Red Zebra Business Centre - Management Memos

Making Measurably More For Your Business Since 1985!

April 2013 Now including My Local Pool Shop Monthly News.  

Taking a Combative Approach Only Delays the Inevitable. Hurts Business!

‘Bricks and Mortar’ retailers are taking a combative approach to on-line retailing. At the same time, retailers are lobbying for a reduction in the LVT from the current $1000, which can be of some value in resisting overseas inroads to the local market, but is of no value against local on-line retailers.  Of which there are many!

The retail landscape is changing inexorably.  Different retailers are following different pathways, some taking the high road and some taking the low road.  Either way, the final outcome will be inevitable.

Retail chains collapsing

If something does not change, B&M retailers will continue to struggle for survival - and many will not make it.  Britain saw three major high street retail chains go under within the first 16 days of 2013!

What is inevitable is that internet sales will grow.  When we talk about the internet, we are in effect talking about the supply chain - the distribution of goods from manufacturer to end user. 

Just as many will say that Australia is over governed, many will say that there are too many layers within the supply chain, each exacting its pound of flesh.  The consequence is that the number of levels in the supply chain will need to be reduced, so that ‘Bricks and Mortar’ retailers have a chance of competing.

If ‘Bricks and Mortar’ retailers (in Australia, and worldwide) are to compete, prices will have to the lowest denominator, which currently and for the foreseeable future is the online market place.  In being comparable, that does not mean being identical with the on-line price.  Local ‘Bricks and Mortar’ retailers have advantages, and that provides a basis for a local ‘real shop’ premium!

Shopping on line gives real pleasure

While the pleasure of a real ‘bricks and mortar’ store sales experience is not replicated on-line, there are some psychological gratifications when buying online that are not replicated in-store!

  • First, there is the pleasure of saving money on-line
  • Second, there is spectacularly great convenience if you do not actually enjoy shopping.
  • Third, there is the benefit of resource saving because you haven’t had to travel to the store - and this makes you feel good from an environmental perspective and,
  • Great to open a new parcel!
  • Fourth, there is a ‘gift’ style experience while waiting with anticipation for the delivery, followed by the excitement of unwrapping the parcel to find out exactly what the product inside looks like.

So on-line buying is not just about saving money, even though that is a large part of the equation.

The tide of significant change in retail will not be stopped, regardless of whether individual retailers react to change or not.  This is a threat retailers can dilute by the use of omni-channel retailing.

Omni-channelling offers customers choices - something difficult or impossible for distant suppliers to counter.  It is also difficult for single channel ‘Bricks and Mortar’ retailers to counter too.

In other words, the really successful retailer - or perhaps, the only really serious retailer - will provide customers with choice and convenience.  Only omni-channelling can do this!

In years to come, we will reflect on these extraordinary retail times.  And wonder that it took so much ot convince us of the obvious.  Then wonder what might have been if we had acted earlier!

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