Economy

Not drowning just waving – Are we spending less or just differently?

Engel Schmidl /

“I have been up against tough competition all my life. I wouldn’t know how to get along without it.” – Walt Disney

Darrell Lea, Ojay, Payless Shoes, Brown Sugar and other retailers who have become clients of our country’s administrators may have many various reasons for their decline, although there is one common feature that pervades all of their situations, they simply failed to adapt.

I am reminded of the adaptive strategies of a fit company like Australia Post who, faced with rapid change being thrust upon them, such that traditional mail was becoming less than 1% of their business mode, adapted and responded in such a diverse and speedy manner that they dominate the market in many digital communication services, and physical courier services. Australia Post now even has a mobile app to send a personalised postcard from anywhere in the world.

Perhaps this is best put by Ahmed Fahour, managing director and CEO of Australia Post, when he insightfully says that “if we didn’t cannibalise ourselves, our competitors would”.

Is it a surprise that Apple retail stores average 10 times the sales that their domestic retail competitors average in this country? Or that the new fashion entrants with all their focus and differentiation are equally doing great numbers?

Are we also surprised to see some of our domestic retailers who innovate, build brand and are just wonderful in the space of cross-channel retailing going from strength to strength?

Sportsgirl, with its digital plays, and Target Australia which recognises the power of collaboration and ‘scarcity’, are just two examples of retailers adapting and succeeding.

Indeed, Target’s successful collaboration with Stella McCartney in 2007 has led to a collaboration with Roberto Cavalli to be released on October 31, fuelling the desire of Australians for affordable international fashion products. Target recently announced its collaboration initiative will increase in frequency to between four or five collections every year, using designers from both Australia and overseas, with a weighting towards international designers.

We must also remember that while we’ve been focusing on outside-in, globalisation works both ways and some Australian retailers, such as Cotton On, are successfully taking their offer overseas.

So here is the hypothesis – Australian retail is going through a major structural change and by and large the retailers who adapt and focus both globally and now domestically are winning the war.

When it comes to ‘do or die’, Australian retailers can ‘do’. Perhaps we can read the winds of change and invest in a strategy of globalisation ourselves, learning from these new entrants to become fitter retailers and embracing this new order of global retail.

The others fail to adapt and blame the referee when the whistle blows and they are the losing team.

Happy ‘fit’ retailing.

Brian Walker is the managing director of Australasia’s leading retail consultancy, Retail Doctor Group.

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