Even before the arrival of Amazon, the Australian retail market is a competitive place.
Amazon isn’t the only challenge keeping local retailers up at night, after Australian retail sales fell by 0.6% in August, missing forecasts for an increase of 0.3%, according to the Australian Bureau of Statistics (ABS).
But there’s one important stat on the locals’ side.
Australians are making more trips to the shops.
As increasing household costs and flat income growth constrain consumer spending, local retailers need new strategies to retain or grow their customer base and make customers spend more on their shopping trips. One way they can do this is through data.
Businesses now have more access to data than ever before. Not only can businesses track their own transactions, new digital tools are allowing businesses to understand customer demographics more broadly and, from this, map out key industry trends and opportunities.
But just having the data is the first step, retailers need to interpret and analyse the data, understand how it relates to their own business and competitors, and use it to inform decisions.
For bricks and mortar retailers, insights from data can inform very practical needs such as procurement, inventory, staff rostering, marketing strategies and investment decisions. But it can also have a huge impact on their one differentiator from online retailers – the customer experience.
In 2016, a survey conducted by RetailNext found 89% of companies in the US planned to compete on the basis of customer experience.
It’s no surprise, as customers have come to expect a certain amount of customisation and a high level of customer service from physical retailers.
If retailers can’t overtly compete on price, the experience is their only option. DigiDay found that 71% of shoppers believe they can get a better deal online than in stores, but buying online requires a degree of confidence in your purchase.
Retailers understand this, and many are now using insights from data to better understand customer behaviour, and in turn, anticipate the needs of their customers and prepare accordingly. This could be as simple as knowing their last purchase and being able to recommend an updated product, or offering them incentives to shop based on their age or location.
This could be one factor driving the lift in the number of Australians going into stores, even though the eCommerce category is still growing.
Mark Flack, Board Member of the SME Association of Australia (SMEA), thinks businesses could be doing more to make the most of online opportunities, while maintaining their own bricks and mortar operations.
“The reality is that there’s a lot of education that needs to happen amongst the small business community when it comes to being digitally savvy and using the right tools to take their business to the next level. The SMEA is committed to ensuring that our own community has all the information needed to make the most of the digital opportunity.”
Thankfully for Australian retailers, even when it comes to buying online, consumers still trust their brands more than online only retailers, which could explain the increase in visits to department stores.
A recent study by KPMG found that 44 % of Australians made their last online purchase from the online store of a bricks and mortar retailer, well below the global average of 50%.
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