Computers and artificial intelligence have come along at an exponential rate over the past few decades, from being regarded as oversized adding machines to the point where they have played integral roles in some legitimately creative endeavours.
David Lawrence, Marcs, Herringbone, Rhodes & Beckett, Pumpkin Patch and Dick Smith – the growing list of retailers hitting the wall in Australian is a wake-up call for other retailers to re-examine the ways in which they attract and retain customers in order to compete in today’s digitally savvy consumer world.
We speak with CMOs, retailers and CX experts to discover what marketers can learn from the recent retailer demise in order to offer a more relevant and engaging customer experience.
Adapt or bust
Experts warn Australian retailers have been far too complacent when it comes to delivering innovative CX and will continue to be at risk of falling against more innovative international brands entering the local market.
“Australian retailers have been caught with their pants down because they just haven’t innovated quickly enough,” general manager of local brand loyalty agency ICLP, Simon Morgan, says. “Bigger, nimbler overseas competitors, who have come from even redder oceans than ours, are fitter and stronger. It’s also hard to move past the corporate action shenanigans that have affected the likes of Pumpkin Patch and Dick Smith.”
Marketing Consulting Company’s founder, Fleur Filmer, points out brands like David Lawrence, Marcs, Herringbone, Rhodes & Beckett, Pumpkin Patch and Dick Smith were once at the top of retail heap. But it is only those who adopt the chosen tools of their target market and adapt to customer buying trends that can really thrive in today’s highly competitive landscape, she says.
“I maintain that nothing in marketing has changed throughout the centuries except the tools and methodologies,” she tells CMO. “The one common thread among the downward spiral of what were, as little as three years ago, retail giants is their lack of adoption of technology and adaptation to the modern customer experience.”
Marketing agency Crossmark’s Asia-Pacific chairman, Kevin Moore, notes the US and European markets have had to face and deal with online innovations and cross-border shopping for decades.
“In Australia, we haven’t had that competitive environment so we’re not match fit. There is still a level of complacency within the Australian retail sector, supplier and retailer, traditional and pure online, over the entry of Amazon into this market," he says.
Moore's agency recently mapped Australian and international retail brands, from bricks-and-mortar to pure online and omni-channel, based upon “Growth” and “Shopper Experience”, with worrying results.
“It fast became evident that the traditional, Australian-owned retail sector has not responded to new international brands’ retail offerings, and that traditional Australian-owned retail has itself declined in overall share of the Australian market,” he claims.
“And it’s not just a better online shopper experience, it’s a better overall shopper experience. Aldi and Costco have a low online focus, but deliver significantly better ‘value’ and overall ‘shopping experience’ than mainstream grocery and discount departments stores. While Aldi and Costco have fewer products in their stores, their use of the ‘store centre’ in Aldi and ‘The Fence’ at the entry of a Costco delights, surprises and entertains shoppers with amazing value on impulse or destination items.”
Moore warns these new retailers will continue to take share from all sectors of Australian retail. “From a shopper’s experience, they are fresh, innovative, offer value and are easy to shop physically and digitally,” he says. “From a supplier’s perspective, they are easier and more cost effective to service and adopt a more partnership-based approach to supplier relationships.”
Without a good product and a good overall experience, today’s digitally savvy customers will simply go elsewhere, ROI agency Zenith Australia’s CEO, Nickie Scriven, says.
“Dick Smith didn’t appear to have a great handle on how people now shop for consumer electrical goods,” she comments. “Most people now do their research online, compare prices and then either purchase online or go into store to secure the cheapest price, or demand a price match. Retailers need to understand this journey and intercept consumers throughout the process to ensure their brand and product is top of mind."
On top of this, many Aussie retailers have been too late to the game of e-tailing. In this day and age there is no excuse for not having a good Web experience and allowing consumers to purchase on line, Scriven says.
“Websites have not been invested in early enough to provide a good user experience,” she says. “Surprisingly, many are not even built in responsive design to provide a good user experience across desktop, mobile and tablet. This is just not acceptable for consumers now who are on their mobile phones 24/7. UX and CX are critical to success and provide the means for learning more about your customers. Then you can anticipate their needs and drive personal communication with relevance.”
Beware of the weakest link
According to head of CX research at Fifth Quadrant, Dr Steve Nuttall, retailers that fail to optimise all the individual touch points of the customer journey simply become too weak too fast.
“You're only as strong as the weakest link,” he says. “Brands that fail often have multiple weak links in their model. And there have been brands that have felt it pretty hard. So for example, you might have grown too fast and built too many stores, so you sell your stores that were in the wrong location. But in the process, you haven’t got to grips with social media engagement with your customers and your prospects and you're just not utilising social and digital.
“You haven't invested properly in distribution and in your supply chain. That is critical in terms of delivering the customer experience today’s consumer expects.”
In order to survive, Nuttall says retailers need to truly understand where the gaps lie across the customer journey so they can ultimately deliver a more personalised customer experience.
“There is also the danger of not integrating your channels and having no genuine omni-channel experience – so you end up just adding more channels to existing channels,” he continues. “But there's no integration across those channels and you’re not using data analytics effectively. So you're not able to provide tailored, personalised or relevant communications at the right point in time to your different customer personas. Everything becomes generic and it simply doesn't adapt to today’s more individualised customer expectations.”
The key to keeping physical stores alive is not just to provide a better online experience but to provide a better, more integrated retail experience – offering experiences in which the particular store plays a seamless and complementary role, author of Good to Great CX, Isabella Villani, says. "This includes integrating their online and physical presence. Some traditional retailers have managed to adapt to online engagement, but they’re also being challenged by new entrants, who these days require far less startup capital than they used to.”
CEO and founder of online retailer Hardtofind, Erica Stewart, is another who believes anything that engages the customer in an experiential way will help improve the customer experience and build brand loyalty. “It's really interesting to see what some retailers are up to - creativity and innovation does seem to be leading the way," she says.
Stewart, whose online store is now fetching over $15 million turnover after opening eight years ago, says her focus is on making the shopping experience as engaging, personalised and interactive as possible.
“At hardtofind, creating a more interactive shopping experience for our customers is where we're heading,” she says. “We also have more than 6000 products on the site that can be personalised with a monogram, special message or meaningful date, putting the customer in control of the final product and ultimately creating a fun, interactive shopping experience.”
But creative technology agency DT’s experience and design strategy director, Tracy Brown, warns retailers need to be more strategic when adopting new technologies, not jump on the next shiny new toy for the sake of it or simply because competitors are doing it.
“True, there is a level of hygiene required to make sure you are meeting existing expectations, but only looking at the competitor landscape means you will always be one step behind,” she says. “If retailers want to innovate, they need to look at how customer expectations around service delivery are changing instead of only focusing on technology trends.
“Technology does influence customer expectations, but new technology is also created to solve problems that haven’t yet been solved. What are those problems and how are you going to be the retailer to solve them once and for all instead of just doing what is plausible today?”
Up next: The debate between cheap and convenient