Why 2017 is a good year to open a new retail business in Australia

Amazon is coming to Australia. It will happen later this or early next year, and the US online giant will take top line sales from, and force lower prices on, all retailers—traditional and pure online.

In the past 12 months Dick Smith, Marcs, Masters, Herringbone, Rhodes & Beckett, Pumpkin Patch and David Lawrence have fallen on hard times. Target is being restructured and around 1,000 small stores that operate in high streets, major malls, strip malls and the suburbs have shut up shop. This includes milk bars, newsagencies, petrol and convenience outlets, hardware stores, clothing stores, tobacconists, pharmacists and bottle shops.

All of these retailers were independently owned and operated by Australian small business owners. Some have closed because they’re just tired, others because they can’t make money with major mall rents and compliance demands, or because their high street foot traffic has just quietly faded away.

So that’s basically a big NO to opening a new retail venture then, right?

Well, not really. I am pleasantly surprised at how well many new, small, independent retailers are thriving. And they should be. We have a growing population, with high and well paid employment.

However, there are some very key areas I would focus on, and some clear “do’s and don’ts” I would recommend following.

As a backdrop to your new retail venture are the four key drivers of digital disruption everybody in business is faced with today. And each one of the four can be a positive or a negative for your business. You just have to work out which of them matters most to your new retail business, and how to harness them.

I blogged about them in detail in Smartcompany some months ago but here they are again in brief:

  1. Partnering: No one company can now deliver the range of technology, people, service, sourcing, speed, choice or productivity required to operate in our predominantly digital environment;
  2. Millennial behaviours: Millennials create and then adopt our new digital delivery models, and then lead older shoppers to this faster, easier and cheaper world;
  3. Innovation and reinvention: Irrespective of the age of a company, employee or owner, without the humility to accept the need to innovate or reinvent, it is simply not possible to survive, let alone thrive, in the new digital world. The two mindsets that allow this to be accepted is either that of a “burning platform” or a “burning ambition”—a burning desire to survive or a burning desire to grow; and
  4. Technology in all things: Nobody has a technological panacea but all business owners accept that millennial companies, those that have come of age since 2000, have the most relevant and productive technology models. Those with legacy systems can’t just change them overnight, so they need to create the vision of delivery, audit the current system and then build out new technologies.

If I had $20,000 – $2,000,000 to invest in a new retail venture to provide me with an income and enjoyment what would it be? These are the six retail categories I would focus on if, and only if, I had a passion for the things I’m selling and the types of shoppers I’ll speak with and serve every day. If you don’t have that passion do not go into retail—it will suck the life out of you.

1. Ultra local physical services

This includes hairdressers, nail bars, and massage parlours. All will continue to be important to local shoppers near their homes, in walkable distances if possible, but within a five-minute drive with parking as a maximum, or close to public transport. High streets in the suburbs are perfect for these services.

DO look for the right shop for your business. Think small in space but big in hourly sales. Have a website that shows your services and allows shoppers to book appointments on their phone. Have an active Facebook page and be on Google Maps.

DON’T go into a major mall. 

2. Close to home, curated style products

Think homewares, niche fashion, garden furniture, and manchester. Our cities and ‘burbs are all benefiting from huge amounts of new home construction and renovation; consumers think,”If I spend big on a home, I’ll shop for nice things to go with it”. 

DO choose newer suburbs with new homes and young families. Show off your personal taste and style by creating vibrant and dynamic displays. Change them often. Make offers every Thursday via your email campaign to all regular shoppers. Have a transactional e-commerce website, an active Facebook page and be on Google Maps.

DON’T go into a major mall. Don’t allow your passion to buy you into overstock.

3. Global niche pastime and hobby products

The wing mirror for a 1964 Datsun; an original score from a 1980s stage show; leather Levi 501s made to measure; an Astroboy magazine or a reproduction Motorhead t-shirt; or radio controlled yachts and off-road cars. All are products where a small number of shoppers in each country, but a large number of shoppers around the world, will pay full price for the right thing.

DO start purely online. Have a huge passion and knowledge of your product. Have partner-suppliers that can provide you with quality items, at agreed prices and consistent lead times. Partner with the postal service and one courier company. Make offers every Thursday via your email campaign to all regular shoppers. Have a transactional e-commerce website, a Facebook page and be on Google search.

DON’T open a physical store until you are selling more than $5 million a year online. 

4. Multi-retail

Whenever I walk into a big, old space that’s letting me buy three or more seemingly unrelated things, I know it’s working. Firstly, as a shopper it feels good. Secondly, as associates working in there it’s buzzier. Think coffee bars, barbers and shoe repairers. Flowers, wine bars and gifts. Motorcycles, surf boards and clothing. Usually one person owns the main lease and sub-lets to like-minded people who have differing retail skills.

DO pick your partners carefully. Think about the type of shopper who would be happy with this mix of products and services together. Make the space relaxed for the shopper, but busy for the guys working there. Have a website showing all your services, an active Facebook page and be on Google Maps.

DON’T go into new premises.

5. Big and quality sensory

This category is all about big: big bakeries; big woodworking shops selling furniture; big butcheries preparing and curing meat; big microbreweries and wineries (noisy, wet, shiny and busy); big car, bike and boat dealerships with the service centre accessible or at least visible to shoppers.

DO train all your staff to realise that they are in retail and on show, even though they’re paid to be a turner, mechanic, or brewer. Clean uniforms matter. Use bright lights and light colour fields to give it a clean, modern factory feel. Have a website, a Facebook page and be on Google Maps.

DON’T make the shopper experience an afterthought. 

6. Global emerging products

Vayping, legal Marijuana and water soluble graffiti paint are all products that are growing quickly in leading markets around the world. Some are here, others will be here soon. When they arrive there will be a plethora of new millionaires in the following decade.

DO visit the markets that are ahead of us and learn from shop owners, suppliers and shoppers. This includes the UK for vayping, key cities and states in Canada and the US for legal marijuana, and the Netherlands and Spain for water soluble graffiti paint.

DON’T judge the products, the suppliers or their shoppers, or break the law.

So in 2017, with this knowledge, and in the words of Steve Baxter: ”Go make a job, not just go get a job.”

Kevin Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings and Mirador Retail Technology. He is also the founder of TheRoadToRetail.


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Chris Koenig
Chris Koenig
4 years ago

You have taken a complex conundrum and hit it with a sledgehammer, revealing a myriad aspects. The common theme revealed is none other than “passion.” I found, after 10 years in my own retail business 20 odd years ago, that with focus and passion David can beat Goliath; so too the new independent retailers can succeed and excell in their chosen niches. Chris Koenig