Retail is dead; long live online? Is it too soon to be mourning the end of shopping as we know it? The retailscape is headed for a massive overhaul; with crippling IR compliance and rents and international competition, more brands will be driven to sell online and promote via social media. Online is not only here to stay for the foreseeable future, it should be considered just one facet of a multi channel distribution strategy for continued growth. There will be stunning flagship branded stores. No more strip shops and less soulless malls. Outlet stores will serve for moving old stock without diluting brand image. Relationships at each step of the sales process need a refocusing; with manufacturers working more closely with wholesalers, then wholesalers supporting suppliers through to how retailers service clients.
Rise of the Masstige Brand
Lucie Trinco from Il Tutto, a luxury baby bag company with an online presence and in over 150 locations worldwide, echoes many retail insiders; traditional retailers are doing it tough. They are ordering more regularly and they are buying cautiously and not wanting to be left with excess stock. The brand’s biggest growth has been experienced at the lower end of the collection; to maximise this, they plan to expand the entry level offering without diluting the aspirational luxury end.
Flagship is the Future
Matthew Ball, Marketing Director, Australia and NZ for Blackberry (RIM) observed that the consumer path to purchase is evolving, with an increasing trend for consumers’ shopping: ”Search online, Feel in retail, Buy online”. This sets the perfect environment in which to benefit with flagship retail stores designed to show the pure branded experience with the absence of competitive products as found in current department store layouts.
The flagship concept is a way of creating a brand experience that minimises the expense per square meter for retailers. There have been numerous media features on whether retailers should be charging for people using their fitting rooms then not purchasing, as customers are seeking to “try before they buy”, securing codes, sizes and prices, then searching online for the best deal. This flagship would provide many solutions to the cost of rental space, of penalty rates for staff and seven day and late night trading.
Online is only part of the solution
Director of Glottogon, an online book store for foreign language children’s books, Karen Mennie, clearly sees the solution for local retailers is to not continue the discounting culture rife throughout the country. The local industry cannot compete with international brands on price, so the focus needs to be on the experience, including unique offerings, service and exploring multichannel distribution where they can better control the margin.
The perceived lack of service and experience in buying from an impersonal website has been countered uniquely by online eyewear brand, Sneaking Duck. Created by successful customised shoe brand, Birds of Prey, Sneaking Duck plan to deliver to potential customers their top 5 frames for them to try on before they purchase. As reported by Power Retail, Sneaking Duck CEO and Co-Founder Mark Capps states “Our vision is to make online retail THE best way to shop – we truly want to wow each and every visitor and customer.”
Sarah Pavillard of e-boutique, The Dreamery has also faced a tough market, with price matching, daily deals and sales all part of the customer experience. She works closely with her supplier partners to secure exclusives, to ensure she is giving her customers something unique, generating loyalty through her offerings rather than discounting.
Jo-Ann Hicks, Head of Fashion at eBay Australia notes that eBay’s recently launched Fashion Gallery has been designed for both one-off boutique sites and also for retailers who may already have stores or stockists and their own online sites. By offering the same stock as their retail space or only selling sales stock online, brands have been able to reach more and control more; not seeing this as cannibalising their established distribution but adding, just like opening another store or stockist.
Reach and Engage
Facebook has changed the way we associate with brands. As a tool to connect and create a brand personality, Facebook invites an audience to participate and build a community. Il Tutto’s Facebook fan page has tripled over the past 12 months with a lively and actively engaged audience. This is far more so than the company’s traditional email/website. To handle the immediacy of social media, there are three staff who are able to respond directly via their Smartphones.
Cassandra Mow of Mimo, wholesalers of eyewear brands including Silhouette, have developed an official partnership agreement with their stockists, formalising their supplier relationship in order to ensure brand consistency, service and customer engagement.
Phoebe Garland, from Garland & Garland Fashion Agents, asserts that by using social media, offering unique online promotions and reward programs with exceptional service, retailers are able to “build a brand for their business so they become global players not suburban retailers relying on local traffic”.
New Apps on the Block
Possibly the biggest growth area for retail is via Mobile Apps for use with Smartphones. Many online shoppers are using online within a shopping centre looking for deals and price matching. The eBay Mobile app experiences fashion as its largest category, with the convenience of buying on the go and the added security of purchasing via PayPal.
F-Commerce will enable direct payment through Facebook, completely changing the current “like” system. Purchasing via Facebook using recently launched updates that will allow retailers to better connect with customers/ “likes” via Timeline. This enables tracking of previous purchases and planned buys. The concern by companies about negative comments posted needs to be outweighed by the level of engagement and how companies handle such issues.
A recent worldwide promotion by Net-A-Porter, for an exclusive Karl Lagerfeld’s KARL collection was only available via an iTunes app that required an iPhone or iPad to make purchases.
Prescription; a bitter pill
For a struggling retailer, the investment needed to spend on the technology from mobile apps and websites to spending time on Facebook may just send them to the wall. Perhaps they were living on borrowed time in this new retail environment? For those who have sensed change is in the wind, now is a time to consolidate your offering, review your distribution and your customer experience; stop discounting and add value as we are happy to pay for the wow.
* Originally published in Gloss, Little Black Dress Group’s monthly e-newsletter
http://www.ragtrader.com.au/news/abs-report-fails-to-shine (downturn in fashion retail)
http://www.ragtrader.com.au/news/the-roundtable (discussion over retail trends including Award wages and support from Govt)
http://www.powerretail.com.au/insights/growing-globally-survey/ (Global Online Survey – Are you taking advantage?)
http://www.powerretail.com.au/pureplay/forrester-2012-online-retail-trends/ (mobile apps, the end of daily deal sites and more)
http://www.linkedin.com/news?viewArticle=&articleID=969825433&gid=3113486&type=member&item=84287743&articleURL=http%3A%2F%2Fwww.powerretail.com.au%2Fnews%2Fchange-future-australian-retail%2F&urlhash=eof8&trk=group_most_popular-0-b-shrttl&goback=.anb_3113486_*2 (Power Retail 2012 in review)
http://www.powerretail.com.au/news/sneaking-duck-home-try-before-you-buy/ (Sneaking Duck)
http://www.linkedin.com/news?viewArticle=&articleID=969825433&gid=3113486&type=member&item=84287743&articleURL=http%3A%2F%2Fwww.powerretail.com.au%2Fnews%2Fchange-future-australian-retail%2F&urlhash=eof8&trk=group_most_popular-0-b-shrttl&goback=.anb_3113486_*2(Facebook revamp for retailers to connect)
http://www.ragtrader.com.au/news/net-a-porter-responds-to-sydney-snub/login/1(Karl Lagerfeld iPhone App collection).
http://www.mamamia.com.au/style/when-changing-rooms-become-charging-rooms/ (trying on fee)