While the nation is aGASP over the customer relations practises of one Melbourne-based "playful couture" retailer, the incident couldn't have come at a worse time for bricks and mortar stores already ailing under pressures of pricing, a strong Aussie dollar (albeit now 98 cents to one US dollar), rising rents and a global shopping mentality, all eating into profit margins.
|"We're not caught up in the discounting mindset." Jodie Adams, owner, Last Tango boutique.|
"No matter how strong the brand is, of a traditional retailer such as Woolworths or David Jones, there are larger forces at play that alter consumer perceptions and behavior and have an impact on the way that the business must operate to remain viable," says Dr Liz Ferrier, head of advertising at the University of Queensland School of Business.
While the cautionary tale of GASP will make many retailers recoil, as stories of bad in-store experiences are circulated via Facebook and Twitter, the incident also brings to the fore the idea that, especially for women, shopping is an emotional and relational experience. Give a woman a positive experience – whether online or off – and she is more likely to return, with her friends in tow.
"Women are always going to love shopping and the launch of Zara really proved that, given a good reason, we can absolutely still get excited about shopping and we will back it up by spending," says Justine Cullen, editor of SHOP Til You Drop.
"Retailers just need to offer experiences in-store that you can't get online – great service, knowledge, personal shopping and styling, for example. Discounting has lost its appeal for most savvy customers."
Indeed, like the rampant spending plague before it, retailers mindlessly jumped on the post-GFC discounting bandwagon in order to lure in bargain hunters, giving little thought to the longer-term repercussions for their brands. A once-loyal customer base, who may have once saved up for a seasonal update, or to savour the in-store experience in their favourite store, have become miffed at seeing garments bought at full-price discounted within two weeks.
"The pricing wars – competing on price points alone – has started a cycle that sets a benchmark for a business where reduced price points are the base line," says Jodi Adams, owner of Last Tango boutique. "We have our usual sales, three times a year, plus an ongoing sale rack, but we're not caught up in the discounting mindset."
Online retailers, like Katrina Colla of FrockYou.com.au, are quick to point out that while online has attracted more shoppers, as more people grow comfortable with entering their credit card details and grow to appreciate the convenience, ease and selection of buying on the net, it's unfair to point the finger solely at online for the decline in overall retail profits.
"The majority of Australian online stores (particularly in fashion) are small businesses who are coping with the current economic downturn as best they can, and most are facing a drop in business the same way that shopfronts are," she says.
"People are definitely being more careful with their spending, so retailers need to work with that. There is nothing more frustrating than buying something 'new season' in a chain or department store, then going back in a fortnight later to find it on the sale rack. Who in their right mind would buy something at full price?"
It's always been a challenge for Antipodean stores to keep up with international seasons, but keeping up with Europe and the US means local stores are out of sync with customers' needs, however fashion-forward they might be. While Cullen asserts that most Australians want to shop locally to benefit the economy, Colla adds that the industry is shooting itself in the foot by getting too far ahead of itself.
"Right now, chain stores are starting to advertise "mid-season" sales – it's only been Spring for a couple of weeks, and in most of the country it's literally only just starting to warm up now," she says. "The same goes for winter – knitwear in February? I don't think so!"
While Premier Investment Groups – owner of Just Jeans, Peter Alexander, dotti and Smiggle, reported a 49% retraction in profits on 2010 levels, owing to a strategic review of its stores and "challenging retail environment", other groups, such as Myer and The Sussan Group (owner of Sportsgirl) have adapted well to the new digital environment; a key to faring well in the future.
"I think Sportsgirl are doing a brilliant job," says Cullen. "They've perfected that magic mix of a unique online space with experiential store spaces that offer you something other than what you can get online."
What's more, with the ability to research trends, brands and future purchases online – the new way to window shop – customers have learned to become far more discerning, whether shopping in-store or online. They want value as well as a positive brand experience, and that can happen in-store or on Facebook, with Dr Ferrier adding that blogs can be a cheap, SEO-effective way for small businesses to keep up the customer engagement.
"Those retailers who are flexible enough to respond to the transformed environment, understanding the reason why many consumers are going online to buy certain goods and services, and catering to those consumers in ways that improve the consumers’ lives (using both bricks and mortar AND online vending/services) will be able to capitalize on the opportunities," says Dr Ferrier.
"People will make time and will travel to a store, if they associate that store with a good experience. If retailers understand their customers’ needs and preferences, and find ways to enhance the customer experience, and evaluate and reassess the ‘customer experiences’ they facilitate, they will understand how best to cater for their customers. This amounts to respecting and valuing the customer, who in turn will respect and value the retail business."
Girl With a Satchel