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Pack your bags, we’re going on a field trip

You can’t conquer the Kiwi retail landscape hiding in the back room.

By Jai Breitnauer | June 4, 2019 | News

Junaita Neville-Te Rito, CEO of retail strategy company Retail X

The thing about retail is that it’s really easy to have your blinkers on. There you are at 10am, ready for a customer or two to cruise through the door... except that you’re over analysing the window display, wondering if you should have stacked that new line in a more quirky fashion, and one jealous eye is on the new advertising campaign of the place opposite. 

If you can’t see the wood for the trees, then it’s time to try a different jungle. Whether it’s a week in Washington DC or a day trip to Whakatane, there’s a lot to learn from seeing how other people do things.

The hottest spots  - and stores - worldwide

New Zealand is, of course, just a wee dot on the bottom of the globe, a smudge from the cartographer’s elbow – if we make it on to the map at all. While that doesn’t mean we can’t be cutting edge, it does mean we might have to travel a bit further for inspiration. International trips targeted around a theme are worth the investment, say the experts.

“Seattle is the home of Amazon so we see a lot of tech integration there,” says Junaita Neville-Te Rito, CEO of retail strategy company Retail X. Each year Neville-Te Rito takes groups on tailored ‘retail safaris’: research missions to help them visualise how they could do things better. Seattle is high on her hit list, in spite of the fact that authentic high street experiences are minimal and it is mostly just shopping centres.

“All the malls are different, and there are some incredible applications of concept,” she says. “The recently opened Anko flagship, Starbucks and their new Reserve Roastery concept, and Krogers are testing their digital interactive shopping experience.”

This application of “big concepts on a realistic scale” is really important for the Kiwi retailer, she says. 

Another draw card for Seattle is that it is the home of Nordstrom – Neville-Te Rito’s pick of ‘best in class’. David Corrick, managing director of retail consultancy Reveal agrees. Reveal creates customised software that retailers of all sizes can use to collect data about how their customers interact with their retail space, and how their staff respond. With a clear focus on driving good service, it should be no surprise that Corrick’s positive impression comes from Nordstrom’s incredible ability in this area.

“I was just browsing in Nordstrom, Seattle, after finishing with a client a few years ago, when a young man came up to me and asked me if he could help. I told him I was fine, but he asked politely if he could show me some shoes he thought would be perfect for me,” says Corrick. “He didn’t just bring me what was on special or a new line they were trying to push, he actually matched me to a product. He brought me some Italian hand-made shoes that were spot on, and they were a good price for the quality so I bought them.”

Corrick said that his positive experience didn’t end at the checkout. 

“The young man gave me his card and told me that if I had any issues at all with my purchase I could ring him direct. This is one of the ways Nordstrom keep clientele – their sales staff develop a relationship with people, and act almost like a personal shopper for them. Then he took me over to a shoe shine booth and paid for both my new pairs of shoes to be shined. A nice touch.”

Corrick says Nordstrom is a good example of a store that is professionalising its sales staff – they’re well paid, well trained, and offered career development pathways. Something he would like to see more of in New Zealand. 

Of course, Seattle is small fry compared to the likes of New York, where high volume and density make retail innovation a low risk, commonplace event.

“New York is always number one for retail trends, especially Manhattan but increasingly Brooklyn too,” says Neville-Te Rito. “European and Asian retailers tend to make their debut in New York, and it’s the home of many flagship stores. It’s a testing ground for pop-ups, concept stores and technology – and plenty of locals, tourists and early adopters to make new ideas come to life.”

London shares this vibe, with the British spring a vibrant array of often very experiential concepts juxtaposed against the traditional backdrop. 

New York and London are great places to see what is happening at the cutting edge of retail innovation, but that doesn’t necessarily mean you should bring it home with you. The market there is completely different. With that in mind, Chris Wilkinson, managing director of First Retail Group, says their eye is firmly trained on smaller locations, such as Leeds in the UK. 

“We take many of our leads from the UK, where many of the most interesting trends originate,” he says. “Contemporary cities in the UK demonstrate how independent and artisanal retailers can get ahead. In London, it's often too expensive to get a foothold and you have an increasing 'sameness'. There is a hunger for new and differentiated businesses in these other cities - plus the spaces that make it affordable.”

Richard Hyman, a leading retail expert in the UK says Leeds is an important retail hub for the country.

“The population is officially 475,000, but because it is by far the largest city for many miles around, it attracts vastly more people,” he says. Hyman says it’s a great place to test an offering because it’s discrete, accessible to a varied population, and still benefits from volume.

Another UK retail expert, author and speaker Clare Bailey, says Lincoln, Derby and Norwich are also worth keeping an eye on. “These smaller cities, away from the main conurbations of London, Birmingham and Manchester are an interesting mix of smaller and larger businesses.” Their store make-up and clientele probably reflect the New Zealand market better. 

Local authorities in the UK are increasingly supporting the development of city centre shopping destinations, which are then marketed in other regions. A great example of this is Cabot Circus in Bristol which opened in 2008. Once host to a depressing array of pound shop strip malls and the Tollgate carpark, an infamous suicide spot, a multimillion pound redevelopment revealed an architecturally designed mall, well located in the urban centre close to public transport and new, affordable apartments for weekenders. The mall itself introduced the likes of Mulberry, The White Company, Krispy Kreme, Hollister and Harvey Nichols – names that would previously have been unthinkable tenants in that location. 

While you are in Europe, Neville-Te Rito suggests you tack on a trip to Berlin. “It’s a new breaking ground. European influences, with a culture that is less statement and more considered tend to provide a market more aligned to the Antipodean view regarding where retail possibilities are,” she says. “Kiwis and Aussies are more laid-back and try to make every dollar count off a smaller base of customers. We are early adopters of technology but tend to be more engaged with exceptional service and considered touches. Berlin is also influenced by lifestyle, art and culture which seeps into retail concepts and brings wonderful experiences to life.”

Fun markets

Last but not least, turn your eyes to Asia where many locales are shaking off their bulk manufacturing rep and investing in high end retail experiences. First stop, Hong Kong, says Chris Wilkinson.

“Hong Kong's proximity to mainland China makes stores like Apple some of their busiest in the world. Chinese consumers swarm in, wanting the latest and greatest and buying up a storm,” he says. “With consumer synergies between our two countries we enjoy watching the dynamics happening there.”

Seoul is also another great Asian city making its retail mark.

“South Koreans are early adopters of many trends so we see them manifest in new concepts in this market,” says Neville-Te Rito.

“Seoul boasts consumers with a high disposable income: technology adopters, fashion forward, lifestyle and experientially engaged and socially active. It’s a great population base. Fun, fun, fun consumers!”

As if to back this assertion up, the Deloitte South Korea retail market report paints a picture of people who enjoy retail as a pastime or hobby, not because they needto buy. For example, a quarter of Seoul’s retail outlets are specialist fried chicken restaurants, and they have 284 Starbucks stores – the largest number in any city worldwide. The sharing economy leads with service valued over sales – Socar and Green Car, two car sharing companies, are leading the market in terms of growth. While South Koreans are happy to spend money on experiential offerings, the no frills/home brand product sector is growing rapidly. The importance of social media in sharing promotional information and activity, and also the mobile payment system which has proved popular cannot be underestimated.

Ian Thomas of Thomas Consultants, now part of Deloitte, says that in cities like Seoul and also Vancouver, where he is based, tourism plays a key role. 

“They (tourists) seek out specialised tenants. The more different and special they are the greater likelihood of success,” he says. “Tourists tend to have more discretionary income and thus seek out such different tenants. This is also the reason that luxury tenants do so well in tourist oriented markets. I believe Auckland would certainly fall into this realm.”

Taranaki-born Ozone coffee roasters.

Home grown – where can you find good retail on, or close to, Kiwi soil?

Not everyone can afford to down tools and jet off overseas. Start-ups, SMEs or those finding they are struggling a little probably can’t justify the manpower or the cost. But researching retail innovation is important and you don’t have to miss out.

“Wellington probably has New Zealand’s best selection of independent and artisan businesses, exciting laneways and characterful precincts,” says Wilkinson, who urges retailers to visit this diamond on home soil. “[It’s a place where] innovation and creativity abounds,” he says. “Take a road trip to the Capital via New Plymouth, which is another place that does on-trend very well.”

Once considered a surfing outpost, New Plymouth is fast developing a rep as a retail destination in New Zealand, with boutique businesses using innovation to draw people into the city, and then applying what they’ve learned to break out. 

“New Plymouth's food sector anchors a very cool city centre that stands apart for its proliferation of independent stores - particularly around clothing, gifts, homeware and vintage,” says Wilkinson. He notes the city council is very focused on enriching this further. 

“The CBD is characterful, and 'quarters' have developed - each with an area speciality. It’s a great place to visit - and establish!”

Taranaki-born Ozone coffee roasters are a great example of this creative upscaling, having just launched their hospo-retail hybrid in Auckland. Having started in New Plymouth in 1998 they successfully took their offering to London before conquering the Auckland market. 

Ozone managing director Craig Macfarlane says valuing staff is key to his company’s winning formula:

“It’s about people, coffee and hospitality - beyond that, we are responsible for creating inspiring environments for our teams, communities and visitors to experience. These environments form a hub of creativity and a desire to be involved, no matter the occasion. Accurate data, weekly assessment of our performance, and an urgency to act on everything and anything is crucial - there is never a ‘tomorrow’ in hospitality; it’s all about the now and converting your passion into a working model that respects all things people, and all things commercial. It’s a tough gig, however, the value of people should appear on your annual accounts balance sheet.Our industry is guilty of undervaluing the real contributors.”

Neville-Te Rito says New Zealand great little pockets of retail everywhere, but it is small scale.

“You might see something in one retailer for a piece of insight and then another for something different. We are a very conservative market and prudent with how we spend our money. Bar our adoption of tech, which is incredible in some categories, the market here tends to be quite some time behind the rest of the world.”

Examples of those pockets of excellence privately mentioned by a few commentators include Noel Leeming for their investment in staff training around customer service and in-house technical support; Countdown for their Onecard initiative and early adoption of plastic bag free stores; and Smith & Caughey’s for their innovative pop ups and experiential offerings. But most are coy about naming specific retailers they feel are sparklers because of the variability in service level and in-store innovation, particularly in the franchise sector. 

“I think every Kiwi business that can’t go way overseas should make an investment in visiting Australia,” says Neville-Te Rito. “I recently did a retail safari taking a small team to Brisbane. It was exceptional in providing new insights to how categories are evolving and how you can nimbly improve your offer.”

Neville-Te Rito notes how similar the Aussie and Kiwi markets are, meaning a visit to a smaller market over the ditch should yield a high level of takeaways.

“Because Australia has a larger population base they can experiment more at a lower risk. They think a lot like us and aren’t bad at No. 8 wiring themselves. Also, I think by jumping the ditch you see what you are doing incredibly well and can give yourself a pat on the back while taking home a few nuggets of insight for your own business.”

Corrick thinks that some of the answers are even closer to home, and require no travel at all, just a fresh cup of coffee and an open mind.

“Where should retailers look for examples of people doing it right? The internet,” he says. “Every good online retail business analyses their performance the way we do at Reveal. They look at who comes into the virtual store, what they put in their basket, when they abandon it and then follow up to find out why. Yet the average bricks and mortar store doesn’t have that information.”

Corrick feels that understanding your customer is the key to success, and taking some of the innovations commonplace in e-tail and applying them to a bricks and mortar store to drive better service would send a retailer rocketing head and shoulders above the competition. He also says you should spend time in your own store, especially if you are management level in a larger business. 

“About 20 years ago retail – globally - moved from doing what was right for the customer to what was right for the business,” he says. “I went to the States in the late 1990’s and the level of service was phenomenal across the board. I met one guy at Footlocker who had just finished a Bachelors degree, and told me he felt fortunate to have that job. These days many retailers only seem interested in paying minimum wage and not enabling their staff for a career in the retail sector.”

A good example of this mistake he says is Circuit City in the US. Struggling against their competition, Best Buy, they identified that some staff members were being paid 50c an hour more and decided to fire them all to save US$260m a year. Within weeks the business was spiralling down the pan.

“Those were all the staff making the sales, they slit their wrists,” he says. “A classic example of management not understanding what is going on at store level. Even the CEO needs to spend time on the shop floor. They need to understand there is no such thing as a self-service retailer – people need support to make a purchase, and staff need to feel engaged, a sense of ownership over the business they work for.”

Whether your research adventure takes you to Europe, or just encourages you to stick your head out of the stock room, changing the scenery can give you a lot of inspiration, and the energy needed to drive success.

This story originally appeared in NZ Retail issue 761 April / May 2019

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