Can Aussie retail win back fickle digital customers?

Smarter Staff
Smarter Writer

This article has been written by the Smarter Business™ Staff Writers

Smarter Staff
Smarter Writer

This article has been written by the Smarter Business™ Staff Writers

Avoid end of financial year (EOFY) stress and ensure your business is well prepared. When three leading minds in Australian Retail recently met to share their views on the biggest challenges facing their sector, the discussion revealed that culture could be the most treacherous factor.

The trio were sitting on a panel convened by the Trans-Tasman Business Circle in Sydney last week. It included Dymocks managing director Steve Cox, Super Retail group managing director and chief executive Peter Birties, and Bain & Company’s Australian Consumer Products and Retail practice chief Melanie Sanders. All three occupy senior management roles in a sector facing unprecedented disruption from online commerce, a natural lull in the economic cycle and questionable consumer confidence.

shopping trolleys

Competing on a global scale

For Birties, who leads a group consisting of outdoor and sporting brands, it is the first of these that is the most challenging.

“We’ve now got to recognise that we’re competing at a global level so for us as a domestic operator we’ve got to benchmark ourselves and compete against the world’s best. The whole bar has been lifted in terms of competition,” says Birties.

However, it’s not just the lowering of entry barriers for new retailers and destruction of market border making it hard for retailers with strong domestic brands, according to Cox. He says that the internet and its social media siblings have completely upended the older and predictable decision making processes that retailers could rely on. “My decision set before I make my purchase is far greater than it ever was,” says Cox.

“The brand is still of great value but it’s responding to and understanding changes in the customer cycle − the way that they’re shopping and then ultimately how you can maintain their loyalty − so that next time they’re not just going to Google (products) and ensure that you’re front of mind”.

That adds up to major challenge achieving growth, says Sanders. “Macro-economically we’re at a cyclical low. What’s making that sort of a perfect storm is that there’s a structural challenge as well,” she says.

We've now got to recognise that we're competing at a global level. We've got to compete against the world's best.

- PETER BIRTIES, SUPER RETAIL

A natural shift

Birties argues that the challenge is driving a need for business culture changes in retail as shifts from being a product-centric to customer-centric industry. He says the customer proposition and culture are now entwined.

“We’ve got to align culture internally with what we’re trying to do externally with our customer. I think that those organisations that can achieve that level of consistency from their customer all the way through to their team are the ones that will have a sustainable competitive advantage,” he says.

Sanders sums up another element of the cultural challenge with a question: “How do you get a bunch of really technical tech savvy guys who like creating stuff and are in Silicon Valley to want to come and work in retail?”

Trying to find the cultural nexus between the technology industry and traditional retail, she says, is a global challenge. Cox says that being more customer-centric is about having much greater intelligence about customers. Imprecise digital and email campaigns will no longer cut it in a world where consumers are overloaded with information.

He says Dymocks has cut the number of email campaigns it send to all its customers each month to just one. “The biggest email campaign I sent last year was a Mother’s Day campaign to the small group of people who I was 100 per cent certain were mothers because they’d just filled out our survey a few months earlier. We sent them a piece of communication around ‘Mother’s Day − you deserve something’. That got a 68 per cent open rate when we normally average around the 30s and 20s,” he says.

Time for change

Birties admits that Super Group’s customer database is not quite where he’d like it to be. However, he says that for now his main focus is on macro-issues like changing the mindset of his organisation.

“To make changes and to go out in the market and run this business is quite a challenge when you’re moving away from things that you’ve done for 20 years, and you’ve got a pretty good idea what results you’re going to get, to this new world where you say ‘I’ll try this, but I don’t know whether it’s going to work’.”

Birties says that retailers have to start accepting a level of variability in performance as they make their transition to the digital era.

However, when asked about the importance of business agility Birties gave this warning: “Agility is certainly a mantra but it’s difficult to execute. Sometimes you have to be careful you’re trying to be so agile that you don’t do anything well”.

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