, social media, email, SMS, phone and face-to-face – and then let the customer choose.
These multichannel retailers are being heavily rewarded by consumers. The Australian Centre for Retail Studies at Monash University found that consumers engaged across multiple channels will shop three times more frequently, spend three times as much and display much greater brand loyalty than consumers engaged across a single channel. What an incredible opportunity for Australian retailers during these tough times!
Online and other digital channels have converged. The rapid rise of social media has permeated every facet of personal and professional life. Twitter messages flash across television screens in real time and advertisers have put Facebook links on outdoor billboards.
While these channels have been very disruptive in the world of customer communications and marketing, this change should not be feared. Digital communication offers unlimited potential, while the power of social media is expanding the realm of possibilities.
Retailers have a tremendous opportunity to expand their avenues to connect with customers and ultimately, increase their share of our wallets.
It is the change consumers want and Australian retailers need to embrace the new digital world order, innovate, adapt and reap the enormous rewards that are on offer.