Selective Consumption and the Retail sector
The Retail sector in Australia is slowing coming to grips with the fact that for the past 50 years, they’ve had a captured market and enormous profit margins. and that now, the times have changed. Whilst many point to the internet as a cause of their woes, others are pointing out the apparent high cost of labour as a major concern. Both of those issues are more or less out of the control of the sector and I would argue have only some influence of the retail sector. Yet what fascinates me is how few retailers (of all sizes) seem to be aware of the fundamental shift in the buying behaviours of consumers, and the implications for the retail sector:
Selective consumption is a relatively new term that depicts a more discerning consumer less able to be swayed by big seasonal sales or large discount offerings. The Big Retailers in Australia seem to have ignored the shift in consume mindset. This is IS where te internet has played a shaping role. When there is always a sale on somewhere in the world, the perceived value of a ‘big sale’ period drops dramatically. Yet many retailers still rely on this model of ever diminishing value.
Nowadays, ‘Big Sales’ work for exclusive customer sets – those clientele that have been nurtured and developed over time with limited run or high end offerings. The Big Box stores just feed into the core asset of Internet purchases when doing their big sales. The urgency factor when an offer is on for everyone no longer cuts it.
Selective consumption also means a better informed consumer. This is where the internet is an asset, not a competitor, yet once again we hear retailers complaining that shoppers don’t buy like they used to – in other words, they’re no longer the captive audience able to be fleeced with exhorbitant mark ups. But the true challenge for retailers now is that they fail to match what te internet offers by way of information, on the shop floor. Poorly trained staff (when you can find staff) offer no value to either the customer or the business. The consumer, looking for assistance and a reason to buy gets neither. A lack of knowledge of shop floor staff exacerbates the sense of lack of service and consumers are saying ‘well if I get no service in the store, I might as well have no service on line and at least buy at a lower cost’. The cost of labour isn’t a problem – it’s the cost of poorly trained staff that is a HUGE problem
Finally the internet allows customer to price shop. This is also a potential asset for retailers who instead, complain about needing to ‘match’ prices. The answer is so simple it’s gobsmacking that few retailers are doing something about it – bundling products. This makes price pointing more of a challenge, allows flexibility in margin spreads and attracts shoppers who want a more complete solution to their needs.
Oh and one last thought – the two biggest challenges for the retail sector are not high cost of labour and the internet. It’s an unwillingness to evolve the business model and high cost of floor space – rents, not labour is what kills a business. Poor labour (untrained) just exacerbates that problem, and the Internet exposes the high cost of shops, for what they are – white elephants
If you followed my numerous posts over the years you know I like jumping in early on new products or services – not all have been successful, especially on Kickstarter and Indiegogo, but you roll the dice sometimes and see what happens. Over the years Looking Up Feeling Good was an early community investor in…
Read More >In the 1760s Josiah Wedgwood changed forever the nature of workplaces. He expanded his pottery business and constructed a new large scale factory that required two critical elements: a) Systemisation of processes to ensure consistent high-quality outcomes b) Skilled workers on site The systemisation required experimentation, observation, trials, failures and recording of data – what…
Read More >We’re delighted to announce that Neuro-Psychologist Dr. Kim Hazendonk of Positive Brain has accepted our offer to join our elite speaker’s group. We’re looking forward to bringing her to more groups across Australasia as she discusses effective workplaces, positive mind management, and managing busy lives. If you have a need for an engaging and passionate…
Read More >I flag my bias towards the need for a vastly improved approach to managing staff in the work environments. V A S T L Y improved. I’m still surprised at how clunky, disorganised or naive some senior managers are when it comes to that part of the business that considers ‘people’. And rather than cover…
Read More >An interesting public workshop in Perth in the first week of October introducing a varied group to the Organisational Evolution model. The Org-Ev is the model I developed for the start up of The Australian Strategic Planning Institute in conjunction with Steven Bowman. Given the diversity of the group, there were a number of surprises…
Read More >A note for those of you in Perth that there are just 4 spaces left for the Introduction to the Organisational Evolution Model workshop at Adina Apartments in Perth. The Org Ev model has been designed to enhance Strategic Planning and decision making and this introductory workshop is aimed at those looking to attend the…
Read More >Later this month I’ll be facilitating a scenario session looking at the potential impact of a long standing heatwave event for the City of Greater Dandenong here in Australia. Heatwaves kill more people than any other weather event. By a long way. Importantly they also have a ‘fat tail’ with physical impairments to individuals often…
Read More >Looking Up Feeling Good will be running an workshop on the Organisational Evolution Model in Perth. The Org-Ev model has been used by a wide number of agencies across almost all industry sectors, and was originally developed for the Australian Strategic Planning Institute. The workshop is limited to 25 people and will take place at…
Read More >Looking Up Feeling Good are delighted to be associated with the Victorian over 55 2s at the National Masters Championship coming up in Perth in a few month’s time across September and October. We wish all players well
Read More >If you’re involved with setting policy, allocating funding, designing products or services and delivering on them, then one book you simply must have read is the absolutely astounding ‘Invisible Women’ by Caroline Criado Perez. What Perez has done with this book is ALL OF THE RESEARCH you need to have available to you when you…
Read More >