As part of my annual retail study tour, I am spending the next month in the US meeting retailers at their head offices. I am also meeting senior executives who work for manufacturers that sell products via retailers – from confectionery to eye care – to understand their opportunities and challenges.
During this study tour, I will visit Dallas, San Antonio, Des Moines, Cincinnati, Bentonville, St Pauls, Los Angeles, Las Vegas, Reno and San Francisco. I will also meet with the founder of the world’s largest shopper marketing agency, MARS Advertising.
Each week, I will give feedback on my observations of what is happening in retail across the US, along with the trends that are relevant to Australia and New Zealand. In this post, I will segue from my recent series on the Retail Leaders Forum in Sydney to give some initial commentary on the innovation that is rescuing overseas retailers from the ongoing downturn the sector is experiencing.
The final out-take from the Retail Leaders Forum was this: there are Australian retailers and manufacturers that could be in a better place today if they had applied lessons from the northern hemisphere more quickly. I am not going to attempt to list the possible reasons for this late adoption, as they are many and varied.
However, why Australian retailers didn’t learn from the painful global economic downturn in markets 10 times larger than ours, and the subsequent re-engineering of their retail offerings over a three year period, is something we should all spend a little time reflecting on.
- In the UK, John Lewis is a very old and conservative department store that is proving how any retail brand can embrace online to maintain sales. It isn’t a sexy retailer; it’s operating in a recession-torn country and 90 per cent of its loyal shoppers live within 30 kilometres of a store. But, John Lewis has created and delivered an online strategy that now accounts for 17 per cent of the retailer’s revenue. Further to this point, Walmart in the US has gone from a few thousand items online to almost 1 million in just four years.
- When large format store growth stalled, US electrical giant Circuit City went into receivership because it didn’t adapt. Meanwhile, Best Buy in the US rolled out small format stores dedicated to selling smartphones and tablets (the fastest growing sector in technology retailing). Where they couldn’t find sites, they put them inside other large format stores.
- In another move that’s paying dividends, US department store chain Nordstrom has adopted iPads as mobile check-outs to allow store associates to stand “hip 2 hip” with customers, serve their needs and transact the sale anywhere in the store.
- In the UK, grocery store Sainsbury’s has adopted clever and targeted check-out couponing. This move has increased sales sufficiently to overtake market leader Tesco in less than 18 months.
I share these examples because every one of these initiatives could have been first into our market or is replicable within our own retail environment this year. Yet none of these initiatives have been adopted to date.
I will leave you with a final anecdote: several months ago, I met with a senior Australian retailer who headed up a division that was in a degree of performance pain. I shared with them some proven, successful and relevant (although not particularly new) shopper marketing initiatives from the US. Their response was, “I’ve seen these things over the past five years and they were bound to get here eventually”. Any one of these initiatives would have improved sales and the customer experience at their stores, but were never implemented.
However, the winds of change are blowing in Australia and New Zealand. Shareholders and boards are calling for change – and profitable growth!
In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands.
CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.