Industry needs to master basics for 2007
As trading conditions look set to remain in the red for 2007, retail analysts have predicted that only well-structured, large scale and niche players would emerge unscathed.
Retail Doctor managing director Brian Walker said on the whole, middle ground retailers would prove to be increasingly cluttered and less profitable.
"It's a major industry catch cry - retailers who are performing well are either large scale, large volume types like Myer or small, well-informed boutique operators. This means retailers, especially the middle players, will need to have a strong brand story, a discernable point of difference and a very strong focus on operational efficiency to survive this year."
Tough economic conditions would also emphasise the importance of good merchandising strategies to win reluctant consumer dollars, Walker added.
But even this may prove difficult for retailers this year, according to some industry experts. Australian Retail Services director Roger Sayers said that as international demand for imports continued to rise, quality and timely supply could be significantly affected in coming months.
"What they should be doing now is looking at their supply chain management [because we will see] the increasing dominance of multi-national and international suppliers with a much clearer focus and delivery on customers and their expectations."
Regional retailers in particular would need master the fundamentals of retailing in order to compete with the onslaught of multinationals in rural areas, Sayer said.
"Their coverage into regional Australia means there will be significant margin pressures on independents. The indifferent retailers who do not pay attention to the fundamentals will continue to wither and die as their margins reduce and their costs increase."
Australian Centre for Retail Studies marketing director Faith Toy agreed with Sayers and Walker but was slightly more optimistic about consumer confidence over the next 12 months. Toy said while the cost of living might continue to soar, it was hard to predict whether this would entirely deter consumer spending.
"The consumer mind is a complex and unpredictable one. The interest rate rises in 2006 affected consumer spending in November but it seemed to not affect Christmas and post Christmas shopping. Customer service and a unique product offering is what will ultimately bring customers through the door."