Fordham partner Michael Sutherland details what retailers need to do to capitalise on the 'resurgent shopper.'
It’s 30 degrees in sunny Melbourne and the horses are galloping at Flemington on Cup Day without the usual crowd of 100,000 plus, but there is reason to have a little spring in your step and not just because of the weather.
November brings not just the horse race but the start of the real selling season. With Singles Day, Black Friday and Cyber Monday all jammed in just before the biggest retail month of the calendar year, our retailers are now getting into full swing.
With restrictions finally lifting in Melbourne, residents and consumers are now able to join the rest of regional Victoria and State premiers are finally talking about reopening borders. With this (hopefully) comes a resurgent shopper.
Illion have reported that within their study of 250,000 shoppers, that for the first time since the pandemic began, that high income earners are spending at pre-COVID levels on both discretionary and essential categories. So there is much to be optimistic about.
But there will be winners and losers… within brands, categories and locations.
The return to CBD in the major capitals has been subdued. Retail, it seems, is moving to the suburbs, which together with the continued expansion of online (which the ABS states now makes up 10.6% of total sales – up from 6.6% in September 2019) is meaning that retailers need to evolve, whilst dealing with their legacy structures.
As businesses try to work through this evolving landscape, (again) in Victoria small businesses are seeking dispute resolution services for rental arrangements in record numbers. Brands like Premier, Mosaic and others are continuing to exit sites and are flagging more store closures will follow.
Industrie and other national retailers are repositioning their wholesale arrangements and exiting national department stores as retailers now exercise their power to control access to their products and say “enough is enough” in putting up with prior master servant arrangements - to gain access to a decreasingly profitable distribution channel.
Consumers are now more comfortable accessing their favourite brands through alternate channels. The power, it seems, is shifting to those that have content that is relevant for the consumer of the day.
Consumers themselves of course want nothing short of remarkable experiences. With savvy retailers constantly raising the bar with convenience and customer experience, consumers expectations have increased.
McKinsie and Co observe in a recent US study that 46% of surveyed consumers have switched from brands they were previously loyal to. So too therefore has the level of competition amongst retailers.
The modern retailer needs to continue to work hard to remain relevant to this evolving customer. The themes of recent years become even more relevant in this changing environment - being consumers want to feel that they are being directly engaged with (personalisation), that their consumption makes them feel good (sustainability) their brand’s purpose resonates with their aspirational sense of self and is authentic. Sounds easy right?
This requires a clear business strategy and focus on the details – investing in people, technology and systems as enablers – whilst prioritising projects. Those retailers that do this will continue to outperform, not just this summer but beyond!
Fordham is an integrated accounting and financial services firm. We work with business owners to help optimise and grow their businesses. Our knowledge in the retail industry makes us ideal to assist an aspiring business.