Hope for an Australian retail renaissance August 4, 2013 20:51
I believe that Australia stands on the cusp of a retail Renaissance, by which both retailer and customer will benefit.
Australian retail is at an inflection point. While many may claim we are witnessing our darkest days in the industry, there is also every sign that this country is on the verge of a significant retail Renaissance.
It was Thomas Friedman the Pulitzer Prize winner and futurist who, back in 2005, claimed that the world was flat. Just as tellingly he summed up his key thesis to business in a few sobering words:
“You are either doing it, or it is being done to you.”
We know with the benefit of hindsight, that a lot of Australian retailers – especially those in the well established sector – were heavily invested in the status quo and were not willing subscribers to Friedman’s theories. Those are the retailers that resisted the change. Quietly, and in whispers, they frequently referred to the Australian retail tapestry as “treasure island”, referencing a captive market of customers, isolated geographically. The mantra, unashamedly: charge what the market will bear.
We now know that Friedman was broadly right. The shift age, the digital age, the hyperconnected world has resulted in a borderless shopping globe. Australian shoppers, unsurprisingly, as early technology adopters, extremely savvy and in pursuit of value, are boldly shopping across borders. Via social media they shop, indeed, hunt, in packs, ensuring the best value is delivered to not only themselves, but to their fellow shoppers. Alarmingly, the divide seems to be increasing between larger Australian retailers and their customers.
I have stopped reading some of the sensationalist media online that’s always predicting the end of retail in Australia. But I do pay attention to the readers’ comments. On the 26th July, in The Sydney Morning Herald, the article was entitled Australian Online Shoppers Go Global. I skipped the article but did read its two hundred reader comments – vitriol mainly against Australian retail, which was perhaps best summed up by ‘Savvy of Melbourne’, who wrote: “Irrespective where our economy heads, our retail sector will never recover to the level of the ‘good old days’. The internet is the ‘great leveler’ – it helps us to draw a direct comparison of pricing models here and overseas. As consumers, we are within our rights to choose where we wish to spend out hard earned dollars. So it’s goodbye bricks and mortar… hello internet orders!”
If we really want to get scientific about it, and move away from these emotive comments, one only has to go a comprehensive survey run by the Australia Day Council of NSW in October 2010. Overwhelmingly, respondents voted for optimistic battler Darryl Kerrigan from The Castle as the film character that best represents us as a nation.
Retailers, you were warned; Australians love a bargain, and they’re not afraid to say, “tell ‘em they’re dreamin’”.
Regrettably, the response by some established retailers only appears to have amplified this disconnect. Large and wealthy retailers and their industry association heads looks down the lenses of TV cameras, and, while being beamed into every Australian household, remind the government of the impediments local retailers face, the inequity of the lower value threshold and the importance of traditional retail in the Australian economic landscape. In most cases, the retailer message is all truisms; the only problem is they never seem to reference the Australian shopper. This is a deep betrayal of the mantra that the customer is king, the customer is always right, start with the customer and work backwards.
The result of this disconnect is a standoff between Australian shoppers and Australian retail, leaving Australian shoppers to continue seeking offshore alternatives.
Add to this the force of disintermediation, the removal of the middleman, the intermediary. This is another powerful force shaping retail today that will provide enormous opportunity to those who adapt, and threaten those who don’t. Walk down George Street and look at the retailers with foot traffic – Nespresso, Apple, Samsung, Zara, Nike, Swarovski, Gap – the list goes on. All of them retailers who own the brands within their shops. The digital age continues to compress the supply chain. The market is in perfect equilibrium, and casualties will mount.
But as they say, it is often darkest just before the dawn, and that dawn is slowly starting to break. The blinding flash of the obvious must surely be this: if the world is flat, if the world is borderless, and if we are the clever country, geographically positioned bulls eye in the Asian century, then maybe, just maybe, we are on the cusp of an Australian retail renaissance. As much as some retailers feel ‘invaded’ by their offshore competitors, our best and brightest are themselves starting to ‘invade’ rich markets on our doorstep. So, let me say that I am a bull – I am deeply optimistic about the emergence of a new retail in Australia. And NORA and its board share the passion for this retail transformation.
So, what is NORA’s view of the future? What retail ideal to we advocate for? We advocate for what we increasingly refer to as the ‘new retail’. Mindful that jargon is not well received by shoppers, we are quick to define the new retail by having four simple pillars that continue to drive its success. New retail:
Is lead by technology
Is deeply customer centric, not just from a customer experience perspective but also understanding customers at scale using big data, personalization and lifecycle marketing tools
Usually embraces a strong consumer direct delivery model – don’t we love it when we can’t come to the shops, but that the shops come to us?
Is increasingly global
Australia might well be on our way to becoming that retail ‘treasure island’ once more. This time, however, it’s for the right reasons. Australia could well become a treasure island of talent, entrepreneurship, innovation, invention and intellectual property. These are all the attributes required for a true Australian retail renaissance – a renaissance that I believe is beginning now.
This is an abridged version of the speech I gave at an event for the Committee for Economic Development in Australia last week.