The Emerging New Face of Retail

This is the first in a series in Retail Sales Articles; I hope you find them worthy of thought and discussion.

Firstly what I am about to write about is based upon observations of the retail sales industry and much of it needs more research to really confirm my hypothesis but these observations are based on over 20 years experience of working within the sales industry so there is a strong grounding in anecdotal evidence to draw these following points from.

In the beginning wholesalers imported goods and on-sold them to retailers who in turn sold them to consumers, and this process is still current. Each level has their own profit margins and their own customer service standards so there can be much variance across the board. We are still in a Global Recession which appears to be slowly improving in some areas...another discussion, but which has had a profound effect in all areas of Australia including retail. In relation to Australia the economy is running slow as I found through many clients who have cut back on their expenditure due to business downturn. There are also many horror stories of small businesses which are no longer in operation never to return. I can cite a client who manages a long term family business that dates back over several generations that are really concerned about their long-term business future and now looking at ways to reinvent their business as they are concerned about their short term business viability. This is also the case with the consumer market; the average household is being very conservative on their spending and this is impacting upon retail sales. Many a retailer is hoping for a bumper Christmas period in sales this year to improve their business but enough of the doom and gloom. Is there a new approach to retail as I see an Emerging New Face in Retail and a New Emerging Direction?

Now enter the internet, yes I know it has been around for many years, but in the last couple of years much has changed with conservative spending, the consumer is now shopping all purchases and now the internet has made it even easier to shop both in Australia and globally. The buyer is a better informed and astute buyer and will now buy sight unseen globally as well as in their local market via the internet relying on pictures and specifications to gain lower pricing, a major change in societal buying patterns. There are of course the buyers who still wish to touch, hear, smell, products before buying, the well stocked retail store caters for them, so where is this Emerging New Face?

It lays in the quiet move by manufacturers to enter global markets with their own stores matched with an internet presence mimicking their store products and importantly pricing. In many cases it does not matter whether you buy it out of the store or over the internet it is the same price and internet pricing in many cases includes freight so the overall pricing remains the same. There now appears to be a number of global manufacturers embracing this new model making product and pricing similar across a number of countries. So what will become of the traditional retailer?

I believe they still have a small future but will need to reinvent themselves as more manufacturers approach their business from a global standpoint, they will need to work closely with local distributors and my theory is that they may need to consider segmenting their stores into separate manufacturer zones where each product brand is allocated their own segment different to just lumping them all into one product type in each area. This area can be supported by dedicated staff who knows that product range intimately as in many stores I visit many sales staff are not strong in individual product knowledge. Now I know many will say that the cost of dedicated staff will outweigh the advantages, but what is the alternative? I believe some cosmetics sections in stores are already doing it with dedicated staff and in some cases with sales staff members who are employed by the manufacturer/wholesaler/distributor. Some purists will say...but what about the three ‘F’s, Food, Footwear, and Fashion, will they change their ways? When buying these products the consumer wants variety, and with food...freshness, to choose from, so a broad offering is required but internet shopping is now invading these traditional areas as well so even the corner convenience stores may need to create an internet presence in conjunction with store offerings and pricing to compete. More and more the need to have an internet presence is growing supported with a social media strategy as a part of the marketing mix to heighten store awareness and product offerings. Some major supermarket chains are now also offering food purchases online driven in some cases by successful entrepreneurs who are already successfully selling grocery lines online without a retail store presence.

The way we need to do retail business in the future will change through necessity or we may not have a retail business as we know it currently in the future. I believe pricing needs to be uniform and competitive matched to global markets. The days of having a consumer research the product overseas to find pricing differences in Australia hard to justify with similar retail operations in other countries offering the same product at a much lower price I believe are numbered. I of course leave myself open to those who will say that the cost of importation makes the difference; I will not argue that point only to say that the consumer will buy where they feel they are getting the best deal for them. Prices can be higher but price justification in the eyes of the buyer is always the focal point for ongoing profitable sales and is called buyer perception. It does not matter what the industry thinks is right, it is what the consumer perceives is right for them that will drive the future of retail we must never lose sight of that.

So is the face of retail sales changing...I believe the answer is a definite...Yes!

What do you think?

Stephen Hampson - Sales Image.