The main reasons for the much debated & document malaise in Australia's retail sector can be summarised below:
Well documented fragile consumer confidence & cautious consumers
Structural & costing issues relating to high labour & occupation costs in Australia
A PM who in leading a minority Government, is hostage to narrow political interests of her political supporters & in trying to save her political career has bet everything on a hard to explain Carbon Tax
A suspicious electorate who is finding it hard to believe that everyone will be better off as a result of the carbon tax
An opposition that is cleverly taking advantage of a weak PM to instill fear in consumers' psyche about her policies, including portraying them as half baked & made on the run!
A Reserve bank that keeps everyone guessing about the interest rates & the true health of Australia's economic well being & in the process further hammers consumer confidence
A well documented rise in utility, food & petrol prices & other household expenses
The media feeding on shock headlines such as "Interest rates on the rise", "Utility charges to double" or "House values declining" & in the process make consumers even more cautious
A desperate media that is feeding on above shock headlines further undermining confidence
The strong Australian dollar making it both fun & affordable to shop on line for consumers
An almost universal lack of online presence in a substantial way by most Australian retailers to combat the above, further allowing the consumer dollars to be spent on overseas websites instead.
The blurring of channels giving consumers a much stronger bargaining power due to ability to source products from many competing suppliers
Having listed the above factors, most importantly & noticeably, it is the consumers' attitude towards retailers, the exertion of their newly found powers & the unreasonable expectations they are placing on retailers that is making the sector structurally unsustainable.
Consumers are finding the indescribable joy of exerting their newly found psychological & financial power over hapless & desperate retailers a new shopping experience unknown in Australia until this year. that is driving consumers to shop on what they choose to have, but at the lowest price! They are enjoying the brutality of what they are putting retailers through!
Most consumers' (young & old) attitude & psyche towards most retail stores they walk into can be summarised as:
I can probably buy what I am looking for cheaper elsewhere!
Therefore I must drive a hard bargain!
I must watch out they don't rip me off!
I'd prefer service AND lowest prices at the same time!
I can't be bothered to go to the cheapest retailer around! instead, I will use my smart Phone apps to make them price match with other retailers'.
They must meet my demands because I am spending my money with them & not someone else
If I don't enjoy my "shopping experience" I won't go back there again, unless I can get them to sell things to me cheaper than elsewhere!
I don't mind being rude to the staff because I AM spending my money with them instead of somewhere else!
If I don't get what I demand from them I will spend MY MONEY somewhere else! Here's a true story, of a customer interaction I had in one of my stores this week:
Me (M): May I help you Sir? Customer (C): Yes I am after a brand of
xxxxxx (name withheld) starting with K you have on Special!
M: Is it this one Sir? C: No! You had it on Special for $6.50
M:
OK! I think it's this one Sir! It was on Special in our Catalogue THREE months ago. It's now $7.25 (
i.e a mere 10% more)
C: (looking very annoyed) BUT I have come all the way here
because you had it at $6.50!!
You don't want to lose my business do you?M: (thinking, OK Customers are always wrong!! But, what the heck!) OK Sir, I will sell it to you for $6.50!
C: (at the registers) takes out his credit card to pay after having secured a catalogue price!
M: (firmly & politely): I am sorry Sir! But due to recent hike on
EFTPOS?Credit charges our minimum purchase on credit cards is now $10. Would you like to buy something else or pay cash?
C: (huffing & puffing): You guys should get on with the times! I
am giving you MY business! You should jump at it! Then he took out a $10 note from approximately $250 of cash in his wallet AND threw it at me in disgust!
M: Thank you Sir, here's your change!
C: (Avoiding eye contact & making his disgust with me and my service plainly obvious) grabbed his bag & stormed out without a response!
Now, Don't be alarmed!
The so called "customer is always right" marketing gurus are wrong if they think I lost a customer there by not accepting his preferred method of payment
after he had extracted the life out of a miserable $6.50 product out of me! In all probability this customer has now tasted blood in my store & will be back to hunt for more bargains sooner rather than later!
The only thng in these uncertain retailing times that is quite clear is that the eventual sustainable response to the above can not arise from price differentiation & discounting alone as it will only make consumers more suspicious & bargain savvy. The solution will have to arise from innovative "shopping experience" ideas which the likes of Zara & Nespresso are successfully managing in the new Westfield in the sydney CBD.
The main reasons for the much debated & document malaise in Australia's retail sector can be summarised below:
