The Internet was once an enemy to many bricks and mortar retailers but now they are beginning to realise the benefits of it, according to a panel of retail solutions vendors who met in Sydney on Wednesday 28 November.
The panel was moderated by Frost & Sullivan's Senior Research Manager, Australia & New Zealand, Phil Harpur. Participants included: Chris Petersen, regional manager – Asia Pacific, Meridian Systems; Christian Ebel, director of product lifecycle management value solutions – Australia and New Zealand, Dassault Systèmes; and David Tyc, sales and marketing Manager, Island Pacific Australia.
They all reported they have seen a growing interest among retailers in adopting technology within the past 12 months as they are beginning to see the strategic value in the physical floor space and the ability to deliver an omni-channel customer service. This is resulting in enabling them to increase margins, reclaim their customers and maximise revenue.
A recent report by PWC and Frost & Sullivan, Australian and New Zealand Online Shopping Market and Digital Insights, predicts Australian online shopping expenditure will grow from $16 billion in 2012 to $26.9 billion by 2016. Much of the growth will be fuelled by the entry of new online retailers and product manufacturers selling direct to the consumer, and by an expansion in the range of products and services on offer among existing online operators. Currently, around 45 per cent of all online retail expenditure goes to overseas sites.
Phil Harpur, Frost & Sullivan, said it’s anticipated over the next five years more and more bricks and mortar retailers will be driven to improve their online offerings
“The biggest change technology is having on retailing is the increasing amount of pressure that is mounting and it’s creating great competition in the market. There are a number of overseas players who are also putting pressure on the local market,” he said.
“But online is not new it has been around for the last decade. But the spotlight on online hasn’t occurred until the last three years and it will be like this for at least another two years as retailers continue to play catch up.”
As a result, this online push is driving a shift from what previously was known as ‘multi-channel’ to ‘omni-channel’ customer engagement.
According to the PWC/Frost & Sullivan survey, 29 per cent of all online shoppers in Australia currently follow an online shopping site on Facebook. Thirty-four per cent of online shoppers have done so using a mobile phone or smartphone. Half of all Australian online shoppers who currently own a smartphone have used their phone to find a nearby store and just over one-third have used it to compare prices before shopping for items.
As a result, retailers are rapidly developing social network and mobile shopping initiatives to sit alongside existing channels such as physical stores, websites and contact centres.
David Tyc from Island Pacific said all the applications and technologies are starting to come together to produce a shopping environment that can be both virtual and traditional bricks and mortar.
“A few years back it was about multi-channel and the problem with that model was that it was retail-centric and consumers were restricted to how they could shop. This differs to the concept of omni-channel where it’s consumer-centric and focuses on providing customers options to shop in way that suits them,” he said.
“There’s also now a bilateral shift where pureplays are opening bricks and mortar stores. This ubiquitous variety provides customers with the choice and that makes it customer-centric.”
At the moment, web-based applications are becoming popular as a tool for coordinating the multi-national or multi-site nature of retail businesses, such as during the stages from product design through to manufacture. In the process, the applications are generating valuable digital assets such as designs and shop floor layouts that over time can be re-used to enhance the retailer's online presence.
“In terms of technology, retail has come out of its infancy and is now going through the exuberant teenage years. Companies are trying all sorts of new things with varying degrees of success,” Tyc said.
“The one note of caution that every retailer needs to keep in mind is that the use of technology must always come back to commercial reality. It has to be commercially sustainable, putting dollars on the top and bottom lines.”
The panel also noted that as retailers redevelop their online presence, many will use the chance to rewrite their technology strategies and to improve top and bottom lines by introducing more efficient tools and processes.
However, Dassault Systèmes’ Christian Ebel warns it’s not a simple process. “Retailers need to learn how to adopt, to develop, to communicate and this transformation for organisations may not easy to do, especially large ones who have to look not at their local operations but their operations overseas. And they may not have the tools to make it happen,” he said.
Harpur agreed: “The complexity here is retailers must look at everything so they make sure they don’t miss anything.”