Endless technological advances are having a significant impact on Australian retailers. But this year could prove to be a tipping point for some. Here are the 10 key trends changing the market.
1. Retailers will stop pointing the finger
For years now, even large department stores have publicly blamed weak financial results on everything from the rise in international ecommerce sites and the strong Aussie dollar to droughts, floods and heat waves.
But 2012 will see retailers start to take some responsibility for their own situation, predicts WeAreDigital director Karson Stimson.
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“Retailers will start to realise this year that having a decent product and brilliant customer service are the essential components to being a successful brand on and offline,” Stimson says.
“Having a bricks and mortar presence is a huge advantage for retailers because you can showcase what you stand for as a brand in-store. At the same time, the internet presents a huge opportunity. Retailers are starting to realise this and act, but we’ll see more of this in 2012,” he says.
2. Shoppers up the ante
Shoppers are dictating to retailers how and when they shop – and even what they’re prepared to pay. And retailers are being forced to respond.
Google Australia’s head of retail, Ross McDonald, says research shows that shoppers that shop on a tablet tend to spend more time and purchase more products than those shopping via desktop.
“Part of this can be attributed to shoppers typically being more relaxed when interacting with tablets, but another major factor is the richer experience that can be enabled on tablets, like video links, product reviews and richer information content,” McDonald says.
Research and strategy firm Stamford Interactive says shoppers want a seamless shopping experience, whether they are in-store, on the website or shopping on a mobile.
“For example, shoppers with store loyalty cards expect that the store know who they are, regardless of the channel they use to shop,” Stamford director Lisa Wade says.
“Although, large retailers are often hamstrung by siloed organisational structures that make it difficult to provide this seamless experience, as different customer channels are maintained by different business areas,” Wade says.
Shopping centre giant Westfield is one retailer looking to respond to changing shopper needs. Westfield business development director Michelle Vanzella says multi-channel shopping is vital to consumers, which prompted it to make changes.
“Features, functions and formats that will assist and enable shoppers to seamlessly find and buy items on and offline will, in our opinion, unlock the best of both worlds. Of course, mobile devices that enable shopping anywhere, anytime, will be a crucial part of the success equation,” Vanzella says.
3. The phone will take over as the credit card
The term M-commerce has been around for a while, but its meaning will change this year.
M-Commerce describes the process of making a transaction using a mobile device, such as a mobile phone. And retailers not on board need to be.
Internet marketing company comScore says up to 38% of smartphone users have made a purchase via their mobile phone at least once, with this figure expected to grow this year. It’s a lot of people given that recent statistics reveal there are more than 22 million mobile devices in Australia.
This year, M-Commerce is set to grow, with predictions that mobile phones will start to replace credit cards.
Fuse Mobile CEO Paul Coleman says major advancements in M-Commerce should be expected, with smartphones exerting a huge influence on consumer behaviour towards the online shopping experience.
For example, PayPal is investing even more in technology that lets users shake their mobile phone near a barcode to complete a purchase, Coleman says.
“Expect to see Apple, Ebay, PayPal and others launch a slew of applications for coupons, and mWallets join the party throughout 2012. For retailers, this means they need to ensure they’re optimised for mobile.”
Google is also testing and developing the Google Wallet, which allows users to store payments, cards, offers and more on a mobile and online. Google Wallet is available in Australia and, if other Google products are anything to go by, take-up is expected to grow significantly this year, Coleman says.
4. Retailers look for in-store digital integration
With more sales being made online, retailers will this year step up their physical store presence. For smart retailers, this will include making digital part of the physical store environment.
WeAreDigital’s Stimson says the key is to implement digital so that it makes shopping in your store more enjoyable.
“We will start to see many businesses integrating digital in to their real world experiences, both for the customer and for the store staff.
“But it will be about using digital to add to the experience, not just as a gimmick,” he says.
Unique fitting rooms with digital applications, creating a bit of theatre to the shopping environment or adding touch screens that give shoppers more information about the products and services you offer are great applications,” Stimson says.
5. Retailers understand it’s about targeted marketing
Retailers have a range of tools at their fingertips to target their marketing these days.
One tool is social media, which enables retailers to target their offering via type of user or geographic location, for example.
Stimson says a growing number of retailers will realise that targeted marketing will deliver far better sales results this year.
“Rather than broadcasting an offer to everyone via a newspaper for example, we’ll start to see far more intelligent, targeted marketing offers that blend both location and relevance. This year it will be far more about real time offers,” he says.
Stimson says this makes the retail experience far more pleasurable and will also increase sales.
To do this, retailers need to capture information about their customers with the right data fields in their system and accurately monitor shopping behaviour, Stimson says.
6. Non-digital retailers get on board or fail
It will be the year of awakening for Australian multi-channel retailers in 2012, with most understanding they can’t postpone online updates any longer.
David Whiteman, director of product and marketing for online shopping comparison website Getprice, says online transactions only sit at around 5% of total retail sales, but more than 60% of shoppers use the internet to research purchases, meaning retailers have to be online in a meaningful way, Whiteman says.
“Many retailers have been tentative to fully commit to e-commerce, and understandably so.
“But this year we’ll see live inventory become more prevalent, offering shoppers the ability to locate and purchase products from local stores then pick them up and avoid delivery costs and eliminating waiting times.”
Meanwhile, large online retailers will become more nimble, while smaller, agile retailers will obtain the necessary investment to become larger, according to a recent Forrester report called Trends 2012: Online Retail in Australia Will Finally Hit Its Stride.
“These two converging trends will build the sector’s resilience in 2012, helping it rise above economic uncertainty,” the report says.
7. Customer service will improve
We all know that retailers need to step up their customer service. But some suggest if they don’t do so this year, they risk being left behind.
Whiteman says retailers need to clearly state the value-add services they offer – including online.
“Things like bundled products, free/cheap delivery, no hassle returns, 24-hour customer service, extended warranties, physical locations if you have them. People will pay more for things they perceive to have incremental value. It’s the retailers’ job to communicate that effectively.”
Home improvement retailer Bunnings is working hard in this area, building a mobile-friendly website that provides stores and trading hours with just a few clicks.
Bunnings general manager of marketing and merchandising Clive Duncan says the mobile version of the website was launched more than 12 months ago.
“We see online and digital platforms as a great way to provide practical solutions for our customers by helping them with a wide range of information. Additional tools that we have available include QR codes and iPhone apps. More recently, we’ve introduced social media platforms where customers can share their kitchen ideas and designs,” Duncan says.
8. Mobile apps will change the way we shop
Australians are already using mobile apps to research and buy. In fact, Australian consumers purchase an item every four seconds via eBay’s mobile apps.
But this year we’ll see even more apps emerge. Pundits predict that the number of mobile apps that help consumers shop will skyrocket. Already, there are apps that enable consumers to go in to a store, scan a barcode and find the best price for that item. Which means retailers will have to find other ways to compete than just price. Better customer service, free home delivery or bundled offers are good ways to stand out.
Meanwhile, research firm Gartner says the top 10 mobile apps for 2012 will include Money Transfer, which enables people to send money via SMS message.
9. Retailers turn to gamification to turn on consumers
Gamification aims to integrate game dynamics to a website, online content or campaign in a bid to drive participation and, ultimately, awareness of your brand. It can make even the most mundane customer experiences more rewarding and pleasurable if retailers think differently about the customers’ experience.
Those who have heard of gamification usually think of FourSquare, which is a technology that lets people check in and share where they are with their friends. There’s also Farmville, which is an online game platform that connects players on seven continents.
Power2Motivate CEO Ben Thompson encourages sceptics to consider the image of a child playing a game, and the enthusiasm it inspires.
“When the goal is to improve company morale or facilitate customer communications, gamification is at the cutting edge of sparking a competitive business edge.”
But expect to see progression this year, Thompson says.
“Gamification needs to find its way into all aspects of marketing, especially CRM, to remain compelling.”
10. Retailers create content suitable for Pinterest
Pinterest is relatively new in Australia, but predictions are that 2012 will herald massive consumer uptake. The social media site has experienced phenomenal growth in the US and UK, with latest figures suggesting the site attracts 12 million visitors a month.
Pinterest enables consumers to research, gather, share and recommend brands and products. These recommendations are integrated tightly to social networks like Facebook, where consumers spend much of their time. And those retailers with the most beautiful content are likely to be most ‘shared’.
Bullseye business director Alec Tarshis says brands and retailers will need to be smart about providing interesting content for consumers participating in these networks. Pinterest has approximately 10.4 million users, 90% of whom are Facebook-connected.