SYDNEY: Transparency and frugality will be the hallmark of a new era in retailing according to one of the world's foremost fashion forecasters.
WGSN editorial content director Juliette Warkentin has warned the current economic crisis will leave an indelible scar on the fashion retail landscape with Australian business owners forced to dramatically alter the way they engage with consumers or risk losing them altogether.
Speaking at the GPT Retail Seminar in Sydney late last month, the UK-based Canadian trends analyst said traders here would need to place a greater emphasis on value proposition and emotional connections if they were to survive the toughest retail environment in almost a century.
Warkentin said retailers were battling many challenges in the current environment among them a radical shift in consumer behaviour, aggressive promotional trading and brand survival and differentiation.
There had been a fundamental change in attitude with successful apparel retailers across the world changing their business models to adjust to the current climate conditions, she said.
"For most apparel businesses the current global situation means everyone's focus is on survival and managing cash. But at least as much attention needs to be lavished on making sure the business has a clear competing differentiated proposition. If we don't reassess what value means to our customers today - and it can mean different things to different people - we're in danger of losing our way however well we manage our balance sheets."
Warkentin, who also spoke at the L'Oreal Melbourne Fashion Festival, cited department stores Barneys, Saks Fifth Avenue, Marks & Spencers, Harrods, Harvey Nichols and Neiman Marcus as being among those that had adapted traditional trading practices to make the most of the new retail climate.
She said many of these had adopted a back-to-basics approach with initiatives including using celebrity faces for mass market lines, offering competitor price guarantees, opening communication on corporate responsibility issues and trialing new products via social networking sites.
Some of the more radical moves had seen added attention given to developing customer empathy through such things has hiding branding on high-end goods to appease consumer guilt, private selling events for top spenders and in the case of Barneys writing hand-written notes to customers thanking them for their trust. Other methods included the creation of retail theatre, the retraining of sales staff to encourage consumers to browse, the localisation of brand outlets and the exercising of restraint when it came to discounting periods.
With an increasing number of customers questioning their need to spend, Australian retailers needed to be "gutsy" and have a point of view to ride out the storm, she advised.
"[Customers] want to know what you're like more than ever before. If you are like everyone else they will walk right past. They will walk into the store that they actually feel they have a connection to."
While data from some analysts project Australian corporate earnings could fall by as much as 30 per cent for the 2009 full year, results released last week from the Australian Retailers Association show clothing and soft goods retailing fell only 2.7 per cent in the past month.
However despite the general feeling of doom and gloom Access Economics director Chris Richardson said Australian retailers needed to ignore claims "a new Great Depression" is imminent.
Speaking at the same GPT seminar, Access Economics director Chris Richardson said while there was no denying Australia was in the grips of a recession, current market conditions would not continue.
Richardson said people wanted to spend but the country's income growth "wasn't good" which is why retailers had taken such a battering in recent months.
"Current conditions are only temporary. At some stage markets in general and credit markets in particular will become less panicked and the wheels of commerce will start to turn once more. That is why forecasts of 'a new Great depression' should be treated with a grain of salt."
Richardson said retail forecasts would be consistently weak through 2009 but would make ground through 2010.
However he warned the longer it took markets to get their "mojo" back, the worse the short-term outlook would become for Australia.
"Interest rates are now lower but confidence is too and that is enough to expect consumer spending . .. may be even weaker in the near term."