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
A series of recent activities has me writing on the idea of ‘future strategy’ and how different organisations are approaching their future development. What is interesting is the strong sense that preparing for your potential future requires multiple paths forward, not a single ‘home run’. To that end I’ve recently considered sporting bodies and local…
Read More >Stephen Downes is one the handful of bloggers I follow consistently. I do so because Downes (unlike many others unfortunately) like to write about his thinking AS WELL AS promoting the thinking of others, whether or not he agrees with them. In that way you get a solid collection of alternative views within his field…
Read More >Coming off what has been undoubtedly my busiest period (3 months) in the past decade, I’m in the throws of catching up on some light reading. I usually have at least two books on the go and my preference is for the books to be about diverse topics because it allows the mind to seek…
Read More >Every now and again you have an opportunity to listen to some rare insights to an industry sector. These opportunities are typically rare because the insights need to come from someone who not only ‘knows their stuff’, they need to be able to translate their knowledge in a way that the average person in the…
Read More >The ‘Supertax’ debate is an interesting one and as expected, both parties are heavily invested in their own outcomes. One thing the Mining Companies understand is that the tax will lower the size of their profits in boom times for the resources sector – they’ll still be raking in billions, its just that some of…
Read More >As more organisations look to gain an understanding of how to both identify and prepare for their potential and desired futures, Design Thinking is on the current radar screen as a skill set likely to provide significant value. On the 25th to 27th of may you can attend a highly interactive and practical conference on…
Read More >One of the current affairs TV programs did a story recently on the efforts by NSW police to crack down on ‘hoon’ drivers through a specific squad targeting them. The Victorian Police recently announced a similar project with the squad headed up by one of Victoria Police’s most effective senior officers, Inspector Bernie Rankin. Unusually…
Read More >Lewis Hamilton, the former automotive Formula One ‘number one’ had his car impounded on Friday night for alleged ‘hoon’ driving, having been spotted by police spinning his wheels at a busy intersection in St Kilda. Whilst many character witnesses have already jumped to his defence, with one interesting observation from Mark Webber suggesting we have…
Read More >Following on from the highly rated ‘Skimming the Cream’ forum in Brisbane on the 9th of February, members of the Young Dairy Network and SubTropical Dairy groups reconvened to consider the impacts of Climate Change on the dairy sector in Australia using the high-impact ‘Accelerated Scenarios process’. The ‘2030 Dairy Scenarios’ brought together the members…
Read More >Queensland is one state that leverages its weather to the hilt – and the fact is the ‘Sunshine State’ earns its reputation. The odd thing is that in the past week I’ve spent in the Gold Coast experiencing the warm, humid and often wet weather it has occured to me that Queensland might be missing…
Read More >