There is a growing resentment among retailers as a new breed of shopper emerges in Australia.
A good deal is increasingly important to shoppers, who are more than happy to wander into a retail store and seek advice from staff as they try on jeans, get fitted for a pair of sneakers or sample a few of perfumes – even though a growing number have absolutely no intention of buying.
While shoppers used to be coy about this behaviour, increasingly they are blatantly telling shop assistants that they're going home to purchase the same item cheaper online.
And the problem is only set to worsen. A report by PwC and Frost & Sullivan predicts that Australians will spend $13.6 billion in online sales this calendar year; an increase of more than 13% on last year's $12 billion.
Of that $13.6 billion, an estimated $6 billion will be spent with offshore retailers, an increase of 25% on the $4.8 billion spent last year. This equates to 44% of all online retail sales going offshore, a rise of 40% on 2010.
Consumers like shopping online because they can find cheaper items, it's convenient and they often have access to a broader product range, the report says, adding that retailers most vulnerable to the growth in online shopping include those selling clothing, footwear, gaming, magazines, recreational products and cosmetics.
The rise in the brazen shopper
The growth in online shopping has seen a rise in far more brazen shoppers. Retailers are noticing that growing numbers of shoppers are "just browsing", or worse, are using their store to make their purchasing decisions before leaving to buy online.
Retailers are also reporting that shoppers are photographing tags on their smartphones in change rooms, or are asking sales staff to write down product codes before leaving the store.
Andrew Thisleton of Sydney ski shop InSki says shoppers are spending an hour being professionally fitted for ski boots by him only to take a sneaky photo of the box or barcode when they think he's not looking.
"It's pretty brazen, and I'd say it's getting worse," Thisleton says.
Sarah Paykel agrees. She has just put her Australian women's boutique Pink Zebra into voluntary administration, blaming the rise in online shopping for robbing the lion's share of her sales in the past couple of years.
Paykel had three stores in Sydney, one in Melbourne plus an online store, but says she couldn't compete with overseas sites offering the same brands cheaper that also offered free postage.
"Shoppers used to be discreet about using our store to find their size, asking you to write the style down for them. Then, they'd try things on in the change rooms with their iPhone in their hand taking photos of the tags. These days they just tell us thanks for the help and that they're now going to buy that same item online for less. It used to be just the young girls behaving like this, but now it's all ages. It's unbelievable," Paykel says.
Linda Quinton of South Australian organic baby shop Nature's Cradle has also noticed a lull in sales over the past couple of years, which she puts down to both more online stores but also more choice overall.
"In store, customers do speak of looking at products and then going to check online, as well as going into the bigger stores that they feel may have cheaper prices," she says.
Steps to take
But there are steps that retailers can take to clinch the sale before shoppers leave the store to find a better deal online, says Retail Doctor Group managing director Brian Walker.
Consumer insights researched by Retail Doctor Group found that 75% of customers actually prefer a tactile and commoditised experience, which only in-store shopping can deliver.
Walker takes the view that retailers with a physical store could be doing more to secure sales, saying vast numbers of Australian retailers need to "dial up" the in-store experience.
"If your store is bland and not giving shoppers inspiration, then you're automatically only competing on price," Walker says.
On the other hand, if you've created a worthwhile loyalty program, give good customer service, interact with a database of shoppers, create meaningful marketing, run VIP nights and integrate your store with a strong and relevant online offering, then shoppers will be enticed by your offering and are more likely to spend while in your store, he says.
"Our research shows that between 22 and 25% of people who walk into a specialty store will buy something. Retailers need to focus on converting non-buyers into buyers to remain relevant."
Retailers that differentiate their offering will always win, he says. "It's the bland retailers in the middle of the pack that don't really stand for anything that are suffering the most from a downturn in sales. What retailers need to do is figure out where the opportunities lie and what their consumer looks like and not try to be all things to all people."
Imogen Randell, managing director of Quantum Market Research says when consumers go to the effort of going in store, they are in a buying frame of mind and want to find what they're looking for, so converting them to buy is key.
"Sales staff can make a big difference. Warm, friendly staff that guide shoppers who are looking for advice are critical, especially when it comes to fashion, but also for goods that are technical or health related," Randell says.
Chris Hitchen, CEO of Getprice.com.au also believes retailers relying on just a physical store presence could be doing more to secure the sale.
Its 2011 shopping report found that consumers look beyond price when deciding where to buy.
"Consumers will be loyal if you deliver strong customer service and are relevant and valuable throughout the shopping process. That means connecting more effectively with shoppers on social media sites, your own website and mobile applications. There was a clear discrepancy in how consumers view these channels compared to how useful they find them during the shopping experience," Hitchen says.
Securing the in-store sale
A few Australian ski shops have taken a novel approach to weeding out the non-genuine shoppers by introducing a fitting fee for ski boots.
Thisleton says Sydney's InSki charges $50, which is refunded if the person buys a pair of ski boots in-store. The fee was introduced after a growing number of shoppers were skulking out of the store after being fitted for the right size and style boot, which could take up to two hours.
Thisleton says the fee had had the desired effect.
"Some people do take objection to it, but those who are serious about buying understand that they're paying for a service and that they are buying a guarantee that they will get the right boot for them," he says.
Some high-end fashion labels with stores in Sydney have also started charging shoppers wanting to try on clothes, which is refunded if they make a purchase.
But not all agree that charging is the right approach. Melbourne-based retailer Kogan.com.au is a locally owned and operated manufacturer and retailer of consumer electronics. It designs products in Melbourne, assembles them in Asia and sells direct to customers online.
Executive director David Shafer believes that retailers with physical stores need to continually innovate in a bid to avoid becoming drop in and try-on centres.
"For far too long bricks and mortar retailers have had an easy run without needing to change their businesses. It's time they look at what their customers really want and start offering a unique advantage," he says.
A Melbourne tennis store that has a tennis court attached that encourages shoppers try out the perfect racquet for them with trained professionals is a good example of innovation in a physical store, Shafer says.
"You'll also see more and more experience centres where the physical stores will try and immerse you and let you physically feel the brand you're interacting with. Coffee brand Nespresso are already doing this quite well. They don't push a hard sell, but simply let you experience their coffee and products in-store, which you can then head online and purchase," he says.
Other retailers are also thinking outside the square to try and lure shoppers away from the keyboard.
Vicki Sinclair runs incube8r in Queensland's Fortitude Valley, which actively encourages shoppers to go online to check out the styles of those items stocked in store.
Incube8r's profits are derived from renting retail space to artists.
"Because we don't take any commission on sales, we are kind of like the retail stores of the future, giving customers a stress-free shopping experience, with the end result being happy, satisfied shoppers," Sinclair says.
Paykel is also working on a new business model in the hope she can resurrect the Pink Zebra brand, currently in voluntary administration.
She hopes to re-launch an e-boutique, which would help shoppers find their size in the physical stores and then order the item online on their behalf, also handling any returns.
Paykel has had hundreds of emails from shoppers in support of the plan after emailing her database and is now trying to raise the capital via investors to fund the concept. She believes this sort of approach is the way of the future given the continual trend toward online shopping.
"We would give the stores a facelift, including televisions screening the names of the labels we stock and which celebrities are wearing those labels."
"The best way to stop being a victim is to let go of the old model and find another approach. For us, this is the best way forward. In this day and age, it's about survival of the fittest."
written by DFD, November 22, 2011
This is a service, distinct from the merchandise. In the past it was possible to bundle these together and absorb it into the goods price, but if shoppers are circumventing it and using the service for free, then you need to charge for it one way or another.
The $50 deposit sounds like a winner; maybe you could also get a commitment to spend a certain amount in the store (e.g., minimum $10 sale) before people are allowed into change rooms. Just an idea.
written by CentricConsulting, November 22, 2011
Nice article by the way :)
written by blue tuna media, November 22, 2011
written by itsinthestars, November 22, 2011
Even if they do shop online, you might save them shipping (and the wait) with a free pick-up service for that item if they come to your shop to collect it.
Or perhaps you could look at re-training your sales staff. I've wondered about the future of retail after receiving some very disinterested service from some Gen Ys. It's not always about price. Sometimes people flee to the safety of the internet where they won't get attitude from surly shop assistants...
written by smartselling, November 25, 2011
All we seem to be reading here and elsewhere on the web is articles where the retailers are complaining and crying 'poor me' - yet nothing has been discussed about what they could be doing to create more valued reasons for buyers to choose a retail store over online.
Retailers - big and small - need to evolve and focus on innovation, not price
written by bruggie, January 06, 2012
Battery for a Canon digital camera retails $89 in retailer (Half the price of a new camera) and the retailer suggested throwing away the camera and purchasing a new on.
On Line an similar if not better battery (greater Mah - Milliamp hours) and a 12 month warranty on line for $12.99.
On line retailing is here to stay.
Questioning a local sub contract courier he informed me that over 60% of his deliveries were for on line sales.
Younger people will use on line. Young Chinese couple next door do all clothing and furniture shopping on line. Clothing from China.
I have seen mens business shirts (From Thailand) in retailers for $160.00 plus. From Thailand maybe $5.00
So why would I buy one shirt for $190 ?