With the influence of digital marketing, international up-and-comings and constant changes in consumer culture, 2017 has seen changes already in the retail industry, so what are some important up and coming changes?
International retail is a window into the future according to Chris Wilkinson, managing director of First Retail Group, who spoke about the issue at the Restructuring Insolvency & Turnaround Association New Zealand (RITANZ) 2017 conference.
“New international entrants only just arrived last year, so we are still to feel impact [of their arrival]. New Zealand retailers are not meeting customer expectations, hence are losing market shares to offshore online retailers.”
New Zealand is a small market, and so paired with the geographical location is why large international retailers often bypass us as a worthy investment to their brand.
Last year, Zara and H&M entered our market, making national news and quickly solidifying themselves as the two most popular fashion brands.
High expectations of these retailers did not disappoint the consumer.
Online is another part of retail that’s seen the industry adapt to survive. Wilkinson describes online as ‘borderless shopping’.
Using the US and Australia as an example, Wilkinson explains that fast online international brands can be a primary cause of retail failure. Both here and in their respective countries.
“International retailers have a significant advantage in purchasing power and supply chains. And often use vertical integration to deliver “fast fashion”, turning around from design to store in a few weeks, not months.”
50c of every dollar spent online in the US is spent with Amazon (US$136 billion turnover, $3.8 billion EBIT in 2016).
The graph below shows the impact of international apparel in the different counties.
Sourced from the Restructuring Insolvency & Turnaround Association New Zealand (RITANZ) 2017 conference.
Wilkinson describes online disintermediated shopping as another retail change that is quickly being seen on the New Zealand market.
“Online can link the consumer directly with the manufacturer, cutting out the wholesaler and retailer in the middle.”
An example for this is Container Door. The site works by purchasing container loads of goods to customers’ orders, on a group-buying basis. Container Door places a bulk order direct with the factory once sufficient orders have been received, then ships a full container to NZ, and delivers the products to your door. Cutting out the need for any retailer interference or marked up prices.
Other up and coming changes include:
1) Sustainable and ethical retail practices: Consumers are becoming more aware of what they’re buying.
2) Mobile Payment Solutions: Quickly becoming more popular as Visa, Apple and other large electronic devices produce mobile payment options.
3) Personalization: consumers are searching more and more for personalized shopping experiences they can connect with.
4) Same Day shipping: Consumers might not want to actually make the trip to physical locations, but they still want the instant gratification of taking their purchases home immediately.
5)Investing in Omnichannel: In 2017, we can expect retailers worldwide to push their omnichannel strategies further than ever before in the pursuit of truly seamless shopping experiences.
6) Data components: More retailers will apply data to every part of the retail process.
Although with changes there are many, Wilkinson says there are ways in which retailers can defend themselves.
“Get the basics right. Understand your consumer and offer them a differentiated product they actually want. Wind down bricks and mortar store proactively like the US, rather than reactively when it’s too late.”
“Consumers are spending just as much, but how they’re spending continues to change fundamentally,” says Wilkinson.
“New Zealand retailers need to adapt now, or they will continue to fail and the chances of selling a failed retailer as a going concern is low.”