• Retail Winners and Losers – who will come out on top?

    15 April, 2016 Retail

    It’s been one hell of a rollercoaster ride for Australian retailers.

    Over the last two years, one of our most iconic and longest standing department stores has been privatised, resulting in a South African retail group taking over the reins.

    We’ve witnessed the demise of the Dick Smith chain, then it’s online resurrection, seen Woolies pull the plug on its homewares business Masters, and now there’s speculation about a deal which will see another South African retailer purchase our third largest consumer electronics chain.

    Increased competition and an uneven playing field has been a matter of contention for retailers over the last decade, and it’s only just heating up. Amazon, the world’s largest and most powerful retailer, is eyeing Australian shores – a move which has everyone, from the independent book store down the street, to Wesfarmers, one of Australia’s biggest retail stocks, worried about the impact this will have on the retail landscape.

    Being a fourth generation family retail business, it’s upsetting when Australian household brands change ownership or worse, go into receivership resulting in devastating flow on effects for Australian jobs and families. Yet the reality is that it’s a challenging market, especially within the consumer electronics space and all Australian businesses, no matter how big or small, are facing increased offshore competition.

    There are testing times ahead, but when the going gets tough, the tough get going and in many ways, the current climate is the wake up call the broader retail industry has so desperately needed. But who will come out on top?

    Here are my top predictions for tactics needed to win the retail war:

    Man power - I recently read an article where a retailer boasted that no​t a single staff member manually interacted with an order. Running a lean and efficient system is a must for any online business, however​ ​if no employee ever interacts with an order, the said retailer is clearly outsourcing its customer support; an important window of opportunity where online retailers can put a face to their brand.

    Underestimating the power of human interaction is a recipe for disaster. At the end of the day people buy from people; the biggest fallacy about online retail is that you don’t have to deal with your customers. Invest in your staff and create a culture that breeds exceptional customer service.

    Make lasting impressions - First impressions last, but when it comes to the user journey the last impression trumps; it’s what your customer will remember about your business and likely share with the rest of the world. Retailers that successfully invest in the last leg of the customer journey will leave a lasting impression and reap the benefits.

    Customer Intelligence – Whilst utilising customer data is nothing new, we’re yet to see retailers successfully augment CRM, analytics and telephony data sets. Adopting a scientific approach to all data will help forge closer relationships with customers and lead to more tailored and streamlined user experiences.

    Greater Transparency - Trust is key. Retailers that are upfront and honest with customers will earn respect and repeat business. Compare the Market’s decision to disclose the fee it receives through selling health insurance is just one recent example highlighting the growing importance of transparency.

    Instant Gratification – Whether it’s communication, delivery or post sale customer support, retailers need to scale to cater to heightened customer expectations. This won’t be an easy task, especially considering Australia is one of the most geographically difficult countries to operate in, but the speed at which orders are fulfilled will be a top consideration for consumers.

  • How to navigate the online retail obstacle course

    11 February, 2014 Company Online Retail

    With online retail sales continuing to rise at double-digit levels towards the end of 2013, there will be an abundance of growth opportunities for online retailers in 2014, if they can handle the pressure.

    Navigating your business around the challenges that this year will bring requires a focus on service, technology, stock and logistics – 2014’s holy grail of online retailing success.

    There were a lot of online retailers last year testing the balances of investment and support across these areas, resulting in wins and losses and some that had no impact at all. The businesses that can fine-tune this mix and leverage it will reap the rewards.

    Some of the obstacles that online retailers can expect in 2014 include:

    Increasing logistic costs

    Predicted growth will make it difficult for online retailers to efficiently manage inventory levels and increased delivery demand, as they scale up and attempt to meet the growth. Long-term investment in logistics is required to handle the more demanding times of the year without impacting other parts of the business and your bottom line.

    Pressure on service levels

    Service is king in retail and ‘taking your eye off the prize’ will be one of the greatest challenges in 2014, as other priorities become more demanding. Service levels will be under pressure as online retailers bear the brunt of increasing overheads in the areas of logistics and technology.

    E-complicated

    Technology departments and resources will be stretched to keep up with the business model changes that the market will demand of online retailers to remain competitive and industry leading.

    The agility of a business’s technology platforms and programs, in addition to the talent of its technology staff will be tested and online retailers that have been investing in customisation over the past few years will come off better than those who have been slow off the mark.

    Being accurate with inventory

    One of the biggest challenges any retailer has is ensuring that they have the right product mix and stock levels at all times. The pressure of being price competitive and having more competitors in the market in 2014 could lead online retailers to broaden their inventory in an effort to capture more of the market.

    But there is a smarter way to compete. Online retailers that invest time and money in getting to know their customers will have the right product mix creating invaluable inventory.

    Rising offshore competition

    Australia’s strong economy will attract more international retailers to target Australian consumers. This could have a positive and negative impact on the industry – while the influx of offshore retailers will see increased online options for Australians, local online retailers who fail to stay ahead of the curve in regards to delivery and technology could also be left behind.

  • Retailing now: respecting the consumer

    22 January, 2013 Retail

    The January sales period always leaves a lot to be desired in terms of how marketers attract consumers.

    You see all the standard smutty sales tactics out in force and, while these tactics may be mildly successful, they work on the premise that marketers think they are a lot smarter than the average consumer. And they’re not.

    Gone are the days of loss-leading to attract people into a store for the purposes of cross-selling. Gone are the days of ending  prices in 99c or $399. Gone are the days of fear selling to close people on your shop floor and to make them feel like leaving the store will mean they miss out on the deal. The world has caught on to these tactics and consumers are a lot smarter than some retailers make them out to be.

    Here are the days of genuine value, honest commercial relationships and great experiences. Here are the days where we are happy to see a customer come and go as many times as they like – whether they buy from us or not. Here are the days of lifetime value and building genuine long-term relationships. Here are the days of not measuring customers per visit but measuring them on satisfaction and the quality of their experience. Here are the days of creating a shopping experience that will get the consumer talking. Here are the days of transparent retailing, and appreciating that the consumer is wise.

    There has been a power shift from the marketer to the consumer, and the consumer now has the ability to shop when they want, where they want, and to buy products for fair value. The retail experience now needs to be sharp, and marketers need to be truthful.

    I look forward to a bright and transparent 2013.

  • The two-speed consumer shopping economy

    25 October, 2012 Company Online Retail

    Appliances Online reached a shopping milestone recently – becoming the first retail outlet to offer 24-hour Australian-based customer support, 365 days a year. If someone needs to order a replacement fridge urgently at 3am our locally based customer support team is on hand to answer any questions a consumer might have on any of our products, and to organise delivery at their convenience.

    This coincides with Appliances Online’s extended warehouse hours. We’re also trialling Saturday delivery services to make life even easier for working couples and busy families who might not be able to be at home for a two-hour window during the week.

    Although we’re the first online retailer to offer this immediate 24-hour Australian-based support service in Australia, we anticipate that 24-hour shopping will eventually become the norm.

    The ‘now’ shopper demands to search for what they want, where they want, when they want, and get it at a price that is fair value globally. Better yet, consumers should expect the product to be delivered the next day.

    Online businesses should be fully equipped to support the changing needs of the ‘now’ shopper. Online retailers who are willing to try new ways to make shopping a fun and rewarding experience will see the pay off.

    Yet the paradigm shift which has created the ‘now’ shopper has also created a two-speed consumer shopping economy.

    On one hand, online retail is the ‘sexier’ of the two retail experiences – like a new sportscar, it’s new, shiny and exciting, allowing consumers more opportunity to dictate their own experience.

    Yet the traditional retail experience still remains how the majority of Australian consumers shop and this Volvo-esque safe experience cannot be ignored in favour of its flashy cousin.

    Despite the tremendous growth of opportunities offered by online retail, there remains a high demand by people to walk into a store and touch products rather than reading about them in product reviews. Opportunities also remain for retailers who are willing to go above and beyond for each person who sets foot inside their store.

    Our Winning Appliances stores are an example of a traditional retail outlet that still holds a significant place in the shopping economy, even if its year-on-year growth is steady (off a 100-year-old base) rather than exponential.

    Despite the enormous growth and opportunity for retailers who can service the ‘now’ shopper, we cannot just ignore the needs of the traditional shopper. We are responding to the increasingly busy lifestyles of Australians at Winning Appliances by extending our store opening hours from 8am-6pm to allow people to shop before and after work.

    While there is a world of opportunity for retailers to challenge themselves in their quest to impress every customer and communicate with the needs of the ‘now’ shopper, we mustn’t forget the slower, safer retail experience, as this is still how most Australians shop – at least for now.

     

  • Flip the debate to realise opportunity

    27 August, 2012 Company Marketing Online Retail

    I’m bored of the sensational debate created by many traditional retailers and journalists where online is pitted against bricks and mortar retail. Hyperboles including ‘cannibalise’ ‘death’ and ‘extinct’ are bandied about to describe the impact online has had on many physical stores, in an effort to create an environment where the two can’t coexist symbiotically.

    This article recently published in Connected highlights this limited view of the issue. Unfortunately the journalist did not contact us directly about the article, but if they had we would have given the facts. At seven years-old Appliances Online is one of Australia’s oldest online appliance retailers. We are a pureplay online retailer with a national distribution network and a strong emphasis on customer service. Having served more than 200,000 customers I would argue against the claim we are ‘unbranded’. Our connection to bricks and mortar retailer Winning Appliances, which has eight bricks and mortar stores in NSW and QLD is also not a secret, yet the brands cater for very different types of consumers – those who like the efficiency of shopping online for products usually required to be delivered the next day, and the other customer type who likes to visit a store and talk to a knowledgable sales person. I am CEO of both companies, and 432 employees work across the Winning Group. Big Brown Box, which is also indicated in the article, was originally launched by Thorn Group and the digital assets were purchased by Winning Online Group (the parent company of Appliances Online) in 2011. We kept the brand as Big Brown Box as it was already a recognised market entity and is differentiated from Appliances Online and Winning Appliances as it only sells AV products.

    There are certain instances where the argument posed in the Connected article (“Are bricks and mortar retailers cannibilising traditional retailing by setting up unbranded online shops?”) is correct – particularly where online retailers adopt such an aggressive pricing strategy they cannot survive for the long-term. However it is also true that some traditional retailers have established online retail outlets that devalue the online space by providing a below-par experience to consumers. This exact example is not isolated to online, there have been many bricks and mortar retailers that have opened shops with the exact same strategy and failed to survive also. So to claim that this is an online strategy issue is just incorrect; it is just a poor business strategy that lacks creativity (I am referring to failed businesses that focus on nothing but price in general and am not isolating any business in particular).

    Yet there is a larger issue at stake. These limited arguments obscure the fact there is large opportunity for traditional retailers to embrace online, with or without an online store, as opposed to hiding in the dark and hoping online retail is a trend that will soon pass.

    I  dislike that retailers who have opened online storefronts are marginalised, as though we were all supposed to be united in ignoring the online marketplace altogether, leaving it open for newcomers. When, in fact, existing offline retailers, with experience and access, are best placed to create online stores.

    Online retail, and other advances in technology including smart phones and social media, have provided consumers with a voice. Customer reviews and opinions on products provides a plethora of information for the consumer to help make the best decision for them, quickly.

    As Forbes.com contributor Adam Ozimek suggests:

    “The pre-sale services offered Amazon, in particular customer reviews, are usually of far greater use to me than a showroom when buying electronic goods. Sometimes when shopping for electronics I’ll make the purchase in the brick and mortar (so returns are easier and I can get it faster) while looking up the ratings of the product on my iPhone at Amazon.”

    Traditional retailers should take advantage of some of the downfalls of many online retailers. Many offshore sites, and cheap product deals take weeks for the product to be delivered – whereas if traditional retailers adopt better pricing models and improve customer service they would be able to compete on a much more level playing field.

    The time has come for traditional retailers to flip the experience – retailers should be differentiating themselves by creating a fantastic customer experience that won’t be able to be replicated online. If you’ve ever visited an Abercrombie & Fitch store, with its club-like shopping environment, you’ll know what type of experience I am talking about.

    Online retail is to traditional retail what the printing press was to journalism.  It represents a tremendous opportunity for traditional retailers to evolve. For too long traditional retailers have been complacent – they have been inflating prices and countering this with poor customer service, driving consumers to look for other available options. The power of online should be embraced and encouraged in-store – traditional retailers could have readily available tablets to encourage customers to read product reviews, as well as implementing experiences you can’t get online such as cooking classes, product experts who take you through each product to show you its features, and even smaller tactics such as coffee on arrival.

    There has been a seismic shift in power from the retailer to the consumer, but we must never lose sight of the fact the consumer should have always been the most important aspect of any retail decision.

     

  • 5 business facts you don’t need a university degree to understand

    1 August, 2012 Company Marketing Online Retail
    1. Failing breeds success – Many millionaires have been bankrupt – often several times – on their path to success. Nothing is better to help you appreciate success than trying new things – failing – and learning from your mistakes. I encourage all my staff to have new ideas – however radical – and if they really believe something will be a success I encourage them to give it a go. If it fails it’s a risk that will benefit our business in the long run as the employee will be smarter and wiser with their next idea.
    2. Business decisions need to be made quickly and spontaneously – you can spend hours analyzing the psychographics of decision-making yet in the fast-paced world of online retail if you spend weeks on a decision your competitors will be one step ahead of you. In the business world, decision-making often needs to be instinctual and there’s no better experience than on-the-job training to put you in a position where you have to trust your instincts and internal ethics to turnaround a decision quickly. Being mentored by others and trusting your gut goes a long way in business.
    3. Everyone has a motive – employees from different parts of the business, customers and suppliers are all driven by different agendas. As a business professional it’s up to you to assess where people are coming from, and to weigh up the different emotions around a decision, to determine the best outcome for everyone.
    4. Employees aren’t replaceable – I’ve heard many friends talk about how they feel that they are just a number at the organization they work for, speaking of managers who are on power trips, treating their staff like they are expendable. Yet we treat our staff as the foundation of our business and invest in them continually. Our recruitment strategy is focused on making sure future employees are the right cultural fit and will be with our company for a long time, rather than looking too deeply into their resume and academic history.
    5. Customers are everything – treat consumers with respect and continually assess your business through their eyes. Ask them for feedback as often as possible and implement change based on their input. This is a simple recipe for retail success based on listening and learning from the people who buy products from you.

    After school, and a brief stint working as a door-to-door salesman (that ended quickly when I was attacked by a dog!) I started working in the warehouse of my father’s appliance business. While University is fantastic for many, on-the-job training also has its merits.

    Winning Appliances truck drivers taught me about customer service and going the extra mile to give customers and experience they don’t expect. Time spent with floor managers in showrooms taught me how to provide sales information to consumers in the most helpful way, networking with online retailers overseas taught me about ecommerce, and people in management positions taught me how to negotiate in much more realistic language than I would probably have ever learnt at University. I was lucky enough to have my father as a mentor who taught me to have the upmost respect for not only your staff but for your staff’s families as their lives are equally important as well.

  • Cheap advertising

    25 July, 2012 Company Marketing Retail

    It is not always easy to differentiate yourself from others when you are selling the exact same item.

    You can differentiate yourself by being cheaper, having the closest store, the best website or showroom, and the item in stock… but on some occasions you are given a golden opportunity to show a customer a difference they didn’t expect and win them over for life.

    Our Winning Appliances drivers delivered a fridge and an oven to a house on NSW’s South Coast and were met with a ‘square peg, round hole’ challenge when they arrived.

    Not only did the oven and fridge not fit through any doors, but there were also a narrow set of internal stairs to negotiate, a steep driveway, and a tree in the way.

    Our truck drivers are empowered to make spontaneous decisions to help the customer in any situation. Therefore, they negotiated the stairs, pulled apart the fridge to make it fit through the front door and up the narrow stairs, took off a door and cut down a few tree limbs to make sure the customer received the goods that were ordered.

    Once inside, all appliances were put back together and installed. The process took 2.5 hours for the job to be complete, but the boys were rewarded with pizza from a happy customer.

    When you say you go the extra mile for your customers, you need to live by your statements. I’m really proud to have a team that can assess each delivery and make the right decisions that put the customer experience first. Always.

    It is not always the case that you get these opportunities to go over and above for the customer, and in some cases safety or the situation just does not allow a solution right then and there, however we are yet to find a challenge we have not been able to overcome. We have done deliveries using bob cats, boats, using custom made purchase systems to lower items off balconies, pulled fences down, roofs off and frequently pull products apart and put them back together as is the case here.

    Next week we have organised a big crane, that will position a smaller crane to place a large Sub Zero fridge into a customer’s house as there was simply no other way to get this sized fridge inside. It is the fridge the customer wants and it is our job to find a way to get it in their house. Once we do I am sure we will have a customer for life and a brand advocate worth far more than any paid advertising.

    Below are some images of this week’s epic delivery.

     

  • “Sorry, that’s not my department”

    4 July, 2012 Company Marketing Online Retail

    On Saturday, while out shopping for a few supplies, two different consumer experiences were marred by the same lazy attitude and general disdain held by some staff towards their customers.

    The first happened when shopping for a new bed at a popular store… I walked into the bedding section and tried some arm-waving theatrics in an effort to chat to an employee who was surrounded by beds but was doing an Oscar-worthy impression of looking busy and simultaneously avoiding my attention. I asked said employee loudly if they could recommend any beds only to be met with the reply. “Sorry. That’s not my department” before they hurried off. Needless to say, I left, bed-less.

    Then, after stopping for a coffee break with friends at a popular café in Darlinghurst, we sat down at a table that was cohabited by dirty cups and plates. The café was busy, as you would expect from a well positioned, inner city café on the weekend, yet it still took a long time for a hipster waiter to saunter over to us and take our coffee order in a hurried and brisk fashion. A friend politely asked whether he would mind clearing our tables of plates, which was met with a look of shock, hurt and DISGUST, before replying that he was a barista, not a waiter, and consequently he did not touch plates or food. Instead, we picked up our plates and took them to the counter ourselves making sure the barista saw us…

    In a different age it may have been acceptable to waste people’s time with equal parts of arrogance and incompetence, simply because there was no other option available for consumers. Yet consumers attitudes have shifted. Time is money and people have options. If someone is taking the effort and giving up time on their weekend to walk into your store or café then you owe it to them to thank them with good customer service. Possibly even a smile. Because if you don’t the consumer will shop online or with a competitor, and will ultimately eat in the cafe next door. Employees should be willing to help out on every product on a showroom floor at least to the best of their ability, or to acknowledge the customer and then go and get help for them.

    A good experience is noticed but a bad experience is talked about, and shared, for months.

     

  • High drama at Winning HQ

    3 May, 2012 Company Online Retail

    It’s been 24-hours of high drama at the Appliances Online and Big Brown Box  headquarters… with a fire breaking out in an underground substation between our two offices and 200 people being evacuated.

    We’ve even made the news quite a few times in the past 24 hours… with the fire triggering a power outage, a threat to nearby residents and flats and massive traffic delays around the Eastern Suburbs of Sydney.

    Having a fire breaking out in our main office was a great way of testing our disaster minimisation system, which thankfully stood the test. The main thing is that everyone is safe. The encouraging thing is that our sites didn’t go down at all, and our technology divisions ‘mission critical automation’ came into fruition. Unless you were in the office watching smoke billow out from a sub-station beneath the ground (or following us on Facebook), you wouldn’t have had a clue we were being evacuated.

    We were able to leave a message explaining there was a fire for people who called in, and checked messages with a mobile phone and responded quickly to enquiries. We also had a message on our website explaining why the phone lines were temporarily down. Special thanks must go to our dedicated staff who stayed back until midnight to help ensure no deliveries were missed and all customers were  aware of what was happening with their orders.

    Today, we are still without power however our office, yet everyone is working using back-up power supply thanks to ActiveAir.com.au. The main thing is that everyone is safe. Unfortunately the fire did result in the death of a fish who sadly did not survive carbon dioxide being blasted into the building to put out the fire, and a few egos were checked when some of our staff wearing the Appliances Online uniform of a black hoodie were questioned by police who thought they might be ransacking the building.

    We send our best wishes to two people who were taken to hospital yesterday and wish them a speedy recovery.

    Some amateur footage of the scene from yesterday is below.

  • The great pricing debate

    2 May, 2012 Company Marketing Online Retail

    I was warned against purchasing BigBrownBox.com.au from Thorn Group, with my peers telling me that the world of televisions, home entertainment systems and sound equipment was the place of a great pricing war, where once sound marketing strategies were being held hostage to diminished margins and loss-leading products. I was told the AV market was home to a war with no winner in sight, a land where many businesses died well before their time.

    Yet I purchased the digital assets because I believe there is a place in the market for a business willing to service consumers’ needs – where a service (over the cheapest price) model would come up trumps.

    It has been widely reported that electronics retailer JB Hi-Fi has slumped to a three-year low, after the chain cut its full-year profit outlook because rampant discounting has damaged margins.

    Are you honestly shocked?

    When your tag line is “Always Cheapest Prices” it should be no surprise they would continue to discount against other retailers to the point of not being profitable. Price has become the only trick left as many businesses swap knowledgable sales personnel for a cheapest price guarantee.

    JB Hi Fi is not the only store with this cheap pricing mentality - other reputable brands stand by similar slogans and fellow online retailers even use words such as ‘cheap’, ‘discount’, ‘cash’, ‘negotiate’ and ‘price’ in their taglines.

    I find these kinds of promises troubling – particularly those that incentivise negotiating or paying cash. They suggest a consumer will pay too much if they don’t negotiate – and many shoppers would rather not.

    We love dialogue with our customers, but we’d much prefer to be educating them about a product and having them assured that we’ve set a competitive price to begin with. There’s something quite aggressive about ‘haggling’, and it’s not likely to result in a great experience between retailer and customer. We’re more aligned with the “Everyday low prices” angle in this regard, to borrow another retail catchphrase.

    Many businesses have put everything into having the cheapest price instead of innovating and building up their retail options and investing in customer service.

    In contrast, while our prices are competitive, a cheap price proposition is not our core business driver. Customer service is what sets us apart and helps us stay profitable. We have invested in expert AV sales staff, warehouses, trucks and drivers, and have $2 Million of Big Brown Box products in stock around Australia to provide next day delivery to most metropolitan areas.

    I’m well aware of the conundrum: cheapest pricing devalues a customer service proposition, yet consumers deserve the best price available. Therefore we have a best value guarantee in place for people who ask for it but it is not overt, and it is not our core business driver. Our best price guarantee also includes the fact our delivery is free, and before price-matching we ensure we are comparing apples with apples. Consumers also deserve to have their products delivered on time, with an Australian warranty and after sales service – which is what  our business offers.

    We absolutely refuse to use loss-leader tactics to attract people to our site. Retailers who do this also use price to upsell customers to higher price products with greater perceived value. Customers are pushed to sale in haste, without having done the right research and end up going home with the wrong product. We know this because these customers come to Big Brown Box, Appliances Online and Winning Appliances for their next purchases looking for genuine customer service and advice on buying the right product.

    The success of Appliances Online has led me to believe the recipe for retailing success is simple: If you put your customer into every business decision and think about how this will affect them, your retail outlet will have something its competitors don’t offer. What the AV world is lacking is customer service and expertise. When buying a TV I want to be able to ask someone about the latest technology and have them design a package that suits my needs – including a TV that is the correct size for the room it will be in, how the light of the room will affect visibility and how to get the best sound depending on where I live and the surrounding noise.

    Yet many larger retailers have failed to recognise this, putting financial statements ahead of providing a wonderful retailing experience. They look at staff costs and make a move to cut staff numbers instead of investing in staff and their customer experience and cutting costs in other areas of the business. They also place the cheapest price as the key driver for business which means that over time margins have decreased so much they make serious profit downgrades.

    In the words of  Seth Godin:

    It might be that low prices are the final refuge of the marketer who has run out of ideas and is left with nothing but a commodity.

    Or it might be that organizing your business around lowering prices through efficiency, mass scale and smart choices is a powerful way to grow.

    My guess is that both are true, but you better be really sure about which one you’re choosing. Hint: doing the second one successfully is really quite difficult, so if all you’re doing is writing a lower number on the pricetags, you’re probably playing the first game.

    As with all my blogs, I am sure that many people will not agree with my views yet this blog is how I view the retail space. Feel free to comment and add your thoughts to the debate if you wish.