Having immigrated to Australia last year, you may find interesting the sage observations of Barrett’s head of sales strategy Peter Finkelstein about our retail industry.
Here’s what Peter has to say about the current debate about the state of play in Australian retail:
Over the past few months there has been a plethora of editorial regarding the decline in retail sales. Amongst other things, an argument being put forward by traditional retailers for these poor sales numbers is the unfair advantage internet traders have because many don’t have to charge GST for products under $1,000.
This, claim the brick-and-mortar retailers, makes it impossible for them to compete and still be profitable. Never mind that international retailers have recently opened (brick-and-mortar) stores in Australia and are making a profit; never mind too, that most retailers have steadfastly refused or learned how to embrace the internet in their sales strategies and have thus failed to harness this highly lucrative and growing channel.
Instead of finding ways to harness the internet, the response from so many retailers has been to cut back on already low levels of service by reducing the number of staff on the floor, or alternatively employing untrained sales and service people. Worse, some retailers have simply capitulated and provide no level of service at all. Today, it isn’t difficult to find a customer with at least one horror story about poor or no service from a major brick-and-mortar retailer.
The reduction in the number of staff on the floor would, one assumes, reduce operating costs which could then be passed on to customers, making these retailers more profitable and more competitive. But it appears that the strategy of cutting heads has failed. Low and poor service levels have left consumers dissatisfied and disgusted. And prices have not been anywhere near as competitive as they could be.
Recently a major outdoor sporting goods retailer ran a television ad campaign for its Christmas sale. But it failed to have staff in the stores who were able to service customers as they entered (and in most instances, then left the store in disgust); they had none of the stock advertised (and no staff to explain when stock would arrive or where they were displayed).
With this kind of management and lack of interest in customers, is it any wonder that retail sales are falling? And what of the cost of the advertising campaign? How could these costs be recovered if the staff are unable to service or sell to customers attracted to enter the store?
It seems that traditional retailers have gone back to the drawing board and come up with another useless solution.
Recognising that less staff hasn’t really reduced costs or attracted new customers, they have adopted the strategy of “Let’s be totally rude to our prospective customers; let’s provide them with no service at all; let’s give them the minimum amount of attention by untrained people; let’s offer them high prices and a limited range. Then we can cry to government to bail us out. This time – so the new strategy appears to go – if we get it right, government will have to help us out in order to save the economy.”
It’s a failed strategy and one that is producing a self-fulfilling prophecy.
Every retailer knows that positioning is crucial – one has to be at the right location to attract customers. Range is important, because buyers expect variety. And price plays a role. But most importantly, is the fundamental principle that the Customer is King! In terms of order of importance for retail, it’s location, customer care, range and price – in that order!
If proof of this is needed, one can go back to Jan Carlzon (Scandinavian Airlines System – SAS). Before he launched his iconic Moments of Truth program SAS was ranked 14th out of 17 airlines in Europe and was losing $17 million per annum. A program of satisfying customer expectations turned SAS around. By 1984 it posted a profit of $54 million and was ranked as the number one airline in Europe
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So why should Australian retailers be excused from the basic tenets of retail – making it easy to do business, providing customer service, exciting range and good pricing? After all, internet retailers seem to be able to get it right.
In my opinion, that’s what the Australian retail sector seems to have overlooked. The real reason for the internet being such a strong competitor is because it has a good position and makes access very easy.
Customer service is good. Without exception the genuine internet retail sites make it easy to get answers to questions, information about deliveries and refunds. They provide access to people who are knowledgeable and who care. They too have both range and competitive pricing.
Retailers should be learning how to harness the value of the internet by using it as an additional channel to market, rather than as a rival. By using brick-and-mortar and the internet in combination, retailers can get more traffic for both channels. In the end, buyers go where they feel they are important to their suppliers. When retailers learn this lesson, and more importantly get their staff to understand the importance of it, they will find more people returning to them to buy.
Remember, everybody lives by selling something.
Sue Barrett is a sales expert, business speaker, adviser, sales facilitator and entrepreneur and founded Barrett Consulting to provide expert sales consulting, sales training, sales coaching and assessments. Her business Barrett P/L partners with its clients to improve their sales operations. Visit www.barrett.com.au