An article published last week in the New Zealand Herald (New Zealand’s largest news publication) was quoting some of the top retailers in Australasia who spoke out about their concerns over competition coming from international retailers.
What struck me was the blame put on the tax system. These retailers are putting pressure on the Government to fix the inability of country borders to apply a tax on all international purchases made by Australian and New Zealand consumers.
There was no discussion or comment about how these retailers need to improve their standard of multichannel conduct in order to combat the international threats.
Due to the one sided discussion presented I could not help but reply to the editor.
You can read the full article, but here are some highlights from the article:
- New research released by the Bank of New Zealand showed Kiwis’ spending with overseas online retailers grew at almost four times the rate of domestic web-based spending last month (November 2013).
- Blame on this increased volume of buying is due to the failure of the tax system.
- These retailers feel at a complete disadvantage with this system failure.
- A large New Zealand retailer has recently gone bankrupt and blames international competition as a major contributor to their demise.
My response to the article
It pains me greatly to read the article where large Australian and New Zealand retailers are blaming the tax conditions as a primary reason for consumers to be flocking to overseas websites.
The tax issue is merely a part of the problem. The main issue is the extremely poor level of digital conduct by the retailers themselves. The single most effective way to combat international competition is for Australian and New Zealand retailers to build a multichannel offering in the efforts to create multichannel customers.
Not only are these customer types more loyal, they are proven to be the most profitable customer type for a retailer.
Why is this the case?
Using various channels for transactions and engagement means customers can achieve their service output demand more easily than if they only used a single channel. Multichannel shoppers choose the most appropriate and convenient channel for each transaction, using different channels at different times. This channel option provides additional value.
Single channel shoppers repeatedly use the same channel for each step. As a consequence they evaluate the retailers relationship and value based on this single channel and if it does not meet their demand at one time they quickly become dissatisfied and are more inclined to switch retailers. Because multichannel shoppers consider all multiple channels for their transactions and engagement, they take them all into account in their evaluations of the retailer.
The above statement was taken from a book written in 2012 titled, “Customer Relationship Management: Concept, Strategy, and Tools.”
Case studies have proven the value of this customer type around the world. Back in 2011 Walgreens was recognising the value of multichannel customers.
In July of this year I met with the Head of Retail Operations from John Lewis, our discussions centered on the power of a multichannel strategy and how it contributed to this retailers impressive growth (John Lewis based in the UK does over $1bn in sales online, 25% of total retail sales is online).
Retailers in Australia and New Zealand do a very poor job of…
Creating a great online experience
Creating a great user experience online consists of making things easy to find, and building content that either is good enough to sell the product solely from digital touchpoints or enhances the multichannel buying experience for the consumer (i.e. copy, images, video).
Whatever the retailer delivers on PCs needs to be effectively translated onto mobile with thought being made to the context of the consumers use of this device in their buying journey (i.e. searching for local content).
This has major repercussions. A few stats from Google backing this statement:
- 90% of consumers move between devices to complete a single task.
- 40% of smartphone users watch TV while browsing their smartphone (this is why Asos and Boohoo.com advertised on Australian and New Zealand TV last Christmas).
- 65% of multi screen consumers report they began their shopping process from a smartphone.
- 84% of all multi screen shopping experiences had their smartphone as either the first or second interaction within their buying experience.
Taken from Google’s “Mobile Playbook 2nd edition”. To add more weight to this argument comes a statistic from Neilsons where 68% of mobile searches occur at home where there are other large screen devices readily available.
Australian and New Zealand retailers utilise social merely as a ‘push’ media channel i.e. one way communications. Social tools provide the opportunity for retailers to connect to their community and develop meaningful two-way relationships.
Many of these retailers do poorly in social because they don’t know how to speak to their customers and are frightened of the prospect of communications coming back to them in a public forum.
Two channels one experience
These retailers do a poor job of making the two channels work together (physical and digital) in order to build a single relevant meaningful consumer experience.
Some examples of what they should be considering:
- ‘Click and collect’. (pick up in store).
- Easy returns (buy online return instore)
- Promote instore specials online.
- Promote online specials instore.
- Make the most of ‘showrooming‘.
In conclusion, it’s very convenient for Australian and New Zealand retailers to be positioning themselves as the victim, however the real victims are the consumers and is why they look outside the country for businesses to fulfill their needs.
Consumers don’t leave, they are pushed away. Australian and New Zealand consumers are fanatical at ‘supporting local’. but the fact that online spend with international retailers is growing becomes a true reflection on how poorly a job local retailers are doing.
End of response.
It is not my intention to beat up on retailers. This is a difficult industry to be successful in. I know, I ran a large retail bricks and mortar operation myself so I empathise.
However, it is not OK to be making statements which lead everyone to believe their destiny is out of their control.
Retailers in this part of the world have used global isolation for decades, and as a result have capitalised on very healthy margins and very little competition. With the international couriers improving their infrastructure, New Zealand and Australia are now cost effectively accessible. This is their real issue.
With the right strategy, these retailers can take back the advantage.
It comes as no surprise I have not had a response.