‘BIGGEST BUGBEAR’: The rookie mistake dooming our shops

AUSTRALIA'S bricks and mortar retailers are in danger of losing the battle to online upstarts - and yet just a small change in store could prevent customers from straying.

"Showrooming" whereby customers use traditional stores to browse products but then desert them to buy the same thing cheaper online is a traditional retailer's nightmare.

Some shops, foolhardily, even charged customers for trying but not buying.

Yet it wouldn't take much to persuade those consumers to complete that transaction in store, or at least at the same retailer's website, a new report has found.

Crucially, with the new wave of older - and cash rich - digital consumers, price isn't even the most important factor.

Amazon could be in Australia by Christmas.
Amazon could be in Australia by Christmas.

The timing could not be more critical, with rumours US retail giant Amazon could launch its Australian website as soon as next month, in time for the Christmas shopping rush.

Commonwealth Bank's latest retail insights analysis says demand for online shopping is now likely to be driven by people 50-plus who, up to now, have been reliable customers for stores.

"The most confident businesses are those with multichannel retail strategies, allowing them to tap into the continuing growth in online and mobile sales," said Jerry Macey, CommBank's national retail manager.

While online shopping only accounts for seven per cent of total retail sales, by volume it was far more, Mr Macey said.

"What we found was consumers and retailers were completely aligned in that 25 per cent volume of purchase made online."

Big name retailers have perished in Australia in recent years. Picture: AFP / Saeed Khan
Big name retailers have perished in Australia in recent years. Picture: AFP / Saeed Khan

There was a reason for that huge disparity between sales and volume.

"We tend to buy smaller and less expensive things online," Mr Macey said. "When we buy something more expensive, more is at stake and if you get it wrong you want to send it back easily."

So, it's yes to buying the groceries online and no to the table you serve them on.

Up to now it's very much been younger shoppers in the forefront of online shopping. Digital natives of 35 and under can barely remember a time when shopping online wasn't standard.

But now your grandma - a grey digital immigrant if you like - has discovered eBay and she's all over it.

"The 21-35-year-olds have really driven online retail and over a third buy online but their growth is going to be only five per cent, that's the lowest of any generation," said Mr Macey.

Older people are the new growth area in online retail. Picture: Dylan Coker
Older people are the new growth area in online retail. Picture: Dylan Coker

"The older generation, specifically Baby Boomers (over 50) with 10 per cent growth and the grey generation that came before Baby Boomers, the Pre-boomers, are seeing 18 per cent growth.

"It's absolutely catch up. Even though they weren't born into it, online has been around long enough now for them to understand it and there is a familiarity."

Somewhat perversely, however, just as older Australians are about to jump ship to online could be the moment for retailers to keep them loyal. And one of the chief reasons is because older people really aren't as bothered about cost as other shoppers.

"Baby Boomers have a fair bit of money and they have paid off their mortgages."

In fact, price is only vitally important to eight per cent of over-75s. But a third want quality and convenience when they shop.

To keep the over-50s from showrooming, retailers need to focus on customer service, Mr Macey said.

Gerry Harvey at Harvey Norman’s new Auburn store, which is all about experiences. Picture: John Feder.
Gerry Harvey at Harvey Norman’s new Auburn store, which is all about experiences. Picture: John Feder.

Baby Boomers and Pre-Boomers want good customer service and a checkout process that is nice and simple.

Generation Y and Z had different needs. They want shops to provide them with "in store experiences" - that is the much vaunted "excite and delight" retail mantra of reeling in the dollars by wowing the customers.

For instance, Harvey Norman's new flagship store in Auburn, in Sydney's west, includes barista and cooking demonstrations, virtual reality gaming exhibits, GoPro workshops and in-store video game sessions against famous gamers.

But that's not to say price isn't important. If shoppers are to purchase in store they need to be satisfied they are getting at least a semblance of a deal.

"Across all the generations, the biggest bugbear is you get home and find you could have got it cheaper online, so retailers want to avoid that … but, interestingly, only a quarter of retailers actively price match," he said.

It won't take too many bad price experiences for customers to abandon bricks and mortar stores, he said.

"Stores need to not be beaten on price and be open about that as a way of building that trust."

The retailers that succeeded would be those that blended elements of instore with online and everything in between. A household name that you can browse instore, order online and then pick up after work was the aim.

Retailer PETstock has a service that automatically ship regular items to customers without them lifting a finger.
Retailer PETstock has a service that automatically ship regular items to customers without them lifting a finger.

Retailer PETstock told news.com.au it has set about linking online and instore by creating a "digital warehouse" to provide a "clean user experience" however their customers shopped. The aim was to have few steps to purchase.

"We offer and collect across 140 sites, which offers the customer the ability to order online and pick up at their preferred store at a time convenient to them, while also getting the PETstock customer service," said Andrew Gibbs, PETstock's head of Multichannel and Business Services.

The company also has an "autoship" service where products that are regularly replaced such as kitty litter, are automatically delivered to customers.

Far from being a hindrance, Super Retail Group CEO Paul Birtles told Sky Business physical stores were essential to beating Amazon. Super Retail is behind brands such as Rebel, BCF and Supercheap Auto.

"The one thing that we learned from Amazon, more so than anything, is their focus on customers," he said on Monday.

"That's where we see an opportunity to link better with those customers, not only provide them with product, but provide them with information, with services and take more of a solution focus.'

Super Cheap Auto now offers an 'Auto Crew,' which offers assistance with a variety of car maintenance tasks.

"Retailers need to ensure that their physical stores do become more of a place on inspiration and engagement and not just a showroom for product," said Mr Birtles.



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