If there is one sector of the Australian economy that is under pressure it’s retail. Not only are businesses assailed by changing consumer tastes, a demand for immediacy, and lack of brand loyalty, but they have to contend with the rise of disruptors like Kogan and Amazon.
Is it any wonder that Australian retail is reporting the worst business conditions of any industry in an otherwise healthy business climate and landscape right now?
But, while global, and more recently Australian retail, has been disrupted by the juggernaut that is Amazon, it is perhaps this new enemy that Australian companies, both retailing and across the broader spectrum can look to for answers to what ails them, to how they can reconnect and reinvigorate their sales.
In our latest Business Insider Research Report we outlined some trends that have emerged and which are likely to influence the consumer of the future
Core to that was that while online sales are growing at a multiple of bricks and mortar growth even in mature markets like the United States and United Kingdom online sales still lag B&M sales by a factor of more than 6 to 1.
But, in retail, as in every other aspect of business, customers – retail and B2B – expectations have changed as a result of changed technology. Customers, molded by the instant gratification of social media and their smartphones, are looking for the same kind of seamless experience.
As our insight into future consumers concluded, convenience is the key demand of today’s consumer, and ‘whether online or in store, they [customers] expect a more personalised service.
That’s not easy to achieve without businesses investing in themselves – in technology.
Howard Schultz, long-time CEO and Chair of Starbucks said in December 2017, “for every consumer brand that exists today, especially a brick-and-mortar retailer like Starbucks, there are very unique challenges because there is such a seismic change in consumer behaviour, the Amazon effect — everything.”
Sounds scary, but Schultz has the answer. “What that means is Starbucks, like every other consumer brand, must push for innovation and must do everything possible not to embrace the status quo,” he said.
“No company, consumer brand or otherwise, can exist today without being a tech company,” Schultz said.
That’s something Atlassian co-founder Mike Cannon Brookes agrees with. He told a Senate Committee on the Future of Work in Australia in March, “as every company becomes a software company, technology became a true source of advantage a genuine source of competitive advantage. It doesn’t matter if you’re a media company or a bank or an insurance company or a doctor, some form of technology’s going to be there”.
But he added he just didn’t see Australian businesses “moving that fast yet” to hire or build the right infrastructure and staff.
Which gets me back to what Australian business, Australian retailers, can learn from Amazon and how they can face the consumer of the future with any chance of success.
Writing his first shareholder letter in 1997 – when Amazon had just 147.8 million in sales – Jeff Bezos laid out the strategy he has relentlessly pursued over the last two decades.
“This is Day 1 for the internet… Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets… Our goal is to move quickly to solidify and extend our current position while we begin to pursue the online commerce opportunities in other areas. It’s All About the Long Term.”
Indeed it is.
But the takeaway is simple. Focus on the customer and build the systems and infrastructure to allow that. If success and long-term sustainability is your goal.
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