Few industries have faced greater challenges in recent years than retail. From lockdowns to staff shortages and cost-of-living pressures, local retailers have been forced to work harder for every customer and every dollar. At the same time, customer expectations are rising, while in the background the looming threat of global online retail heavyweights like Amazon, Temu and Shein are intensifying.

Their investment in the market has grown significantly in the last 12 to 18 months, with all three successfully capitalising on what shoppers want—low prices, unlimited choice, and customer-friendly delivery—which allows them to consistently grow their market share. However, for all their reach and financial might, they also have disadvantages. It’s these disadvantages that the local industry can capitalise on, to drive sustainable growth in the short-, medium- and long-term.

Love local business

Australia is a proud, passionate and parochial market. Consumers want to see local businesses thrive; you can see that in the make-up of city centres and high streets, where local coffee shops, restaurants and retailers dominate compared to global chains. This ‘support local’ sentiment is as influential as ever and is an important way for local retailers to build relationships with, and incentivise loyalty from, their existing and target shoppers.

Lightspeed research set out to understand the factors that influenced which brands consumers choose to shop with. It revealed that themes like community and ‘shop local’ have a big impact. The research revealed that one in three (34%) shoppers said access to deals for locals was important and one in four (25%) said unique and locally made products. Personalised customer service (25%) and having shared values with a local business (24%) were also influential factors.

These are generally more closely aligned with local retailers than global brands. Competing based on, for example, marketing budget and product variety will always be a challenge. However, if retailers offer ‘local deals’, promote the local or unique nature of their products and materials, endeavour to provide personalised customer service, and build relationships that are more meaningful and less transactional, there is success to be had. A bricks-and-mortar store is an effective way retailers can deliver this. 

Build community around bricks-and-mortar

The already-surging eCommerce trend exploded to new heights during and in the wake of the pandemic. However, while some expressed fears for the future of brick-and-mortar retail, the notion and appeal of physical shopping is as strong as ever. Our research revealed that three-quarters (76%) of Australians still shop in-store at least once a month.

Shopping is a personal, tactile experience. For all the convenience of online shopping, people still want to be able to hold, feel and try on an item before making a purchase. Indeed, Lightspeed research found that almost half (45%) of Australians research a product online before visiting the store. Without a physical store, Amazon, Temu and Shein don’t have the luxury of being able to offer that.

Retailers should treat their online store as more than a platform to facilitate purchases, but as a way to steer shoppers in-store, where they can play to their strengths. From there, they can provide the personalised customer service that their shoppers want and show off what makes their products different from the fast fashion and mass-produced products that global retail marketplaces are often known for.

This is how retailers can drive customer acquisition, but to truly grow, they need to incentivise retention – something Amazon, Temu and Shein are doing particularly well – too. Retailers should consider offering them a free or discounted product in exchange for signing up to their mailing list or loyalty program. From that point, retailers can begin to deploy the personalised experiences – based on their previous purchases – that shoppers are looking for.

They can even use it to align with them based on values. They can do this by, for example, talking about any community or charity work they engage in, how they source their products locally, why they prioritise meaningful, sustainable retail over fast fashion, and even the mission and values that drive the business.

Australia’s dynamic, resilient retail industry has become accustomed to challenges. Today, there are many, including the threat posed by global retailers who are turning sizable investments into even more sizable growth in the local market.

Competing against them at their own game, on the same playing field, is a tall order. However, by aligning themselves with themes like community and shopping locally and using their bricks-and-mortar location as a key competitive advantage, they can succeed and scale in the months and years ahead.

Andrew Fraser is managing director for APAC at Lightspeed.