Editorial: Greed, Charity and the Questionable Future of Australian Retail

The recent ARA Retailer of the Year Awards event captured the contradictory attitudes that continue to erode hope for progress and the future of Australian retail.

For many people working in the Australian retail industry, the million-dollar question is either ‘What does the future of retail look like?’ or ‘Will local businesses survive, let alone thrive, in the future?’. Perhaps the question should be, ‘Which businesses deserve to survive?’.

Sitting in on the Australian Retailers Association’s (ARA) Retailer of the Year Awards breakfast last week provided me with a new perspective on an embattled industry that doesn’t always see eye-to-eye with the wider public.

Of course, as an industry awards ceremony, there’s always a required level of ceremonial hand-clapping and back-patting, or perhaps the whole affair simply smacked as hollow given the ongoing doldrums in which the entire industry has become mired.

Mixed Messages

Nevertheless, it’s hard not to smell a whiff of pretense when Myer CEO Bernie Brookes stands to make a speech, and begins by telling the audience that, as retailers, “we can’t blame the Government for our situation” and that “we just have to work with what we’ve got”, before launching into a tirade about local labour costs as soon as prodded on the topic.

“We ain’t world competitive and we ain’t got a chance of being world-competitive,” Brookes said after the main body of his speech had concluded. “We’ve seen an enormous uncompetitiveness occur and decreasing productivity in Australia, that I think the next generation should not only be scared about, but they should be frightened to the extent of making more noise to do something about it.”

Now, for the sake of disclosure it’s necessary to point out that Brookes’ initial statements related specifically to the ongoing GST debate, but even that is a massive backflip on the kind of statements he and other local traditional retailers were making back in 2010.

‘So what?’ you might ask. ‘These retailers have clearly lifted their game in recent times and it’s only a matter of time before we have a resurgence in the sector’.

Reluctantly dragged into the ‘omnichannel’ hype (or ‘spin and bullshit’ as Gerry Harvey describes it), local retail brands are moving the needle – albeit slowly. Though still criticised heavily as online dinosaurs, the digital standards of our top retail brands today are lightyears ahead of where they were just a mere two years ago. All would acknowledge there is still a long way to go, but the journey has begun in earnest

The Issue isn’t Going Away – Transparency is Here to Stay

There is a lot to be considered, but to be honest these issues don’t even describe the core problem. The issue here isn’t the Government, it isn’t even retailer investment priorities. Somehow Australia’s business leaders are missing the implications of the most transformative change sweeping the world at the moment – the internet.

Sure, we’ve had ‘online’ for over 20 years now, but the changes it has gifted humanity didn’t occur with the flick of a switch. They’re gradual, permanent and ongoing.

When it comes to the current retail predicament, it isn’t the fact that the Australian public can find out how much your offshore competitor is able to undercut your prices on any given product, it’s the fact that they have access to any information they want, including the detailed ‘secrets’ hidden in your laundry basket. Of course there’s going to be costs involved in ‘doing the right thing’, but if you got into business to do the wrong thing, there certainly has to be more profitable ways to earn a dirty dollar.

Develop all the whizz-bang service offerings, perform all the latest user-tested optimisation strategies – hell, you can even try to flog shoes that look like they’re made out of dragon’s skin (Game of Thrones fans will be onto those faster than you can say ‘Valar Morghulis’) – but if you don’t have a reputation for being the best, then shoppers will vote with their feet and their mouse. If you can’t compete on price without potentially sacrificing your reputation, then try beating the competition by being awesome, or even beat them by being generous.

Out of the Blue

For just a moment there was clarity and silence at the ARA’s awards breakfast, as an emblem was borne aloft by a helicopter that hovered momentarily outside the window. It may not have been a sign from God, but it was symbolic of a change that certain organisations have so far refused to acknowledge – and it looked like this:

A photo of Thankyou.co's helicopter stunt.

Thankyou.co’s Coles and Woolworths campaign.

If you aren’t aware of what the brains behind Thankyou.co are trying to do, checkout the videos on their website. This is a classic case of smart marketing, and has so far garnered the brand tens of thousands of hits on YouTube and 60,000 Facebook likes. If these figures are anything to go by, this charitable start-up is outperforming many of our local retailers when it comes to increasing their visibility.

Update: And to some extent, it’s working! Thankyou.co have previously signed on 7Eleven convenience stores to sell their product, and this latest campaign has been enough to convince Coles to jump on board. What odds would you offer on Woolworths accepting as well?

It’s not the only example, either. Isaac Elnekave’s CartPop software is used so that consumers can donate to a charity at the online checkout. His current focus is the 1in5 Campaign, which hopes to put a stop to the sexual abuse of children in Australia.

Australian retailers have always given to charities, but it isn’t something they’re consistently seen to work at. To a cynical, jaded Australian population, an organisation that advocates the lowering of labour costs while also complaining about the introduction of a national disability relief scheme isn’t going to be seen as charitable, no matter how many thousands are donated to charity at the end of the year (it is all tax-deductible, right?).

Moving Forward

The neo-liberalist incarnation of our globalised, consumerist society functioned well in Australia before the advent of the internet. Back then, the big publishers controlled the flow of information and the retailers that paid the best money got direct access. Now that the game has changed and the world has become increasingly transparent, certain organisations are scrambling to cover their backsides.

Unfortunately, the smoke and mirrors routine will no longer work. In order to coax the Australian consumer back into your store, start by investing in sincerity and truly giving back to society at large. Only a cogent message that appeals to consumer’s sense of quality, price or morality will tempt the sale. The best organisations will be able to provide all three.

Pointers from a Pundit

Increase transparency – By the same token, people will have more faith in your business model if they understand it. Do you masquerade as a battling retailer when in fact you’re a franchise magnate? The façade isn’t fooling anyone, so it’s better off dropped. The more honest you can be to your customers about your business, your staff, your money and your product, the more respect you will earn.

Take risks. Change the model – There is an increasing amount of literature that indicates social networks and ‘collaborative consumerism‘ is the Ghost of Retail Future. How will your business model stand up in light of that and how could you start shaping your offering to meet the change?

Invest in education and technology – It’s not like the wheels have fallen off yet. Let’s stop being so reactive to whatever happens in the US and started leading the charge for once. There are too many cases of local retailers being hoodwinked by tech providers and agencies in order to complete what many savvy students would consider a simple task (like building a website). Which leads me to my final point…

Make the most of your people – I’ve worked in retail on various levels and in various capacities. When I hear of a retail exec complaining about retail wages I can only think about one thing: wastage. There is an entire generation of young sales staff kicking tyres on your showroom floor that are more than capable of serving customers via live chat and social media during downtime. I’ve heard the excuses about the high levels of risk, the lack of existing protocol and concerns regarding accountability, but if you’re so concerned about getting value for money from your employees, then perhaps it’s time to start empowering them to contribute more. After all, give them half a chance and those same sales assistants may be the ones designing your next website, building your future marketing campaigns or simply giving customers a real reason to return to your store.

But will it happen? For the small entrants that were conceived in this heady, high-tech environment, it is possible that some will ride out our economic head-winds. For them, there is strength in agility.

For the lumbering, traditional retailers that can’t seem to offer a consistent message, let alone recognise an opportunity until it has already passed them by – the future looks bleak indeed.

3 Comments

3 thoughts on “Editorial: Greed, Charity and the Questionable Future of Australian Retail”

  1. Dennis says:

    Well observed 🙂 and written

  2. Rita Arrigo says:

    Wow, what a great initiative thankyou.co is and would it not be great if Woolworths and Coles took it up. The nirvana of retailers given is often turned into local sponsorships which are soo important to local communities but the idea of changing the model and investing in people is a new concept that could greatly benefit Australian Retailers.

  3. Nice article Campbell. But I had to think about how I deciphered this sentence – “The neo-liberalist incarnation of our globalised, consumerist society functioned well in Australia before the advent of the internet.”

    It all comes back to my favourite hobby horse and that is CUSTOMER SERVICE. If you read their marketing the retailers are all about making every in-store minute a great customer experience. What a load of rubbish. What they are really doing is maximising the dollars that can be extracted from all the stakeholders. That includes customers buying more (no issues here), lower staff wages, lower costs to suppliers, manufacturers and producers. So basically a diminishing value chain.

    It eventually reflects back to customer satisfaction and service, and consumers are getting much smarter at determining what is REALLY good for them.

    Then add the channel cross-over such as fuel discounting and it starts to have longer term macro economic effects on the country as a whole. Any consumer who really believes that someone (eventually them) is not paying for that 8 cents off per litre is living in fairy land.

    John

Leave a Reply

Your email address will not be published. Required fields are marked *