The Current Challenges Facing Retail In Australia And The US

If you work in retail and rely on customers coming into your store to buy goods, you know times are tough. We are living in challenging times with many factors creating uncertainty including a minority government, increases in electricity prices, job losses, lower spending, and a volatile housing market. All of these issues lead to a lack of confidence and consumers who are spending less than they were previously, particularly in certain sectors of the retail market.

Stories of doom and gloom about retail are everywhere we look. Many retailers are closing down.

To add to these ongoing challenges, online sales are growing rapidly and large overseas retailers are continuing to open in Australia. It doesn’t look like a great background and many retailers are feeling the pinch. This lack of confidence is certainly reflected in recent sales data.

Online shopping, however, continues to see phenomenal growth and is a direct threat to the traditional retail-shopping environment. Customers don’t have to fight the traffic, find a park, battle with the kids and then suffer from a distinct lack of service. Instead, they can go online at their convenience and make a purchase. It’s a huge threat to traditional retail stores and it’s here to stay!

In particular, let’s  look at what’s happening in the US and Australian markets when it comes to online shopping.

According to industry experts, price and convenience aren’t the only critical factors driving online buying. This opinion has been confirmed by research commissioned by Frost & Sullivan.

When asked why they were buying online, customers cited lower prices (55%), convenience and range (15%). Some also cited ease of the shopping experience (11%). Other reasons included: goods not available in shops, or available overseas only, delivery to door, no crowds, no need to find parking space, no salespeople, the ability to research and compare prices online.

Despite the growing importance of e-commerce, there is a segment of customers who have decided not to buy online. In the ACMA survey, they declared they preferred shopping in the “old-fashioned” way, or buying “in person” so they can see, feel, or try a product. The security of online transactions was also a concern for many.

Traditional shopping is still regarded by many as the most reliable and secure method of purchasing goods, but this is rapidly changing.

Against this backdrop of tightening consumer spending, tougher economic times, and the spread of online shopping, it would seem to be the right time to make sure that customer service in stores was at an all-time high. Yet this doesn’t appear to be the case according to recent customer surveys.

So what does this mean for those of us in retail who rely on customers coming into our stores?

Here are the problems I can see:

  1. Times are tough; customers are saving their money at record rates so spending is down and there are fewer customers visiting retailers.
  2. Online is a major threat to existing retailers and unless we give the customer a great reason to come back, many will move to buying online and will never come back.
  3. Customer service and the customer experience is in decline – that’s what 60% of customers think anyway.
  4. Customers are quick to leave retailers who don’t get it right and flock to the ones that do (or go online).

Retail is challenging but with the right people and the right attitudes you can get through these tough times and even grow your sales. Customers will still drift to the online environment; it’s the way of the future, after all. But you can be sure of one thing: if you keep doing what you have always done, they won’t drift away, they’ll leave in waves!

In the words of Michael Sherlock (former CEO of Brumby’s Bakeries), “There’s no service with a smile online.” He goes on to say, “Retailers need to get back to basics, providing the experience of human connectivity with the customer.”

Roger Simpson and the team at The Retail Solution have provided nearly 2 decades of unparalleled expertise in retail consulting for Australian businesses.
 
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