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yARN: Are retailers falling behind?

yARN: Are retailers falling behind?

Retailers might still be struggling, but they need to start making technology investments

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European yip aside, market confidence is definitely creeping back into the Australian economy. That is, except for in retail.

Last week brought the sad news that Clive Peeters had been placed into voluntary administration. With receivers appointed almost immediately afterwards, the vultures were quickly circling a retailer that has been rocked with controversy in the past.

Clive Peeters was no small entity. ASX-listed, it supported approximately 30 stores on the east coast, and owned additional franchises such as Rick Hart in the Western Australian market. It’s also not the only retailer experiencing a challenging market.

In their respective third quarter financial results to the ASX, both Myer and David Jones claimed soft market conditions. Both grew slightly, but admitted this was through a ‘challenging’ climate. Causes cited included the Government’s economic stimulus drying up, and rising interest rate rises that had taken their toll on discretionary spending.

The falling unemployment rate, long considered a vital statistic to the profitability of retailers, was not enough to mitigate negative pressures in the environment.

It’s easy to point the finger at Clive Peeters and claim its woes are its own fault. Six months ago, the retailer was rocked by multimillion dollar accounting fraud by one of its own staff members which saw it heading into the courts. But that would be ignoring the whole picture. The industry has found itself in the middle of an upheaval in consumer buying behaviour, and not every retailer is properly equipped to handle the shift.

And there’s more pressure on the way. Statistics from Forrester Research and IBISWorld suggest offshore retailers are getting the first look-in with the increasing number of online consumers. That prompted the managing director of the Online Retailer Expo & Conference, Mark Harvey, to call for retailers to improve their own Web presence – a view that Bing Lee, among others, has backed up.

However, there have been success stories in retail – JB Hi-Fi, for instance, posts record profits with each new ASX release, and Harvey Norman is likewise on the up. Both retailers are heavily invested in bricks-and-mortar retail outlets – so perhaps the online route is not the only solution.

What retailers need to do is undergo some kind of transformation to remain relevant in the current market. This might be through investing online, or it might be in creating a better in-store experience. I suspect this is where Clive Peeters and Strathfield Electronics fell by the wayside, and why Myer and David Jones are not seeing the same kind of growth that JB Hi-Fi has – a lack of innovation on the point-of-sale (POS) front resulting in limited appeal to niche customers.

On a recent trip to Japan, I saw any possible wonder you could think of in retail – from digital displays, to effective use of RFID technology and free catalogues that dwarf the Ikea textbook. Of course, retail in Japan is a highly competitive environment and the need for differentiation was forced on the store owners faster than it has been here, but Australia is at the point now where retailers need to offer an experience transcending the mere exchange of cash for goods.

It’s not necessary to compete with JB Hi-Fi on price – in the long term, you’ll likely lose that battle. What a retailer needs to do is offer a shopping experience that encourages people to spend that little bit more and enjoy it more.

Borders partnered with Gloria Jeans to offer what we all love to do at home – settle down with a new book and hot coffee. And every time I walk into the Westfield shopping mall at Chatswood, Sydney, a massive digital display floods me with colourful ideas for parting with my money. These two examples only scratch the surface of what can be done, but are good ideas that bode well for the fortunes of both companies.

Tucked away in a tiny corner at this year’s CeBIT Australia exhibition, a Korean vendor new to the market had set-up shop. In4 Media Communication Design has some seriously fascinating technology such as holography and mirrors that become digital displays.

The vendor is serious about the local market and hopefully, even if holography isn’t right for every store, retailers will look a little more seriously into presenting a compelling shopping experience in the future.

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Tags online retailersClive Peetersjb hi-fiIn4Media Communication Design

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