British department store giant Marks and Spencer will soon join Uniqlo and Sephora as the newest editions to international brands challenging local brands for their piece of the retail pie. With their well-known brand names, steadfast following and viable pricing, global entrants have some local retailers shaking in their boots.
But there are many ways Aussie retailers can hold their own. Here are my top five tips for Australian retailers to stay competitive.
1. Manage your supply chain
Getting stock from manufacturer to consumer can be a lengthy process and quick consumption by customers cannot happen fast enough. When dealing with inventory you’re aiming to have an effective working capital flow, from buying to selling:
The buying process
Make the buying process more cost and time efficient by utilising online technology that allows remote connection. Through a remote access system, employees on an overseas buying trip can input all the information online and have that data sync to the system in Australia in real time, requiring nothing more than an internet connection.
This eliminates several time consuming manual processes and is a significant cost saver as a remote system automatically calculates expenditure against your budget, removing the risk of overbuying and finding out after the fact.
International retailers have access to a fast supply chain, resulting in high stock turnover. If your key offering is hot new trends, achieving this ‘churn and burn’ style of retailing is essential in competing with global brands. Fast fashion—product with a 2-3 week turnaround—is not executed as effectively by local retailers mainly because of the immediacy that’s removed by geographical distance to suppliers.
A client of mine successfully churns and burns stock akin to international competitors. A high performing costume jewellery chain store, they overcame the supply chain lag through use of a highly effective management system, which speeds up the feedback loop enough that their weekly replenishment cycle can be done several times a week.
2. Data doesn’t lie – so listen to it
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I find a huge loss for retailers is the problem of dead capital. Retailers spend cash on a large mass of products that don’t sell and end up with a lack of working capital to buy newer products.
This can be avoided if you’re paying attention to your patterns of sale. You might think that shirt is great in every colour but chances are, your customers don’t and data from your systems will help you by differentiating between your wants and those of your customers. If you have more than one store, data can reflect product popularity and should dictate product distribution.
Effective management systems analyse complex patterns of sale and provide instant feedback of how to make better use of your working capital. You can instantly better your sales and inventory turnaround; all you have to do is respond to your data.
3. Personalise your offering
Being local gives you a valuable leg up when it comes to catering to consumers. Do not underestimate the advantage of being able to tailor your offerings for the likings and desires of your local customers. Global brands penetrating the Australian market have been designed for the tastes of foreign markets. Their brands lack the home-grown, quintessential Aussie quality local consumers identify with.
I see local retailers neglecting the opportunity to engage more intimately with their customers through product, technology and marketing. This can be done through buying decisions, responding to demographic patterns reported in data and creating social engagement opportunities with customers. Holding a fun event in store greatly personalises the retail experience and often fosters a sense of community between fellow customers and employees.
4. On-point pricing
The cost of purchasing stock is comparatively lower for global retailers. H&M and Zara leverage this and offer lower prices than local retailers can afford, escalating their competitiveness.
Global brands deliver trendy, ‘global’ products and are aware of the appeal a popular international brand has among consumers. Confident in their offering, rather than discount to promote, they’ll promote the product on its merit at full price. Alternatively, I see Australian brands following the market and discounting when their local competitors do. Keep in mind, customers become sensitive to pricing habits and often want coveted products over the on sale items they can find anywhere.
5. Don’t be scared of technology
Some retailers are intimidated by, or disinterested in, newer technologies. This reflects findings announced at the recent Security Cybercrime 2015 Conference, with point-of-sale systems identified as one of the biggest security threats confronting Australian business. The increase in malware found in systems is largely due to old hardware and outdated software.
Without a modern and efficient system, retailers are risking exposure and foregoing technologies that cut costs, save time and ultimately, sell more products. By not adapting to new technology, you’re hindering your chances of competing with the global entrants making a home in our retail marketplace.
Craig Downing is chief executive of Futura Retail Solutions.