At the end of each year I write to the top 20 CEOs and leaders in the CROSSMARK client base. I’ve been doing it for almost a decade.
In my message, I recap on the prediction I made for the year just finishing and predict a key area that will absorb the minds of retailers, manufacturers and wholesalers in the year ahead. Importantly, the people who receive the note – retailers, manufacturers and distributors of goods sold via retail – lead the largest sector of workers in Australia.
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Items sold out of retail stores are sold into those stores by the wholesale trade. If you combined these two industry sectors they represent almost 15% of the approximately 11.5 million Australians in the workforce. The above percentage excludes the manufacturing sector, which also employs people who call on stores or administer sales to retail stores. In almost every developed economy in the world, the combined retail and wholesale sectors are the biggest employing industries and largest portion of the overall tax base. So, trends that impact the retail sector here matter
In December 2011, I predicted that in 2012 business would become a “game of inches,” whereby growth would only come from taking share from competitors, new geographical markets or true innovation; increases in prices and consumption in the western markets just wouldn’t cut it. Improved productivity to support lower prices and improve our environment would be the norm.
And so it’s played out, with prices continuing to drop for shoppers, supported by productivity improvements to protect margin. And new markets in Asia and South America, albeit at lower growth rates, are still growing top line sales for many companies.
So what will 2013 see? Well, the US will return as one of the world’s engines of growth, though in new ways. Cheap energy and investment in design and manufacturing productivity harnessed by a low dollar cost of high intellectual capital (a newly minted MBA now probably costs less in the US than anywhere else in the OECD) will combine to grow imports from the developing world to support US omni-channel retail. These trends will also grow exports of high quality products and services to the rest of the world. Those export services include technology, manufacturing and online retail services. It’s that last one I’ll focus on now.
Having walked stores in the US for over a month from March to December 2012, I can tell you that the retail trade is now a vibrant and much more technologically enhanced environment than it has ever been. Fast payment for shoppers, accurate, dynamic and transparent inventory control and sourcing from new countries all combine to deliver an omni-channel shopper experience.
At Christmas in 2008 it was possible to shop US stores from outside the US for the first time. A few early adopter online shoppers did just that. The online shopping model was a work in progress. Now it’s Christmas 2012. The model is fully developed, and US retailers are actively exporting retailing, from the US to the rest of the world.
Last week, The Age in Melbourne ran a great story on key US department stores, Saks, Macy’s and Bloomingdale’s, opening online stores for the Christmas period in Australia. They offer free shipping, wider inventory choice and generally lower prices than can be found in Australia. Well, they aren’t Christmas pop-up online stores, they’re here to stay. These online stores are the way that US retailers will access this market as a consistent and committed trading structure.
Our challenge in Australia remains one of productivity in all parts of our domestic economy. Australian manufacturing, wholesaling and retailing need to adopt new and more innovative solutions if we are to grow. At a department, enterprise and country level we will need to do at least “more with same” if we are to prevent the world from sliding gently past us.
Enjoy the break, and my best wishes to you, your family and your business in 2013.
As CROSSMARK CEO, 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 and across the world. His international career in sales and marketing has seen him responsible for businesses 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.