‘It’s the rebirth of retail’: Future Now Episode 7 Recap

By AdNews | 24 November 2020

Crystallising behaviour in the retail space
“My predictions have been brought forward by at least a decade.” So says Australian Retailers Association CEO Paul Zahra when appraising the seismic effects of 2020.

The former consultant and ex-CEO of David Jones is regarded as a leading expert on all things retail, but even he admits things have moved at a pace no-one expected over the last nine months.

“What we're seeing is widespread digital transformation, the move to contactless shopping, and people wanting to shop in a safe environment,” he adds.

Kate Bailey, Coles’ General Manager Media, Sponsorships and Events, concurs, although explains that digital evolution applies as much to customers as companies: “Digital acceleration is without a doubt the biggest change that we've seen. We've observed 40% more customers coming directly to our website, and a significant increase in customer shopping online.” 

This trend emboldened Coles to scrap a previously sacred staple of the retail marketer’s armoury, moving from a physical to digital catalogue. 

“I also didn't think in my time we would see catalogues not being dropped into letterboxes and retailers deciding to go direct-to-consumer,” admits Zahra.

Facebook’s Head of Retail, ANZ, Kate Box cites two trends influencing Aussies to shop differently. One is a newfound digital appreciation - with recent Facebook and Kantar research finding around 1 in 3 (30%) of Australians surveyed said they have ordered products online that they would have normally purchased in a store in the month leading up to mid September.

The second is an inverting of retail functions, as Box explains: “I think pre-COVID the store was largely experiential, and online was transactional. And during COVID that switched and now we've seen the rise of ‘shoppertainment’ online.

“That’s why there’s a lot of time spent in apps, increasing use of shopping tags, and retailers using Instagram and Facebook Live. We’ve also seen growth in Messenger to showcase supply chain and product,” she adds.

Retail adaptations in 2020
Retailers are moving ahead in leaps and bounds, Zahra says, citing Australia Post research stating since April more than a million households have shopped online for the first time, moving to what he describes as “embedded behaviour”.

He also notes: “Click and collect has fast become one of the most popular aspects of shopping, because you make the transaction from the comfort of your living room and pick up the product when it suits you.” 

Bailey says retailers need to be flexible and change the way they communicate with a newly mobilised digital customer base. 

She explains that when lockdown hit: “Coles quickly recognised many shoppers could only now transact online, so we had to create a campaign, communicate to customers how to shop online, then push it across our channels, because there's an education piece required. 

“And now that they've made that first transaction, we can see that even with restrictions easing, they're seeing the convenience of shopping online and we're not losing those customers.”

Box cites the rapid evolution of the digital catalogue as an example of this evolved mindset: “Pre-COVID, for a lot of retailers their digital catalogues were like a PDF of their print catalogue. 

“But now we're seeing businesses think about how to bring the digital catalogue to life across platforms by building out content like recipes, live videos and how-to tutorials.”

What’s in store for retail in 2021
With government stimulus drying up, retailers need to maximise revenue in the last quarter of the year via Mega Sales and Christmas sales to build cash reserves, according to Zahra.  

“The most important thing is really about trading exceptionally well in this period and realising the dynamics of Christmas trading have completely changed,” he explains. 

“It's definitely much more event driven. We are seeing Black Friday, Cyber Monday having a much bigger impact on the overall promotional calendar. We need to be celebrating these gift giving events to drive customers to shop as early as possible.”

Box feels retailers need to build more technical capability: “I think it’s a trend that is going to continue because today’s consumer wants flexibility, and the ability to traverse between online and in-store.”

She also speculates that an increasingly three dimensional experience is on the way for consumers. “Retailers are building the foundations now to integrate things like augmented reality when it becomes more widely available,” she adds.

Bailey urges all retailers to focus on their omni-channel approach going into 2021: “One thing that really stood out for me across lockdown was how Mecca pivoted and created virtual beauty consultants.

“We’ve spoken so much about ‘shoppertainment’ being in-store, but this is a great example of why it has to move online. 

“We need to move away from these walls within businesses between online and stores. That will allow us to create a real omni-channel experience for our customers.”

Finding potential customers where they are online
In an online shopping environment Bailey says Coles are working hard to adapt its marketing to the platforms its customers, and potential customers, are on. Bailey says brands showing up on social media, for example, need to show up “as you would at a party”.

She adds: “You need to be really relevant to the conversation that's being had and you need to be engaging.” 

Collaborating with these platforms will also provide an advantage, she says: “I think a mistake that some brands make is that they look at new ad products, and they just start using them without really thinking about what they're trying to do. 

“We have a really collaborative relationship with Facebook, where we say, ‘these are the problems that we're trying to solve, what's the best way to solve that?’ Then we constantly test and learn to understand what's driving engagement with customers, and remove friction wherever possible.”

Box believes deeper online experiences will be the key to success over the next few years.

“The horse has bolted. We now want to sit in our pyjamas with a glass of wine while we shop. It's about building that flexibility into comms when things are changing so rapidly,” she says. 

The future for bricks and mortar?
While it may be hard to see a bright future for physical retail, Zahra is optimistic about the future: “It's not the death of retail, it’s the rebirth of retail. 

“With all this new technology the customer experience is really going to be enhanced. There'll be greater personalisation and information will be served up specifically for the customer.

“I've been advising retailers two things. One is to reduce the physical footprint. The second thing is to invest heavily in digital because these are really exciting times in this changing landscape of retail.” 

Bailey points to Coles’ new experiment with Local stores as the kind of thing they are thinking about in the future. 

“These smaller stores are really focused on a local product range and on the local community. We are putting really tangible things into these stores that engage all of your senses, like squeezing your own orange juice, which customers love,” she says. 

eCommerce and overcoming the tyranny of distance
Australia’s geography has always made it hard for delivery-based businesses to dominate. But while last mile costs are always going to be a factor here, Box says technology is playing a role in closing the gap by helping find “more profitable” customers prepared to click and collect. 

Bailey says Coles is investing heavily in delivery fulfilment, including better communication with customers around their deliveries.   

“We’re also exploring how we find the right customers and make the experience for them better. At the same time, we are looking at the big investments that we need to make so that we can reach Australians quickly in a more cost effective way,” she says.

Zahra recalls a time when the only way to deal with the tyranny of distance was to build more stores. “But in this new digital world you don't need as many physical locations to be successful,” he says. 

“In my view, retailers now should choose their store locations very selectively, make them flagship stores, and invest in digital,” he says.

You can download the new global Facebook IQ report The Future of Shopping Has Come Early: Perspectives From the Industry.


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