When so much more is available in bricks and mortar stores, why are shoppers turning more and more to online shopping? It’s not just because of price. We all have examples of when we’ve paid more for an item, such as because of brand, accessibility or timing. One of the reasons is that many bricks and mortar stores have become predictable. To bring the ‘magic’ back, Australian retailers need to create experiences for their customers that engage them every visit.
Is there a ‘lack of magic’ in Australian retail?
When so much is available in bricks and mortar stores, why are shoppers spending less in these traditional channels?
Large retailers blame lower bricks and mortar spending on factors such as a pessimistic consumer outlook, an addiction to sales, and the Australian dollar making shopping from overseas cheaper (in other words, if consumers are spending, they’re only spending on necessary bargains). However, Adele Ferguson in her recent The Age article highlights that consumers “are spending as never before on restaurants and services, at supermarkets and Bunnings” and there has been a “surge in the number of Australian flying overseas – and shopping” (The Age, 30-31 December 2011, Business Day, Page2).
And it’s not all about price. We all have examples of when we’ve paid more for an item or service – because of a range of reasons such as brand, accessibility, or timing. And online shopping doesn’t guarantee a cheaper price, particularly when you consider what you can buy at many of the discount stores that have arisen in the past ten years.
One of the reasons is that many bricks and mortar stores have become predictable. Despite huge amounts of investment, comments about the revamp of some of our largest department stores centered on them being largely the same, but different. But not revolutionary. And not even particularly interesting.
This is not so much about product, although that is a major factor. The in-store experience is rarely a great experience. Apart from the usual racks and shelves of the product you expected to be there, many sales staff come across as bored with the store – an attitude of “imagine having to work in this state of predictability every day”. An almost opposite view comes across when you talk to Bunnings staff – there is a regular sense of surprise as they discover something else they hadn’t seen before.
The Bunnings experience isn’t just about range – it’s also about the experience of that range. If you know exactly what you want, you can take a logical journey through the store (there’s no attempt to trap the consumer with a maze and mirrors). Or, if you have some time to spare, you can go exploring.
Most retailers can change their in-store experience to create a journey for their customers. Rather than being confronted with the usual shelves and racks, customers could be greeted with different paths depending on their reason for popping in. Just browsing? We recommend this route through the store. Or if you have a particular event or purpose to prepare for, let us show you a different way.
Of course, getting this kind of experience right requires good knowledge of your target customers, their needs and buying preferences. And this is perhaps where Australian retailers have become particularly lazy. So much of bricks and mortar retail is developed from assumptions, old research or outdated research techniques.
Customer segmentation is still based on primary demographics and often lacks the richness of our overseas counterparts. Loyalty programs collect huge amounts of data but not always the kind of information that can generate useful customer insights.
As Adele Ferguson sums up, there is “a lack of magic in much of Australia’s retail”. To meet this challenge, retailers need to know their customers and create experiences that engage them – every time they visit the store.
What retailers do you know that are at least attempting to meet this challenge?