From Tokyo to Paris, the message is the same – retail is changing forever. ShopAbility’s Peter Huskins wraps up the recent Westfield world retail study tour.
What we are all at the forefront of, both personally and commercially, is an unprecedented but inextricable change in the way we all approach being a Shopper and a Customer with everything that we ‘consume’, be that food, fashion or hard goods…anything for that matter.
Having just returned from the Westfield Retail Study Tour, nothing is more evident – the small world that Australia is, is in a rapidly expanding global market place, one that we as Shoppers, Customers and Consumers are increasingly embracing as own. Our scale, geographical isolation, and spread, has most likely cocooned us from the impact and expansion of many global bricks-and-mortar retailers: Zara and Costco are recent arrivals to huge fanfare, with a whole lot more undoubtedly due to follow in their successful foot steps as easier and larger markets are dominated .
E-commerce and the rapidly evolving digital marketing has been with us for a while but some of the causes, drivers and key tools are evolving at a rapid rate, creating a whole new shopper-driven marketplace that we as suppliers and retailers need to start strategically considering now.
I am not professing to have the ideal solution for e commerce or digital marketing – that off-the-shelf approach is just not available. However, the discussions and presentations that we had whilst on the Tour, from many retailers, suppliers and service providers, had some clear messages.
People no longer shop “on line” or “off line”, they just SHOP. Increasingly retailers (and some suppliers) regard the store and e-commerce as the same thing, just a different but seamless channel to the Shopper and Customer that needs to be developed and managed.
Most web-influenced sales still occur in store, but trawling for pre-purchase information now occurs out of store. Chris Bahlmann from IBM advised that Australians use 3 different technologies to shop, phone, laptop or tablet for example. Tablets such as iPads are used as the on the couch purchasing partner, with 25% of users multi-tasking with TV and most likely talking to their husband or wife at the same time (yes dear…no dear…). Smart phones will increasingly become ‘enhanced yellow pages’ for shopping be that by product, price, brand, performance etc. These filtering Apps are freely available now and are increasingly being used by Shoppers to steer them along their path to purchase journey.
E-commerce will have a significant impact on bricks and mortar retailers in the coming years (no kidding!) but I have not heard any estimates about what figuratively that could be extended to, until now. Less floor space will be required according to estimates by Conlumno from the UK, 6% of the current floor space and 10% of the shops will disappear in the next 10 years as up to 20% of sales move to online or ecommerce. This will mainly be from secondary and tertiary retail space, the old corner store or group of shops, a trend we are starting to see now. The tribal draw of a shopping centre will accelerate and become fully functional entertainment/ shopping/ lifestyle destinations in their own right. The Westfield Stratford precinct in London currently has over 300 retail stores, 70 café/ food outlets, a casino, a bowling alley, cinemas, two hotels etc and the 2020 master plan calls for the development of office blocks, apartments and even a hospital.
Online is cheaper to operate and therefore more profitable for retailers. We heard again and again that bricks and mortar was third in line for profitability and growth behind E-commerce (1st) and then Factory Outlets (!). Where would you invest as a start up? Think of this, it is nearly impossible to start a top notch retail offer as a pure play bricks and mortar model, but you easily can with an e-commerce model. Moreover, you can do it globally from the comfort of your own lounge room rather than just trying to service little old Australia.
Cross channel retail customers actually buy more stock and buy more frequently, this was another consistent message that we heard from retailers during our global travels. TOTAL spend was up by about 3 times , so the whole aspect of Shopper loyalty and relationship management through an integrated e-commerce/ bricks and mortar strategy is critical to the survival and growth of a modern day retailer.
The development of different forms of social media have seen the power move from retailers (and suppliers) to Shoppers and Consumers. Whilst the majority of us still ‘trust’ family and friends for advice on products, IBM research indicates that 70% of us ‘trust’ on line research, up 15% from 2007. Astute retailers (and suppliers)use social media to influence the shopping experience turn Shoppers into Brand loyalists and to stimulate repeat visits and purchases. By way of an example, try posting a product performance complaint on Facebook and see how quickly you get a response by a retailer (can anyone beat 24mins from posting to solution?) We can thank that guitar playing C&W singer in the US who flew with American Airlines for that!
We have all heard of – and maybe use – the ruthless on line retail brand that crosses countries and continents with apparent ease. Here are a couple of other providers that really made this scribe sit up and take notice.
In Tokyo we heard from the Rakutan Group, a pure play B-B-C on line membership market place model that boasts some astounding numbers. 75 million (that’s right 75M!) have access to over 38,500 on line retailers across all sorts of categories including finance, travel and service products along with the regular ranges and SKU’s, and rings up 4 million transactions daily. Currently 90% of customers and 100% of the retailers are Japanese based, with 10% of sales (+70% L4L) to overseas customers in 8 countries. This is an online retail brand to watch as that kind of performance and penetration is hard to ignore.
In the UK we heard of a company called Shutl that accesses spare courier down time and matches that with retail demand for home delivery sales – retailers offering damn near immediate home delivery for those that want the convenience of no visit shopping – beats a Price match offer by a mile and at full margin. By offering and committing to an astounding home delivery performance (eg 45 mins transaction to door or you get it for free) the Shutl offer has taken the UK by storm with retailers now marketing the Shutl service on their web site, and the Shutl brand is so popular it is about to become a verb in the UK. All of that in the space of a few short years.