Australia’s retail industry, like the rest of the world, is going through a period of uncertainty and challenges. And so far 2020 has brought little relief for the struggling retail market, as evidenced by many big-box retailers shutting down shops or downsizing their operations to mitigate the economic downturn.
While big-box retail struggles are a cause for concern, we are blessed to have a vibrant independent retailer sector, who use extraordinary and innovative strategies to delight their customers and stay ahead.
The retail industry still faces significant challenges that are unlikely to disappear overnight. However, here are the trends that Australia’s independent retailers have identified as a foundation to help them stay ahead of the curve in the year ahead.
1. Sustainable retail through circular approach
In the year ahead, we’ll see more retailers join the circular economy – a system to eliminate waste and the continual use of resources through reusing and recycling. It’s a concept that has a particular appeal for Australia’s increasingly conscious consumers, and it’s going to be a big focus for many retailers in 2020 and beyond.
The benefits are not just social and environmental, but economic too. According to Accenture, the circular economy could generate $4.5 trillion (USD) in economic output by 2030, while the International Labour Organisation predicts it could generate 18 million jobs during the same period. That’s the longer-term impact globally, but what about those retailers already involved in it on a more local scale today?
Queensland’s Biome, for example, is truly ahead of the curve in eco-friendly retail. Since the brand was born in 2003, it has become synonymous with an environmentally friendly lifestyle. Unlike most businesses, Biome’s main focus is not on profit, but instead, sustainability and the health of the planet.
The results have been outstanding, with Biome helping customers save over 10 million single-use plastic items from waste, launching Australia’s first zero-waste beauty bar and implementing a TerraCycle recycling program.
They were also the first Australian retailer to distribute reusable coffee cups, and are now considered the nationwide standard. With their revolutionary business model and devotion to sustainability and the circular economy, Biome’s momentum won’t be slowing down any time soon.
2. Community retailing
Many Australian retailers are realising that creating a sense of community can help brands set themselves apart and build stronger relationships with their customers. In turn, this can boost sales and loyalty.
In 2020, they recognise that the communities they form will be more important than ever before. That’s because retailers across Australia understand that creating a sense of community can help brands set themselves apart and build stronger relationships with their customers. This, in turn, drives sales and loyalty.
Consider the case of Pace Athletic, a specialty store for running gear and footwear based in Sydney. Pace Athletic’s co-founders, Will Hatton and Stuart Sleeman opened their first store in 2014, and while things were going fine, they realised that they needed to do something different to set themselves apart from big chains and ecommerce sites selling the same products.
So, they decided to focus on community-building and started the Pace Run Club, a casual and inclusive community that brought its customers together through their shared love of running.
Since the first Pace Run Club started, Will and Stuart have grown their business from one to five stores with the support of hundreds of members who also shop regularly at Pace. There are now three Pace Run Clubs in Manly, Mosman and Rozelle and a Pace team for races. That’s the power of community, and it’s what many retailers will be emphasising in 2020.
3. In-store experience
In addition to selling great products, retailers have identified that a more involved, memorable and personal experience is becoming increasingly sought after by consumers. For them, the shopping experience is becoming just as important as the products they purchase. It’s about the journey as well as the destination, and Dresden aren’t alone in offering something a little different.
Dresden, an eyewear retailer selling sustainably-made glasses in Sydney, Melbourne and Brisbane, offers a unique in-store experience – another trend that will resonate in 2020. Unlike other eyewear retailers that sell ready-made products on their shelves, Dresden lets shoppers create their own pair of eyeglasses or sunglasses.
Then there’s Skate Connection, a skating retailer with stores across QLD and NSW. They’re one of the biggest providers of skateboards and apparel in Australia, but that’s not their sole focus. Their mission is not just to make sales, but to make Australia fall in love with skating, so they’ve built a small skate park in the back of one of their stores.
They provide skate classes to children of all ages, and let customers – both young and old – test out their purchases on the ramps and rails. It’s these kind of unique experiences that will see small retailers carve out an important and irreplaceable niche for themselves in the future of the industry,
4. Social commerce
Social media has always played a big part in retail marketing, but expect that to increase even more in the coming months – especially in the form of social shopping. And as platforms like Instagram continue to develop their social shopping capabilities, we can expect this trend to accelerate in 2020. Many retailers have already jumped on the trend.
TheSuperCool, a South Melbourne-based gift emporium, for instance, regularly publishes shoppable posts on Instagram. Whenever they post an image that features products that TheSuperCool sell, users can simply tap on the product tags to view and purchase them without having to leave Instagram.
TheSuperCool isn’t the only retailer making the most of social media. Just Bliss Chocolates in Adelaide makes handcrafted chocolates with a real ‘wow factor’. Not only does Just Bliss have a knack for creating out-of-this-world chocolates, but they’ve also mastered the art of showing them off on social media.
The retailer’s unique array of multicolored chocolates stands out from the competition, attracting thousands of engaged followers on social media, particularly during Christmas, Easter and other seasonal dates. Social media is not only a recipe for success for Just Bliss, but many others too.
5. Payment flexibility
Flexibility is the name of the game when it comes to payments in 2020. While cash and credit cards aren’t going away anytime soon, millennials and Gen Z will lead a revolution in more convenient, flexible ways to pay for what they purchase.
Originally online-only, these payments will quickly expand to in-store in 2020. Mobile payments will increasingly appeal, as will “buy now pay later” solutions such as Afterpay, which allows merchants to receive payments for purchased items upfront, while letting customers pay in regular installments.
There is increased awareness from even the largest banks in Australia that alternative payments have a genuine chance to be disruptive. This was further realised by CBA’s $300M investment in Klarna, the Buy Now Pay Later market leader in Europe, and Zip Pay’s recent $1B+ valuation.
Buy now pay later is already a big hit among consumers, with 2.9 million customers in Australian and New Zealand taking advantage of Afterpay alone. Millennials are the highest proponents, accounting for 40.6% of buy now pay later users while Gen Z accounted for 35.1%.
As a system, it gives customers the option to pay for their purchase over time, which means they can buy more of what they want while being able to budget. Indeed, our retailers say that upwards of 50% of their online sales are processed through new payment types. Don’t be surprised to see that figure increase in the future as people prioritise payment flexibility.
While there is no magic wand to undo the market uncertainty, it’s an industry that runs on creativity. This year’s trends confirm the notion that small businesses are willing to implement innovative strategies to differentiate themselves from their peers and invest time and money to create the unique and sought-after customer experiences that will see them thrive in 2020 and beyond.
Dave Scheine is the Managing Director, APAC at Vend.