Retail NZ estimates that of the top 250 global retail brands, only five have a presence here. That isolation, and lack of external competition, is changing fast, however, as new companies are arriving on our shores nearly every month.
But the bigger battleground is online, where Nielsen estimates Kiwis spent $4.15 billion in 2014. Drawn by the promise of broader selection, lower price, and great customer experiences, these sales are increasingly going overseas. BNZ/Marketview estimates that 58 percent of Kiwi dollars spent online still go to local companies. But that slight edge is eroding as growth of cross-border sales are increasing more than 19 percent year-over-year, while domestic online growth is a more modest 3.5 percent.
More than 70 percent of Kiwis surveyed by GfK agree they can shop for nearly everything they need online, and say “Traditional stores are much less important to my shopping than a few years ago.” Further, 76 percent say they “are less loyal to any retailer” than in the past.
Change is happening faster than ever.
The world’s largest taxi service, Uber, has no cars. The company with the most rooms for travelers, Airbnb, has no real estate. And even in retail, the company with the highest market valuation, Alibaba, has no inventory. Today’s successful companies are those that are adaptable to change and are willing to challenge core assumptions.
In retail, we are seeing a massive shift in how shoppers shop. At the root, these trends are all being driven and enabled by technology. In a recent study by Google, they found that 75 percent of consumers use their smartphone while inside a store to research, price compare, or get advice. We all check our phones 150 times a day, and many of us spend more time on these devices than we do watching TV. In recent years, the percentage of both visits and purchases via mobile devices has risen dramatically, with many retailers reporting sales of more than 50 percent.
This shift to mobile means that shoppers are always connected, always informed, and always just a click away from a transaction.
Increased competition and the continued shift to digital, both accelerated by the pervasiveness of mobile devices will challenge many retailers. Successful retailers strive to build capability in a few key areas:
- Focus on the customer experience. It’s simply no longer acceptable to have deep disconnects between the online and offline experience. Physical retail can do certain things better than online, and vice versa. And the mobile phone now ties the two together more closely than ever before. Make sure that your customer can move between channels effortlessly and that they are having engaging, meaningful experiences wherever they interact with your brand.
- Retail is as much about technology as it is about product. Make data, testing and analytics core to your decision-making. Invest in building compelling digital experiences. Exceed consumer expectations with flawless delivery and operations.
- Organise for success. Great strategy and the right technology are meaningless if the organisation can’t embrace them and execute on them. Leading companies like the Gap, who recently did away with the CMO role in favor of a “Chief Experience Officer,” are examples of organizing around customer needs and empowering individuals to drive change across the silos of the organization.
New Zealand is a place where it is much easier to innovate than in larger markets. Our small scale actually works to our advantage when testing new ideas or rolling out new programs. We are close to our customers. We know them not just as numbers in spreadsheets, but as our neighbors and friends. Keeping abreast of technology changes and staving off external competition become much easier when we leverage those strengths and new opportunities emerge.
Noah Maffitt, CEO, Continuous Commerce at Ogilvy & Mather New Zealand
This story was originally published in NZ Retail magazine issue 738, June / July 2015.