Trends impacting the future of retail
Here is a summary of trends that are impacting the future of retail in Australia
Online Shopping
Technology is enabling more effective methods of purchase helping an ageing population, people with disabilities and people in remote areas (in addition to people that prefer the convenience) to shop from the comfort of their homes and purchase more competitively from retailers who extend outside of their local areas.
eCommerce in Australia is growing rapidly, with online spend reaching 10% of total retail sales in 2018, taking its share to two percentage points higher than the previous year1. Australians spent $27.5 billion buying goods online, an increase of 24.4% year on year (YOY)2 (2019 eCommerce Industry Report - Australia Post)
Pressure on physical retail stores
This result has seen a drop off on new leases taken up, increases in rent to premises forcing some retailers to shut their physical stores, a reduction in foot traffic to some areas, increased competition with better prices and more variety offered online.
Buy local
Social media has given small businesses and independent designers alternative methods to sell online, promote their products and create a following. My favourite initiative is #Buy from the bush promoting and connecting regional makers to consumers who want to support and buy local.
Sell Omni-Channel and offer in-store experiences
Online retail has become a normal way to shop but has become difficult for some retailers to compete on price and offer. Businesses that are succeeding are those that have an omni-channel strategy that is they sell online but also sell their products and engage with customers (in-person) in their retail store, pop up or marketplace and communicate regularly through social media and marketing.
Buy food and beverage online
Many supermarkets have been selling online and now Coles has reached beyond their website and are selling fresh food as well as household supplies on their eBay Store.
Alcoholic beverage sales have increased online, the biggest two challenges have been: Fulfilment as a standard case of beer weights 12kg; How to provide Responsible Service of Alcohol with each online sale.
View Case Study here on how we helped Stone and Wood to build community and sell their beer online. Stone & Wood are an independent brewing company based in Byron Bay. They are known for their community engagement, contribution to local industry & have a strong brand following.
Fulfilment and distribution
Fulfilment and distribution is getting better each year, Australia Post ran relatively smoothly over the Christmas period with deliveries arriving within one week from purchase. With the loss of Temando services like Shipit, StarShippit and ReadytoShip have picked up where they left off and have kept the distribution process in sync with minimal disruption to delivery expectations. These services provide technical software and fulfilment options to online and offline businesses to automate the distribution process with Australia's leading couriers services, track deliveries and provide easy return services.
Amazon, eBay and Afterpay
Amazon is gaining traction in Australia with 2 fulfilment centres now in operation. An increase of Australian wholesalers and retailers are now exploring Amazon as a primary sales channel shipping their products direct to Amazon for warehousing and distribution in additional to selling on eBay.
To continue to compete with Amazon, eBay and independent retailers will need to improve their online offering and delivery options. I predict this will influence delivery efficiencies with improvements to how bulky goods will be shipped across the country as well as faster delivery times and more competitive rates to regional areas.
eBay is still Australian’s preferred marketplace, consumers trust their model (Buyer Protection, eBay Plus and Social Proof) but they are becoming more price conscious and are buying from the cheapest marketplaces.. so loyalty is starting to run thin.
Afterpay is now available to eBay sellers in Australia, giving customers ‘buy now pay later’ alternatives. This payment option will help eBay sellers sell more online and is the preferred payment method for Gen Z and Millennials. This payment option is a big point of difference for eBay over Amazon, I wonder when the US eBay site will implement it as well?
My advice to all business is to consider a marketplace strategy and to go where your customers like to shop, selling your products there in addition to your website.
Shop in-store
Shopping centres have taken up a more 'Experiential focus' building infrastructure for restaurants and entertainment that are nice places to meet and relax. Greenery, art, popups and marketplaces are creating a more engaging shopping experience, encouraging consumers to visit and buy more frequently and give new businesses a place to launch and test their product lines and ideas at a lower entry cost than a permanent store lease.
Drought, bushfire and community
2019-2020 has been hard for many individuals and communities, with drought and bushfires impacting health, homes and businesses.
It has been a timely reminder of the importance of being a part of your community, buying from, and supporting local business and social groups and putting communities and people before profit.
It's great to see many people taking the initiative to raise money and support Drought and Bushfire affected regional businesses and communities throughout this time of need.
It's hard to forecast exactly how these natural disasters will impact businesses in the long run, the loss of farmland, livestock and fresh food will impact farmers, producers and services providers for years to come. Loss of produce, damaged property, loss of income and ability to earn will push up prices on Australian made goods.
The impact of the devastation will also influence consumer spending with reduced purchase on luxury items across both domestic and international markets. This will impact our economy for the next 5-10 years to come. Where you can buy and support from local businesses.
But don't forget the animals!!!
Make a tax deductible donation here to WIRES - NSW Wildlife Information, Rescue & Education Service Inc to help raise money for the Rescue and Rehabilitation of our native wildlife during the drought and bushfire crisis.
Negative is good
Some of these changes can be seen as negative but I am optimistic that any business and or operator with a strategy and commitment to execution will be able to innovate and future proof their business through this shift in consumer demand and will create a brand that is memorable with a loyal customer base.
What is your strategy for 2020?
The holidays are a great time to look back on your past year in business and to reflect on what you would like achieve in the future. Its a great time to start to set out your future growth strategy.
Contact Chana to get started with your Online Retail Strategy.
Chana Imsirovic founded Owl and Monk a boutique agency in Southern Sydney and specialises in helping small to medium sized merchants grow their businesses online by strategically planning, designing and maintaining professional, responsive and easy to use e-commerce stores on Shopify, WooCommerce, eBay and Amazon.
Connect with Chana on LinkedIn here.