Michael Baker, Principal, Baker Consulting

Australian retailers are coming to the realisation that the combined impact of internationalisation of the market and technology are permanent, far-reaching, and require a serious response.

The road to competitiveness

Key requirements for Australian retailers to stay competitive:

Continue to improve assortments and pricing to match international retailers.
Improve the in-store experience through better visual merchandising, mobile checkout, technology-augmented service, and improved hiring practices. Retail personnel need to be selected not on the basis of retailing experience but on the basis of their ability to interact with people.
Invest in a mobile-friendly website and adopt a strategy that treats mobile as an entirely distinct business-to-consumer channel.
Build out e-commerce capability and give consumers a consistent view of the brand across all channels. Customers will be intolerant of retailers that operate their online and offline operations as distinct entities.
Accept show rooming and take steps to counteract it. Product innovation, niche brands, strategic pricing technologies, a heightened in-store experience and premium service are all part of the mix.
Implement geofencing and/or other location-based technologies that incentivise people to come to stores and reward them for being there. In-store Wi-Fi may be part of the solution.
Develop the capability of fulfilling e-commerce through existing stores.
Test new businesses and product lines online. If they work, move them into stores.
Learn how to use social media to build relationships with consumers in local communities. Lululemon Athletica is an outstanding case study of a retailer using Facebook pages for its stores to build a community following.
Raise the profile of social responsibility in their corporate manifestos, sourcing and employee relationships. Social responsibility is good business.

I believe these initiatives will maximise the value of retailers’ physical real estate, support sales growth across the company, and enable them to compete effectively in an era of globalisation and technology upheaval.

Estimated E-Commerce Penetration – selected retailers 2011-12

Source: Company reports, Citi Research

About the Author

Michael Baker is a principal of Baker Consulting, a retail and retail property economics advisory firm based in Sydney and serving clients worldwide. Michael is a former director of research at the International Council of Shopping Centres (ICSC ) in New York and, currently, serves as vice-chair of ICSC ’s Asia-Pacific Research Council. He writes a weekly retail column for a major national newspaper and is a frequent speaker on adaptation by the shopping centre industry to global change.

Article sourced from AMP Capital Shopping Centre's Recommended Retail Practice Report: "The New Consumer Paradigm - Embracing the evolving retail landscape".

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