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
Futurists often get asked things like ‘Okay then – who’s going to win the ‘flag’ this year’. In Melbourne Cup time most of my friends ring me asking for a hot tip. Given my consistent poor form at selecting a winner, why they would ask me is anyone’s guess (unless they are working out who…
Read More >Does your organisation suffer what Futurists call ‘Operational Sleepwalking’? That most organisations (and people) willingly sleepwalk their way into their futures is not all that surprising. What is surprising about that however is that those people and those organisations are: * Surprised when something unexpected (and not to their liking) happens and, * Claim they…
Read More >Maree Conway, of ‘University Futures’ has joined the Australian Strategic Planning Institute as a lead facilitator for the Institute’s programs. Maree’s experience in policy development, planning and strategy initiatives provides additional weight to the sessions on offer. TASPI now have three key facilitators that cover critical steps in the Strategic Planning Process – Enhanced Awareness…
Read More >The latest edition of Fast Thinking has hit the streets and includes another tool for those seeking to develop innovation and strategy. Marcus Barber explains how to use, what he calls an ‘iiBubble’, a process that helps capture an idea to see if it has innovation ‘legs’. As one of the tools unique to Barber…
Read More >Looking Up Feeling Good would like to wish the very talented and focused futurist, Sophie Barber a happy birthday today. Sophie’s amazing talent at suggesting the possible future for a positive outcome is a true inspiration and we look forward to many more insights as the complexity of challenges continues to test our understanding, commitment…
Read More >The CoreNet Global Melbourne 2007 Summit incorporated a thought provoking Hypothetical panel discussion on the future of corporate real estate and the drivers for sustainability. With an economic futures framework provided by Melbourne University Professor of Economics Neville Norman who moderated the discussion, the panel included Aggie Aitken, Head of Workplace Development at ANZ; Strategic…
Read More >Among other great articles, the winter 2007 edition of Fast Thinking magazine highlights the ‘8 Factor’ model for effective employee engagement, created by strategic futurist Marcus Barber. Using the model he shows how organisations can develop greater flexibility when it comes to providing incentives as a means for improving productivity and ensuring longevity for staff.…
Read More >Last night the ABC program ‘A Difference of Opinion’ looked at the issues of the housing affordability ciris. The panel provided some quality perspectives as to what was causing the challenge and what kind of actions might need to occur in order to address the issue with Ross Gittins’ early observation that the debate completely…
Read More >Dan Atkins, former manager of Environmental policy at Toyota and now Director of Sustainable Business Practises and Strategic Futurist Marcus Barber will speak at the South East Networks / VicUrban Business Breakfast at the Sandown Racecourse on Wednesday the 27th of June. Both Dan (who’ll discuss how Toyota applies its Environmental Policy in order to…
Read More >Looking Up Feeling Good’s advanced signals reporting service ‘Future Alerts’ is now available as a monthly subscription offering. Designed to provide your organisation with signals indicating potential change, each report comes with analysis of the signals and how they might impact your business. Applying some advanced Environmental Scanning process, including the ‘VSTEEP’ model, you can…
Read More >