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| Retail’s innovation drought |
   
Jeff Rogut: "Real innovation is something that customers will pay for."
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Posted Date: 16/01/2012
The past few years have brought the retail industry into the spotlight in a way not seen in recent times.
"Sure, there were scandals and takeovers, but things had been travelling pretty well," observes Australasian Association of Convenience Stores executive director Jeff Rogut.
"The economy was in good shape and customer numbers were encouraging regardless of what retailers were doing; some inefficient retailers could open a store and customers would still turn up. Real ongoing innovation within the retail sector all but disappeared.
“Then the suddenly the picture changed. The global financial crisis arrived and despite certain industries such as mining doing well, retail faltered. Household were wary of spending with the European debt crisis and a slowdown in the domestic housing market both receiving some blame. Retail sales figures from November 2010 showed a flat trend in many industries and a declining trend in others.
“Sales increasingly relied upon deeper and deeper discounting. Supermarkets had bold catalogue front pages with ‘half price’, ‘buy one get one free’ and other discount offers not usually seen. Established retail names started to fold. And the blame game began.
“Having spent almost 40 years in the retail industry, I have always viewed retail as an exciting place to be," recalls Rogut. "There was always something exciting happening – new products, the novelty of buyer’s specials from overseas, big once a year clearances, constant adaptation of stores and layouts to make them more appealing to customers and changing seasons, and staff who offer friendly and helpful advice and service.
“But what happened? Simplistically, it became too easy. Successive governments, through what could be argued was failed competition policy, allowed the dominant retailers to become too dominant across many areas. In some cases, retailers also just allowed this to happen.
“The leadership which we saw in retail by real merchants and retailers all but dried up to be replaced by financiers and corporate offices who saw ‘bigger and more of the same’ as the answer to what customers were looking for. And in some cases it was – particularly in the home improvement and supermarkets channels – cheaper, imported goods in one stop stores. This resulted in the demise of some competitors who could not match the deep pockets of the majors.
“In the convenience channel we have seen new formats and brands emerge, initially led initially by 7-Eleven back in 1977, which changed the way the ‘service station shop’ was perceived. But even in our growing channel, innovation declined in the mid 1990s and has only picked up again in recent years as the threat of reduced tobacco sales and the growth of supermarkets with their discount petrol dockets has been felt.
“And then suddenly we had the internet. I say suddenly because the way in which many of leading retailers woke up to both the power and threat of the internet, yet hugely underestimated the opportunity that came with it, was quite sudden. The spirit of innovation or leadership was missing amongst many retailers in this emerging channel of business.
“It could be argued that some company managers, indeed even the founders or owners, forgot to lead. Perhaps there was an assumption that retail stores would always be around. We began to hear excuses as to why business was down in recent times.
“The internet and overseas product suppliers were blamed for hurting retailers as times toughened. But the question must be asked: were these retailers really in tune with their customers (or ex-customers now)?
“Do they read the feedback on social media websites or even in mainstream media and appreciate the anger and frustration that customers really have? Do they ever shop in one of their own stores and experience what a normal customer does? And would they return to that store having had that experience?
“Most of us could write volumes on the shoddy retail experiences we have experienced, yet these experiences are what retailers are asking customers to put up with. The negative would far outweigh the positive.
“And there is no real distinction between large and small retailers when it comes to customer care, whether it is an electronics store, hairdresser, hire store or office products retailer – all have some good but many poor examples.
“So what do retailers need to refocus on?
“From my observations and discussions with retailers and customers, Retail Excellence Takes Attitude, Innovation & Leadership
Attitude from the top
“The right attitude must come from the top; this is where the business culture starts. Which retailers are driving excellence through their organisations rather than just focusing on their share price and bonus?
“Which retail leaders are admired and emulated as role models? These people may not necessarily be the ‘boss’, but through their attitude to customers, colleagues, suppliers and everyone they interact with, they are seen as leaders. In retail, skills can the taught and rewarded but having a team with the right attitude is priceless.
Innovate at all levels important to the customer
“An innovative office or staff environment may please staff but what benefit does that translate to for the customer? When was the store, or website, last refreshed in a way that was not just following a competitor? When was the last time you came across a great shopping experience that embraced all the senses? When was the last product released that was truly innovative and not just a line extension, variation or minor change to an existing product? When were staff last asked their opinions on how they would treat customers to keep them loyal – and were the ideas implemented?
“Real innovation is something that customers will pay for, is very profitable and does not have to rely on being on sale.
“The equally important ‘I’ is Insights – what are customers really thinking, what are their real needs now, and how can you anticipate and act on what the future might bring? Insights aid innovation.
Leadership – not just locally, but globally
“Finally, acting like a leader - not just locally, but globally – is the new retail reality and is increasing what retailers are being measured against. Customers can choose to buy from almost anywhere in the world now – why should they give you their hard earned dollars?
“Leadership does not come with incumbency, as some well known retailers which are on their way out have discovered. New entrants in a market can quickly be perceived as the leaders if they have the right retail offer, and those that simply follow will be left with few choices.
"Leadership extends to the store itself, merchandising, website, private brand quality perceptions, being an employer of choice - not last resort, and critically, how well everyone who comes into contact with the brand is treated.
“Retail offers endless possibilities,” concludes Rogut. “It’s up to those in the sector to capitalise on these – or risk being left by the wayside.”
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Wednesday, January 18, 2012 by Lynette Cameron
I couldn't agree more. Offer the customer service is just the starting point, research innovative new brands (they exist but not many are ranged in Australia), review in store ambience and displays - messy and boring in most cases, opportunities exist. I received a letter the other day from a PR company which I opened and read (an experience I haven't received for many years), I am inundated with emails that I don't get a chance to read - loved the idea of back to basics and letter writing - great idea (and effective).
I have introduced a fantastic new brand to the Australian market called MOGO the magnetic Charmband www.minettemogo.com.au - it is fun and innovative. Stores that range it have done exceptionally well - others stores have just been too worried to try anything new - just want to stick with their existing brands - these stores are the ones that will be left behind in the future.
We, as a company, also pride ourselves on outstanding service, quite a shock to some of our customers, they find it extremely refreshing which is constantly fed back to our company.
Thanks Jeff
Tuesday, January 17, 2012 by Mike Farley
I have to agree with Jeff it is time for retailers to innovate and use the insights available and create a better shopping experience - in store theatre.
Now is the time for CEOs of leading retailers to have first mover advantage. A lot of companies are “talking about it” but very few right now have experience in full roll outs and being able to demonstrate real world competency.
The new concept store launched by NAB last week was the culmination of 3 years work with BNZ and NAB. Gone are the rows of tellers behind walls of security glass, to be replaced by staff in open work stations with no screens or bars. Banks are no longer purely financial institutions but also retail spaces competing for people's time and attention against a whole range of retailers.
NAB unveiled the new model for it’s branches, which will be open plan, with more staff out from behind the counters, iPads and laptops available for the public to go online and a kids corner playing DVDs. Among the new technology, NAB will have ''intelligent deposit machines'', which can take loose coins, notes and cheques, counting the money and reading cheques with a four-way scanner.
It’s an “omni channel” world we now live in, retailers need powerful partnerships.
Integration with technology partners and retail merchandising solutions companies. Retailers need to continue to develop their technology road map by investing capital and human resources in the right areas for best and most immediate ROI. Levering technology and IP to build new customers relationships and continue to remain relevant and “sticky”
Companies like The Activate Group and Dealsta are in my opinion leading the way. For example Dealsta has developed a Platform which is very powerful. It is a very clever 'RRR Matching Engine' (connects inventory/offers to the Right people, at the Right place, at the Right time). Off the back of this platform is one of many planned apps. Firstly, a fashion app that I understand will be released in the next few weeks call StreetHawk. StreetHawk http://www.streethawk.com.au/
is an app that enables shoppers to list their 'wants' and be advised via Smartphone of the location within their shopping area it is available. It drives traffic into retailer’s stores, provides benefits to shoppers like discounts and closeouts. This will showcase the technology. This will lead to the ability to collect data from all users of the platform, and use this to build a shopping picture of individual shoppers to make sure they are served the most relevant ads or inventory possible across the network.
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