Retail Express is a software vendor for the retail space. Founded in 2006 by managing director, Aaron Blackman, it currently has a physical footprint in Australia and the UK. The company is headquartered in the Sunshine Coast and has local offices in Sydney and Brisbane for a total of 26 staff. The UK business was launched around 16 months ago and currently employs three individuals.
Nermin Bajric (NB): What trends are currently impacting your business most?
Aaron Blackman (AB), Retail Express founder and managing director: Anything that happens in the retail space drives our business, kicking off with the economy which is forecast to grow 2.8 per cent in the next 12 to 24 months, according to economists. It is steady and slowly coming back, and we are seeing uplift in retail activity as a result. We are not expecting a boom, though.
During the global financial crisis (GFC), consumers were saving up to 12 per cent of their income in fear. Over the last six months, research shows that Australian consumers are now saving to the extent of about eight per cent of their income; they are starting to open their wallets, and we are seeing that float through to the retail sector in terms of in-store spending.
In terms of trends, two are key at the moment. The first is showrooming; the exercise of a consumer walking into a retail store to look around and experience the product, then going back home and buying it online. It has a big impact on retailers. It is much more prominent in the US and UK, but is starting to flow into Australia.
Companies in the US like JCPenney and Urban Outfitters have stated they will remove all their point of sale (POS) units from their outlets over the next two years. Their goal is to improve the customer experience and increase conversions by having staff engage customers on floor. That means mobile POS technology will be utilised. This will also grow in Australia.
The second trend is multi-channel, and having multi-channel efficiencies. The big retailers are pretty much in phase two of their multi-channel strategies; they have understood and implemented it, and are now trying to make it work because it is difficult to have and manage customer requirements of shopping in-store, buying online, and so on. From the Web economy side of things, online spending last year was $12 billion in the Australian market.
It is interesting that at least 80 per cent of those transactions occurred on Australian websites, with 20 per cent offshore. Retail online is about six per cent of total retail spend, growing at 25 per cent a year. That is forecast globally to hit about 13 per cent of retail sales between now and 2016.
The ability for a retailer to embrace a multi-channel solution has historically meant they have had to go to independent providers. It is difficult to make it work if you have multiple parties involved as there are efficiencies required to make it work well. The big online and in-store retailers will still say the in-store business is more profitable than online, but that will change as the efficiencies improve.
NB: With these trends in mind, what are your local and global plans for the next six to 12 months?
AB: We see a major opportunity internationally. Our focus is on small to mid-sized retailers. In our technology and space, there is no one who has really taken on that segment effectively. We have seen lower entry products, such as Vend and some start-ups, take on the micro-retail space, but no one in the midmarket.
In addition, we have a few things going on in parallel. The first is that we are well into the development of our second generation application. Our goal is to expand internationally and have our solution represented in most major areas, including the US, UK, and Asia. To do that we are launching a new generation of our retail Cloud platform. We are due to release the first component next quarter, and that will be all in-store software, POS, and so on.
Parallel to that, by the end of this year, we plan to have our product in the US and support for international tax regimes through a reseller channel. That is a strategy we will implement in the second half of this year. In addition, we are putting a real focus on our channel partner program.
NB: What are your immediate channel goals?
AB: Historically, we have been a direct independent software vendor (ISV). In August last year we launched our channel program which allows us to engage IT consultants and providers, retail consultants, bookkeepers, and anyone that has any engagement with a retail customer. Since then we have registered 27 partners to the program, and are hoping to recruit 75 by the end of this year. We do not have any initial criteria; potential partners just have to be interested in opportunities in the retail space. From there, we start them off on a referral program within the partner program.
NB: Retail Express moved offshore into South Africa and Singapore in December and February, respectively. Has the investment been justified?
AB: We typically have a six to 10-week sales cycle. In Singapore (run from Australia), we are probably generating somewhere around 50 new inquiries a month. The figure is 40 per month for South Africa. Officially, we have two clients in Singapore, but we are only in the initial stages of that process.
In terms of conversion from inquiry to customer, all we can do is model off Australian activities. In Australia we convert at a rate of about 25 per cent, and 69 per cent of those that see demonstrations become a customer. We hope for the same in South Africa and Singapore.