Welcome to the new world of retailing. Let’s take a snapshot of the way we now shop. Jane needs a new pair of boots to keep her toes warm this winter. While she’s watching TV that evening, she browses her favourite online stores to find out what’s in style, and at the same time checks the top fashion blogs on Instagram and Facebook to review the latest winter looks.
The next day in her lunch break, Jane pops into the closest department store and tries on a few pairs. While she’s trying on her selection she quickly searches online to make sure she hasn’t missed a flash sale for one of the brands she’s considering.
She discovers shoe store down the road is having a 20 per cent off sale, today only, so she puts the boots aside, after checking her size, knowing she can buy them online cheaper when she’s eating her sandwich and they’ll deliver to her desk this afternoon. Another pair she decides to buy there and then. By this afternoon she’ll have two new pairs with which to update her wardrobe.
It comes as no surprise Australian shoppers love being able to browse and shop for our favourite brands online. We’re a long way from the catwalks of New York and London, but that doesn’t mean we have to miss out fashion-wise, and it’s all thanks to the web.
Deloitte’s latest research into the retail sector, Navigating the New Digital Divide: Australia’s digital influence in retail shows the powerful influence digital technologies have on our buying behaviour. Seventy-two per cent of us already know what we want to buy before we go into a shop. And that’s largely because we’re using our smart phones and tablets to check out the market before we buy.
Let’s look at some statistics. In Australia 40 per cent of sales are influenced by digital technologies. If we follow the same path as the US, where digital influence has multiplied four times over the last three years, in the next few years engagement with digital could impact the majority of purchasing decisions.
What’s really important to recognise isn’t so much the dominance of digital, it’s how online and offline channels work together. Businesses that understand that are going to be the retailing superstars of the future.
So what’s the best way to re-calibrate your business so you’re optimising your bricks and your clicks? There are five key steps:
1. Rethink customer engagement: as consumers, we’re looking for a relevant and personalised experience. For instance we don’t want to be served up ads on our Facebook page for dog food if we don’t own a dog. The best retailers are putting themselves in their customers’ shoes and designing the retail experience around their needs – not the business’s needs.
2. Rethink pricing: retailers need to be flexible and responsive to continue to attract customers and maintain margins. This means changing pricing according to factors such as the weather, the time of day and competitor stock levels.
3. Rethink the supply chain: the tricky balance here is being able to expand your product range, while keeping a lid on costs. Retailers need real time information about stock levels to be able to meet customer orders and deliver click and collect functionality. This will most likely involve having to review legacy systems and invest in software to give the business a bird’s eye view of the supply chain and to improve delivery speed.
4. Rethink the bricks: the role of the store has changed. The digital and in-store experience needs to be seamless and exciting. Traditional checkouts could be a thing of the past as service staff increasingly rely on a device to access full product information and to take payments. Experience is everything in this context – both through digital and non-digital channels.
5. Rethink your team: customer service staff are increasingly digitally savvy. They are able to work wherever the business needs them and their role as the frontline of the business cannot be under-estimated.
Businesses that focus on operationalising these steps are the ones that are most likely to find success amid the new digital divide. In fact, it’s possible to quantify this:
• There’s a 25 per cent conversion lift when a shopper uses a device before or during a purchase.
• 21 per cent of sales in Australia are influenced by mobile purchasing behaviours.
• One in five shoppers spend more in-store when they use a device.
The fact is, we’re only at the start of the retail revolution. In the coming decade the way we shop for everything from bread and milk, to luxury items to financial services, and everything in between will change. It’s an exciting time to be in retailing. Businesses that are nimble, smart and digitally engaged are the ones that will reap the greatest rewards.
A copy of the research can be found here:
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Accredited Family Business Adviser