As Australian Retailers Get Slaughtered, Does Doing Business on the High Street Have a Future?

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Figures out this week tell a very painful story about the state of Australian retail, yet David Twigg of OMC says, despite the challenges, there is considerable room for opportunity.

The major lesson we have seen develop so far online is that specialisation is a huge USP, narrowing down a product range into a specific niche and being world class in that niche....

During 2012, Australian retail has suffered an unprecedented decline. Smart Company reported this week that 650 stores have closed during the last 6 months with over 1,600 jobs being lost and over 300 more have been announced to close in the next 2 years. Customer service is in decline as the major chains are challenged on 3 major fronts: the internet revolution,the decline in value of their commercial leases and the poor economic outlook.

Myers, the biggest high street department store chain in Australia, with multiple stores in all the major cities was the latest high profile retailer to announce job cuts last week. Previously household names like Dick Smith,Fletcher Jones,WOW Sight and Sound as well as many others have announced major job cuts. In 2011 Borders and Angus and Robertson were 2 of several high profile company collapses. Beyond that smaller retailers are going to the wall and cities have a lot of empty retail units for lease.

In a report recently published by Capgemini entitled "Digital Shopper Relevancy," the conclusion was drawn that retail shops will become showrooms by 2020 where shoppers will choose and order products which will be delivered to them via an internet connected facility. The report generated from interviewing 16,000 people in 16 countries including Australia. The considerable majority of those interviewed said that the website was the dominant factor for them over any other channel when deciding on purchases.

David Twigg of OMC-Online Marketing Specialists based in Brisbane says, “In the USA there are a few major retailers taking this challenge head on and integrating their online and in store customer offering. It is a major challenge however and there have already been some notable failures due to the rapid evolution of the online world. Getting the balance right between technology and maintaining a level of customer service that shoppers have come to expect is one of many issues.”

BIS Shrapnel, recently produced their 2012 retail property sector report and warned retail was in for a very difficult decade despite forecasting growth. It stated that new retail floorspace construction is still growing at a rate above population growth as well as retail spending growth.

Twigg says, “The major takeaway for retailers going forward is that opportunity lies in differentiation. That differentiation could be simply focused on making transactions easier for customers like faster delivery times, faster transaction processing in store, avoiding long form filling exercises or lack of stock. The major lesson we have seen develop so far online is that specialisation is a huge USP, narrowing down a product range into a specific niche and being world class in that niche, perhaps the large retailers need to consider divesting their product range or even splitting it into separate specialised brands. Apart from anything else that is want the Google search engine loves,specialisation.”

As 2012 enters it's second half there are few Australian retailers with a positive outlook but history tells us these are the times when huge success stories are created.

About OMC
OMC work with Professional service firms to create lead generation systems as well as consult on a range of online marketing related challenges. To read the firm's insights into online marketing, it's challenges and solutions click here.

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Gwenn Doria - PA to David Twigg
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