Home Articles Retail versus Online – the gloves are off!

Retail versus Online – the gloves are off! [Five ways retail can fight back]

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Harvey Norman profits are down by 17%, David Jones sales are down 2.7% and retail brands like Colorado are closing their doors – the future of traditional retail is uncertain while the growth of online shopping (growing 9.3% annually) is taking over. Here’s five ways retail can fight back.

Borders, Angus and Robertson, Williams and now the 23 year old Colorado chain are all closing their doors. What is happening to retail in Australia?

To survive today’s challenging economic conditions and successfully fight the onslaught of online shopping – bricks and mortar retailers need to re-invent the way they do business.

Times are changing – more Australians than ever before are shopping online. Price comparison website, www.getprice.com.au claims to attract over 1.7 million visitors every month and a survey of almost 3,000 online shoppers found that 47% of them utilised their iPad, a mobile phone or another mobile device to visit retail sites.

A recent IBISWorld report (March 2011) found that there are only 350 department stores in Australia, competing with 3,852 online retailers, which are growing at an annual rate of 9.3%.

High street retailers will never be able to compete on price or convenience when it comes to their internet based competitors. Online retailers are open 24 hours a day, seven days a week. You can browse the store and purchase product from the comfort of your home, office or anywhere you can get an internet connection and with lower overheads their prices are more attractive.

So how does a traditional retail store compete against such a dominant force?

The answer can be summed up in just one phrase – customer experience.

The internet while dynamic and convenient can also be a cold, dark place – like perhaps having a romantic dinner with a robot. The true personal experience, product association and human interaction is just not there.

Five ways retail can win against online

Good old fashioned customer service – bring it back

Making the customer feel important and valued is one clear advantage that traditional retailers have over online stores. Think back to the time when every business provided a personalised service – from informative staff to home deliveries, in-store promotions to customer loyalty cards.

All of these attractions are difficult to replicate on a digital platform but are easy to introduce within a bricks and mortar store.

Sell the experience, not just the price

It’s true that the GFC has made us a nation of bargain hunters and as such more price savvy than ever before. Customers however don’t just buy on price otherwise we’d all be buying everything second hand on E-bay. At the launch of a fashion range or product release invite customers to an exclusive evening (the day before the official launch or sale) to ‘experience’ the new products first hand.

Make it a special evening with wine, cheese and a fashion parade – not only will the experience be remembered by customers who attend, a few sales may be made on the night and the word will be spread to friends and family.

Make your retail store a destination

The new retail experience should be like visiting an art gallery or meeting a friend for coffee. Look at brand leaders like Apple and the launch of their unique Apple stores around the world – every product plugged in and ready for you to try and fun, friendly staff that are there to inform, not to sell.

Create ‘lifestyle showrooms’ where the product experience comes to life with interactive displays, intimate coffee lounges, relaxing music and burning incense. In a shop it is possible to stimulate all five human senses whereas online you can only deliver sight and sound.

Communication is key

Staying front of mind with your customers is vital to build a long term relationship and establishing brand loyalty. E-newsletters are easy, low cost and instant but are they really the best strategy for a traditional, high street retailer who is competing with online competitors?

Direct mail catalogues, informative product guides and even just a ‘thank you’ card in the post can be far more effective.

Think about the ‘law of reciprocity’ where a positive action is responded to with an equal positive reaction. If someone buys you a drink for example at the bar and then has to rush off before you can buy them one back you feel uncomfortable – the balance is out. Most people will feel the need to return the favour and remember to buy the first round as soon as they meet up again.

Retail marketing can work the same way – send a free gift to a customer and they will feel the need to give you something back in the form of a purchase or at least a visit to your store.

Avoid discounting

Discounting a price merely reduces its perceived value and makes it difficult to ever sell that item again at its full original price. To compete, try adding value instead by ‘packaging up’ a product with another item or a bonus gift.

Most of our big department stores nowadays have to run one sale after another, sometimes even multiple sales at the same time to attract customers. Gone are the days when you had just two major sales a year – new year and stock take.

Technology too is helping bricks and mortar shops to enhance the shopping experience. NCR Corporation in the US is taking even the automated self-checkout system to the next level with a personalised version that analyses your shopping history via your smart phone and populates your shopping list with frequently purchased items.

So while the online world becomes more streamlined and automated there is an opportunity for traditional retail stores to fight back with a true and memorable shopping experience

Tony Eades is the creative director of the BrandManager, a creative, marketing and communications agency based in Sydney and Perth. He is a business branding expert with more than 20 years experience in design, marketing, advertising and media production.

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