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Pioneering retail: Assessing a changing landscape

The retail landscape is rapidly changing. Many Kiwi retailers have already adopted new practices and technologies to adapt to this new retail reality. Sarah Dunn speaks with industry figures at the cutting edge of five key trends with help from Gem, part of Latitude Financial Services.

By Sarah Dunn | August 24, 2017 | News

The retail landscape is rapidly changing. Many Kiwi retailers have already adopted new practices and technologies to adapt to this new retail reality. Sarah Dunn speaks with industry figures at the cutting edge of five key trends with help from Gem, part of Latitude Financial Services.

Ecommerce and the evolution of digital technology are at the heart of a wave of change that’s forcing retailers to adapt their practices. According to the Kantar TNS Connected Life 2017 study, New Zealand is ranked in seventh place worldwide when it comes to ecommerce penetration.

Nielsen data indicates almost two million Kiwis made a purchase on the internet in 2015, with significant growth likely to have occurred since then.

Empowered consumers

Putting food on the table is one of the core fundamentals of life, so retailers like Sally Copland, head of online at Countdown supermarkets, tend to see changes in customer behaviour well before less constantly-visited retail businesses. She confirms that shoppers have raised their expectations as they become more engaged and knowledgeable.

Copland says the rise of smartphones means that shoppers are constantly connected and have an abundance of choice at the click of a button.

Great food, low prices and a convenient location used to be enough to impress consumers, she says, but now, a supermarket has got to be “fast, quick, easy, seamless and engaging, as well as offering an experience, all at the same time” to be worthy of inclusion in a shopper’s busy life.

Copland says shoppers are researching their food choices prior to purchase more, and making more trend-driven food choices such as vegetarianism and ‘scratch’ cooking, prioritising gut health, or minimising sodium and sugar. Customers can see a recipe online in the morning, decide to make it for dinner so they make an online order and be picking up the ingredients on the way home via click and collect. That means retailers need to be smarter about their offering and have more delivery and collection options, weighing up “the convenience into which groceries can fit into [customers’] lives”.

Countdown has responded to this changing behaviour by adding nutritional information to over 10,000 products in its online store, and widening its delivery options. Consumers can now choose what time of day their click and collect purchases will be waiting for them in-store, and Countdown’s home delivery network has expanded to cover almost the entire country.

Copland says collecting and interpreting data is the key to accurately divining what customers want. Through Countdown’s Onecard programme, it can collect meaningful information, and the My Countdown email marketing tool is highly targeted. This information is also being used to determine that Countdown has the right range in the right store for that particular community.

“There’s an expectation from today’s modern customer that if we have data about their shopping habits then we need to use it and create a very personalised offer,” says Copland.

Copland believes customers’ increasing empowerment is driven by the lifestyle impact of technology and digitalisation – especially smartphones. She says retailers need to make sure they understand the empowered consumer, using loyalty programmes and other data sources to accurately inform their perspective.

As Countdown continues to lead in this space, her recommendation to other retailers is to continue to ask themselves, “How to we, as a business, continue to make customers’ lives easier using technology and digitalisation?”

Experiential retail

Like other bricks and mortar retailers, Harvey Norman has accelerated its future-facing planning in response to the entry of Amazon to the Australian market, and to behavioural changes from consumers. It’s now increasing focus on giving customers an in-store experience they won’t find online.

John Hollings, Harvey Norman general manager – computer and communication division, says Harvey Norman is renovating flagship stores in all major cities it’s trading in worldwide. New Zealand is one of seven overseas markets in which the Australian-owned company is present.

Among the upgrades at its Singapore flagship is a ‘games hub’. Gaming is only part of Harvey Norman’s offering, but it’s an ideal division for experiential retail – gamers are highly engaged shoppers, and are willing to open their wallets for significant purchases if their needs are met.

“Gaming boomed for years with Playstation and Xbox, got knocked off-kilter a bit by app-based gaming… and it’s now surging back in with an immersive gaming experience, a premium experience,” says Hollings.

Gaming used to be about buying the console that just played the shopper’s preferred game, he says, but now shoppers want to build a complete experience. This means gamers buy their console and augment it with multiple screens, curved screens and other peripherals like premium audio systems and gaming furniture. PC gamers are looking for ultra-high-end gaming rigs that can be customised with top-of-the-line graphics cards, LED-lit Perspex cases, water-cooled processors and specialised gaming mice and keyboards.

At the games hub in Harvey Norman’s Singapore flagship store, shoppers can interact with multiple live displays and demonstrations to fully experience and play-test all of these products.

“Millennials will spend more for an experience, and gaming is an excellent opportunity to provide just that.”

Hollings says it’s not worthwhile for bricks and mortar retailers to attempt to only compete on price: “There’s always a more aggressive online price but people will pay for value, service and a great shopping environment.” Retailers have to offer experiences that can’t be found online.

Hollings says Harvey Norman has also seen success with its “play table” concept, where devices like phones, tablets, cameras, app-based toys and smart watches are made available for consumers to engage with.

“Wherever you can, have the device out, charged, in consumers’ hands, and they’ll get a better experience than online,” he says. “Engaged people buy more premium products and spend more on average.”

Introducing new concepts in retail always introduces a tension between efficiency versus exploration, Hollings says, but concludes the key to getting it right is ensuring that no matter how customers want to interact with you, the outcome is a good experience.

Added-value services

Another way retailers with physical stores can differentiate themselves from ecommerce retailers like Amazon is by offering services that go beyond the point of purchase to create a memorable connection with the customer.

Noel Leeming supports its sale of electronic goods with a team of 80 ‘Tech solutions’ specialists. These passionate experts can visit the customer’s home to set up and install complicated new gadgets, carry out repairs regardless of whether the product was purchased from Noel Leeming, and even conduct ‘learning sessions’ to teach shoppers how to get the best of their device.

The services team can provide in-person coverage based out of every Noel Leeming store from Invercargill to Kaitaia. There’s also 50 remote specialists operating Noel Leeming’s helpdesk so they can help customers over the phone or via online chat.

Noel Leeming general manager of retail services, Sean Stephens, says the reasoning behind the company’s emphasis on services is simple – retail is a changing landscape, and “selling boxes” is no longer good enough.

Stephens says the traditional service perspective involves attaching services to a product the retailer’s sold and then carrying out repairs on that product, but with Noel Leeming’s new services programme, he wanted to widen the focus: “How do we just help Kiwis whenever or wherever they need help with their technology?”

Stephens sees the new emphasis on services at Noel Leeming as an opportunity to grow its market presence. Since the programme’s roll-out, he’s seen an increase in the number of shoppers served in-store, an increase in home service visits, and an increase in calls to the helpdesk. Noel Leeming’s Net Promoter Score for tech solutions is currently over 86, which represents a rise of more than 10 points this year.

“It really goes to show the quality level of service that we’re delivering,” Stephens says.


Artificial intelligence is moving out of speculative fiction and into everyday life. AI-driven retail is already a reality and has been for years – IBM’s Watson platform alone can support sophisticated chatbots for online customer services, and provide rich personalised customer insights when its machine learning algorithms are applied to customer data.

AI’s analysis muscle doesn’t have to be limited to numbers, either. Visual searches are helping retailers like Asos and Nordstrom offer online shoppers a better experience. Since 2014, US department store Neiman Marcus has offered an AI-driven app which allows customers to photograph items they want and have the app find similar items from the store’s inventory.

Marty Kerr, Visa’s country manager for New Zealand and South Pacific, reports that while 65 percent of Kiwis are keen to try out new payments technology, they’re still sceptical about the use of AI in payments. In a May 2017 survey run by YouGov, 36 percent of Kiwis told Visa they understand AI is the future, but don’t yet feel ready for it.

“When it comes to new forms of commerce, there are many great innovations coming through and we’re only starting to scratch the surface in terms of the role AI can and will play in the future,” Kerr says. “When we look at the attitudes of 18–35-year-olds, who are going to be among the biggest users of these new technologies, it’s promising to see 29 percent say they’re ready or somewhat ready for the opportunities Kiwis embracing the future of commerce AI can bring.

“It’s going to be interesting to see that figure increase over time as consumers continue to influence technology development to meet their changing needs.”

Frictionless payments

“We have a clear understanding of what impacts a retail channel the most – time is money,” says Latitude Financial Services national sales leader Joel Jeevaratnam.

Gem is set up to minimise friction points in the customer’s path to purchase. The retail finance company has made sure that finance and retail are both addressed in one single sales conversation.

The retail finance company provides a secure document upload facility so customers can submit documentation for their retail finance application online in the store rather than having to wait for snail mail. Some applications can be authorised in as little as 15 minutes.

Once the customer has paid a one-off establishment fee, they’ve got no barrier between them and further purchase at any store. Their credit line can be accessed through their driver’s licence number, so they don’t even need to carry a Gem Visa card.

This convenience encourages repeat visits and customer loyalty.

“We’re constantly and seamlessly integrating the finance component into the retail sale,” says Latitude Financial Services commercial director Peter Newton.

Gem retail finance, provided by Latitude Financial Services, has also introduced a number of back-end innovations aimed at reducing friction for retailers who access the company’s help desk.

How Gem can take your business forward

A good finance offer can act as a lever that lets customers say “Yes!” to a purchase that they might otherwise avoid. Retail finance is associated with a larger basket size than credit cards or cash, and can also open up a retail store to a new pool of shoppers.

Gem, provided by Latitude Financial Services, is an enabler to help grow retailers’ businesses profitably with a payment structure that meets their needs, and allow customers to buy what they want, when they want it.

Latitude Financial Services commercial director Peter Newton says Gem increases average basket size by giving shoppers the option to not only buy what they want, but to upgrade to a better item or purchase add-ons at the same time.

At a furniture store, for example, a shopper might choose to upgrade from a fabric sofa to a leather one, or at an electronics store, they could buy a printer to go with the PC they came in to purchase.

Partnering with Latitude and Gem also opens a retailer up to the company’s pool of loyal existing customers.

On the Gem Visa programme, the company has a card base of over 400,000 customers in New Zealand and $1.2 billion of credit.

“We offer purchasing power and a pool of customers,” says Newton.

Gem charges new consumer clients a one-off establishment fee, after which they can access further credit without any further barriers. This means that the 400,000 shoppers with Gem Visa cards have an incentive to shop with retailers partnered with the company.

As well as its retail finance function, Gem Visa can be used like a standard Visa card on everyday transactions. Any transaction over $250 is automatically interest-free for a minimum of six months.

“It provides that flexibility for bigger purchases, and convenience for everyday,” Newton says.

Gem’s website also provides a level of transparency similar to internet banking. The date upon which consumers’ interest free period expires is clearly visible. By offering transparency, Gem encourages loyalty and repeat business, which is good for both the finance company and its retail partners.

This loyal customer base also means that Gem can market effectively and directly to its clients. Through its email newsletter database, it can share relevant, personalised offers from retail partners directly to the shoppers most likely to take up those opportunities.

This arrangement demonstrates the level to which Gem and its retailers are intertwined, says Latitude Financial Services national sales leader Joel Jeevaratnam.

“We’ve tried to stay in step with retail as it evolves, and be nimble,” he says. “The days of shouting a deal left, right and centre are gone.”

Gem also runs effective content marketing programmes in consumer-facing media, and works with social media influencers like stylist and retailer Alex Fulton, who runs the homewares-focused AFD Store.

Latitude has staff who are able to guide retailers in getting the best out of Gem retail finance, of which Jeevaratnam is one.

He says it’s important to Latitude to prioritise “being Gem partners, versus being suppliers.”

Part of his sales team’s due diligence when developing a partnership with a new merchant includes filtering questions designed to give them an idea of whether finance would benefit the merchant or be a hindrance to it. If it’s a good match, then his team will develop a tailored offer that suits the business, with merchant fees based on scale, volume and other factors.

Jeevaratnam has nine business development managers around the country who support merchants on the programme. There’s also a support team answering the phones and staffing a web chat service.

Gem looks forward to supporting retailers as the industry evolves, and will be changing as fast as retail does.

How does Gem retail finance work?

1) To become a Gem retail partner, the retailer either applies through the company’s website or calls its helpline.
2) The Gem retail team learns about the business and develops a tailored offer which suits that business’s needs. Merchant fees are dependent on the scale of the business, the volume of its sales and what length of payment terms it wants to offer, among other factors.
3) The paperwork is completed, and the retailer is logged into Gem CRM.
4) A customer has found a product they want to buy and inquired about retail finance.
5) The retailer provides the customer with a digital application form for a Gem Visa card in the store.
6) The application is approved then and there. Some applications can be authorized within as little as 15 minutes.
7) A disclosure statement and terms and conditions are given to the customer. They pay a one-off establishment fee.
8) The customer makes their purchase using Gem Visa. They get an interest-free loan for a minimum of six months and shopper’s protection insurance on purchases over $250.
9) A merchant fee is charged. Gem merchant fees are based on transactions completed, and the retailer is not charged unless a retail finance transaction is made.

To find out more about how Gem can help you please visit:

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