In Australia recently, there has been a lot of media coverage regarding the possible “end of the retail industry”. This issue is not restricted to Australia, in fact this was the exact title of an article featured on the front page of a prominent financial magazine I stumbled across while waiting at Singapore airport recently which described the similar retail crisis occurring in Asia – the region that is often regarded as the most potentially prosperous and untapped target market.
Reports in newspapers and on TV are constantly stating that sales are down, spending is out and saving and paying off the mortgage and credit card is now in as a result of the economic climate since the Global Financial Crisis (GFC).
However, I doubt that all accountability to the decline in retail sales can be attributed to economic instability and the dreaded GFC. Australia’s dollar is currently around $1.10 against the USD coupled with the genius that is the internet teamed with international postage and courier services resulting in worldwide online shopping.
Natasha Bita of The Australian (April 2-3, 2011) recently reported that Australians have saved over $1.3 million per day by purchasing online and avoiding paying GST on their purchases!
The geographical gap between retailers seems to be shrinking. Gone are the days of seeing “no international shipping” appearing at the checkout of most American or European based online stores. Susi Banks of the Australian (July 4, 2011) commented that as a result of the growth in internet use and social media, trends have become global. She noted that Australia is on trend with what is happening in the UK and Europe and as a result wanting access to international season products – now, not next season! Recessionistas (Recession + fashionista) rejoiced when Topshop and Asos.com (both UK based online stores) began shipping worldwide – including to Australia - providing fashion forward, quality clothing and accessories for bargain prices shipped right to their front door (or work place!).
It’s not just the access to brands unavailable in Australia that has prompted the success of the online shopping world; you can buy identical products to those available in Australia, for a fraction of the price! Cut out the costs incurred by traditional retailers such as importation costs, sales staff, shop rent etc. and you have your product at 10%-60% off plus $19.95 FedEx shipping fee on you door step in 3 business days! Rebel sport sales assistants have mentioned to me that there has been a significant number of customers being fitted for sports shoes and other items and asking for the item code or style name so they can purchase the identical item online for a fraction of the in-store price. Sales assistants from various sunglass stockists have also noted a lot of customers trying on styles only to openly admit they will be making their purchase online and not in-store – where they’d spent large amounts of their (and the sales assistant’s) time trying on various styles. My own father has been purchasing his Harley-Davidson clothing, boots and even parts for his bike online from the American store for 30% cheaper – and if he can do it with ease anyone, any age will have no problem!
An example I recently experienced, occurred at a recent work meeting. Each season, we attend a professional make-up lesson at the up-priced cosmetic chain Mecca to learn how to do our make up to best reflect the newest season’s collection. One product we were strongly recommended was Dr. Dennis Gross’ Alpha Beta Daily Peel – however at $130 for 30 days supply of the “must have product” my stomach was churning as the dollar signs added up. Luckily, a fellow staff member saw my distress and mentioned that I can buy the identical product online at strawberrynet.com for $60 with free postage. With a sigh of relief I spent minimally on the night and instead jumped online and purchased the product which arrived 3 business days later and included a free gift with purchase! I’ve instantly decided to make all of my purchases from the StrawberryNet from now on, not only for the savings but for the convenience of at home delivery and the advantage of avoiding pushy sales staff who some how always manage to pressure me into buying something I didn’t really need or want.
However, I’ve been thinking….. What about the helpful sales staff at Mecca who spent over two hours teaching us techniques and helping us individually with products, tips and colours in the hopes of us purchasing their products? I never would have discovered many of the products I purchased online without the sales staff’s advice. Is it the company’s fault for not pricing as competitively as their online counterparts? Or is it poor behaviour on my behalf to not spend more money in appreciation of their great service and recommendations? Am I in part responsible for the slow death of the retail industry I have worked in for the past six years?
And how else will online shopping change our world? Will more retailers follow the practices of some ski shops and charge customer up to $50 as a “fitting fee” to try on ski boots? Will landlords eventually lower the cost of their shop’s rent as a result of the rent-free option the internet provides? Will our children live in a world where all purchases are made without face-to-face interaction and will retail assistants join the ranks of extinct jobs such as elevator and switchboard operators?
Please feel free to comment with you thoughts or answers to these questions.
If you’re interested in Dr. Dennis Gross’ Alpha Beta Daily Face Peel here’s the link: http://www.strawberrynet.com/skincare/dr-dennis-gross/alpha-beta-daily-face-peel-two-step/111269/#DETAIL
Australian retail has to change, if it is to survive. But how? We often hear reports that they need to increase service levels, but is that enough? Will people pay higher prices if service levels are better, or does it always come down to the price?
ReplyDeleteOne retailer that amazes me is Apple. Take a look at any Apple store in Australian, and you'll see crowds, queues and people buying stuff. Look at the retailer next door, and they'll be empty. What are Apple doing right, that other retailers can learn from?
It's scary to think what retail might become in the future... but is it completely doomed? Hopefully the difference between prices online as compared to in store diminish with time. I know I wouldn't mind paying a little extra for some good service and hopefully this idea will be the saviour of bricks and mortar type stores.
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