According to a recent report by global information firm, Experian Marketing Services, the majority of Australian retailers consider the impact of international online retailers on their business as a top threat to their future success.
For most retailers operating in the Australian corporate landscape, this is not news. Rather, it’s now common knowledge and a view which is being quickly adopted by an increasing number of local players as time goes on and the threat grows larger.
However, a deeper dig into the report – titled ‘Retail in Australia: It’s Time to Embrace the Digital Future’ – reveals perhaps the most interesting, and alarming, gem of information.
The study, which surveyed 300 Australian retailers from sectors including fashion and apparel, found that while 66 per cent of retailers admit international online retailers have impacted their business, more than half (53 per cent) do not have any online transaction capabilities.
What’s more, 44 per cent of retailers said they had no plans to introduce online transaction capabilities to their websites over the next 12 months, despite 53 per cent rating online transaction capabilities or shopping cart functionality as important or very important to their business.
Why is the obvious question. Surely the natural response to such a looming threat would be to back up your own online arsenal.
However, as Experian head of research and consulting Dave Audley explains, it’s actually all a little more complicated than that.
“Our research highlighted five major barriers Australian retailers are most concerned about; and one of the biggest challenges we see retailers struggling with is understanding their customers and what they are doing both offline and online,” he says.
“There is so much customer data available these days, that sometimes it is hard to determine what information we should be focusing on to inform our marketing strategies. So having a strategy about what data to collect from customers and marrying that information together with targeted marketing communication, both online and offline, is key.”
Sam Zivot, digital strategist for activewear retailer Lorna Jane agrees. Lorna Jane currently balances 125 physical stores in Australia in addition to its overseas outlets, an e-commerce platform and social media sites.
It also just recently incorporated the brand’s latest campaign – ‘Move, Nourish, Believe (MNB)’ – into its 125th store fit-out, via an MNB hub featuring iPads for customers, to extend their Lorna Jane experience online.
It’s been no small feat, and Zivot admits that taking the leap from offline to online and integrating the two is often a much larger task than retailers realise at first.
This, he says, could be part of the reason why, overwhelmingly, most Australian retailers are slow to adapt to a dual “bricks-and-clicks” model, as uncovered by the Experian survey.
“The shift to becoming a multi-channel retailer is a massive one. It’s more than simply putting up a website. It requires not only a shift in the technology you invest in, but in a businesses operational processes, marketing and human resource needs. The shift is such a daunting one, it’s hard to know where to jump in,” he says.
“Anything new is going to pose a challenge. Our venture into multi-channel is no different. It has necessitated us to think differently, staff differently, and venture deeper and deeper into the technology/I.T realm.”
Zoning in on barriers that are limiting retailers’ abilities to implement and drive their e-commerce strategies, the report by Experian identified six key challenges, and concluded that while some retailers are struck by all these barriers; others, who may already have e-commerce in their mix, may be falling at one or two hurdles, and therefore, failing to extract the most value from e-commerce.
As a result, most of the retailers surveyed revealed they feel that they are not yet in the position to compete on a level playing field with international and local “online only” competitors.
However, Zivot, drawing from Lorna Jane’s “e”-evolution, highlights yet another challenge – one less to do with the retailer and more to do with the available resources ready to cater to those who are moving at the same pace as their international competitors.
“International and pure play retailers are resourcing their organisations in completely different ways than traditional retailers. To compete at par in today’s climate, retail companies need not only be great retail companies, they need to be great technology companies too,” he says.
“But at Lorna Jane, one of our main challenges has been more around engaging and working with technology partners with the capability to keep pace with us. Digital is still new territory in Australia, and suppliers are still tripping along the way too. And this unfortunately exposes your own businesses to these same trips and falls.”
Touching on Audley’s point about the pitfalls of data, Zivot adds that getting the most out of the company’s customer data has been challenging, but it is something the brand is taking steps to leverage more in order to improve operations overall.
Technology, as identified by the Experian report, is also a major barrier to adoption. And, despite costs coming down and technologies like CRM systems and databases becoming more advanced and user friendly, many retailers still say they lack the tools to adequately drive their online shopping strategy.
This is a challenge that Karen Rieschieck, director of fashion boutique Alice Euphemia, can relate to.
“Any new venture takes time and resources to realise. It can be daunting when you compare yourself with online stores that may be very, very large projects with very, very large budgets. The pressure to build your online presence by yesterday is a strong one but in reality you need to build and build on what you can maintain,” she explains.
“The complexity of building online businesses for these types of businesses can’t be ignored. Without the right supply, exclusivity and product mix, imagery, etc; then a wonderful looking or well functioning online store isn't always an asset, it’s can create new problems. Achieving the right balance of stock availability, costs and demand is our biggest challenge.”
It’s not an uncommon dilemma – and clearly it’s one that most Australian retailers are currently grappling with – yet, Audley believes there are five key tips for successful dual channel retailing that can be applied to assist in the transition.
In particular, he says it’s important to visualise the customer and what they would want from your business.
“Australian consumers have high expectations of their online retail experience. Therefore, it’s important retailers focus on the customer experience when integrating their strategy across both channels. Features such as loyalty programs, vouchers and free delivery drive customer engagement in a multi-channel environment. It’s not about developing an online strategy and an offline strategy, it’s about developing one holistic approach that works across both channels,” he says.
It sounds easier than it is, but, rattling off his top picks, Audley admits there are a few major retailers that can be relied on as good examples. These include Big W, Target, the Just Group’s Dotti, and Topshop, which recently cemented its presence in Australia with the launch of a flagship store in Sydney.
“What they’re doing well is focusing on the consumer’s browsing and shopping experience and offering enhanced value to the online shopping process. Dotti has next-day delivery. Topshop has quick and easy navigation and ordering – important elements to engage and compete online,” Audley says.
“But overall, the most successful retailers have fantastic customer data which they analyse to understand their consumers behaviour. They then use this insight to inform their marketing strategies. They are also linking their customer data across multiple platforms – for instance linking their email campaigns with targeted Facebook advertising campaigns, personalised to their subscribers.
“We are now also approaching the dawn of the mobile era – and with this in mind smart marketers are also using mobile location-based services to drive customers back into their stores.”
But that, as they say – is another story, for another day.