The recent administrations of Pumpkin Patch, Seduce and Payless Shoes should serve as a wake up call for retailers. FTI Consulting's Tom Lemke talks tips on how businesses can avoid the same fate.
1. Move now and move quickly
“Retailers need to evolve with a changing market – and the customer must be at the centre of a retailer’s strategy, not the retailer. Retail will change more in the next five years than it has in the past fifty years. This market change is driven by a number of factors, primarily technology changes and the behavioural changes of a more technically savvy consumer.
2. The Millennial shift
"Millennials will represent 40% of the Australian workforce by 2024, and subsequently will represent an equally large retail spend. They shop differently than traditional consumers. Gen Z will also be entering the market and will be the first fully digital generation.Their expectation of retailers is to be provided with a totally seamless customer experience. They will be the most demanding shopping generation.”
3. There's no room for error
“If the retailer does not have a customer database that enables a personalised customer experience, they risk being left behind. Large global retailers with strong brands are already focused on experience and, as they continue to enter the Australian market, it will be even more challenging for the longevity of Australian retailers. Many of them will fall into the 'well', meaning that they will have little or no differentiation from competitors in the consumers mind. They will become irrelevant and as a result, they will be squeezed from multiple directions.”
4. The devil is in the detail
“Retail is detail. It is a delicate balancing act that requires sound management and financial systems that provide accurate information for improved decision making. Legacy systems and processes may have worked in the past, but with the technological changes set to occur over the next few years, retailers need to adapt and evolve. For example, many retailers have not integrated their digital and in-store data to be able to have a single view of the customer. The customer expects the retailer to have a single view, but many don’t. As mobile purchasing becomes more prolific, retailers must have a mobile application, which again many lack today.”
5. Think customer-centric
“In most retail companies, a relatively small number of customers are core to the businesses ongoing success. The old 80/20 rule generally applies in the sense that typically 30% of customers account for some 50 to 65% of sales. Knowing these customers and retaining them is key to the long term success of the business.”