Lean into local: How can local retailers win in 2024?

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By Published On: April 16, 20240 Comments

Andrew Fraser, Managing Director, APAC at Lightspeed talks to how local retailers can win over consumers by building community and meaningful relationships.

Rarely, if ever, have local retailers faced steeper competition than they do today. Global brands like Amazon, Temu and Shein are investing eye-watering amounts in Australia, winning market share as they do. According to accounts filed with Australia’s corporate regulator Amazon generated more than AUD$6 billion in sales in 2023, while earlier this month it announced it would be investing almost $500 million in more state-of-the-art fulfilment centres in Sydney. Temu, meanwhile, is the most downloaded app in Australia in the last 12 months, while Shein is recording $1 billion in annual sales according to Roy Morgan estimates.

Whether it’s their sharp price points, free and reliable delivery promises or unlimited product choice, these global retail heavyweights are winning the loyalty of millions of Aussie shoppers. For tens of thousands of local retailers, it’s a daunting challenge. However, there are plenty of reasons to be optimistic about growth in 2024. That’s because, for all their financial might, Amazon, Temu and Shein have one major disadvantage: they’re not local.

According to research from Lightspeed, the concept of community, connection and tactile retail is still a huge pull for shoppers across Australia. Community and connection are foundations on which local retail is built. Leaning into that is essential not just in 2024, but long-term. So how are Australian shoppers prioritising the brands they engage with? And how can the local retail community use that to its advantage?

Loving local

Australians have long been renowned for their strong support of local businesses. It doesn’t take long to walk up an Australian highstreet – teeming with local businesses rather than outlets of global brands – to see that. Despite the growth of global challengers, that ‘support local’ sentiment is as influential as ever – whether in-store or online. 

According to Lightspeed’s research, which sought to understand the factors that drive shoppers to engage with a retailer, 34% of shoppers said access to deals for locals, 25% said unique and locally-made products, a further 25% said personalised customer service, while 24% said they wanted to have shared values with a local business. Naturally,  local retailers are unrivalled in their ability to capitalise on these desires and demands. 

Carving out a competitive advantage 

For local Australian retailers, being able to compete with global retail heavyweights based on price, product range or resources is little more than a dream. There are many foundations on which to grow, however. The creation of community and meaningful relationships is an incredibly effective one. 

One in three shoppers said they’re drawn in by deals for locals. While it’s clear how bricks-and-mortar retailers can roll-out offers for locals, there are plenty of ways for online retailers to do so, too. For example, online retailers can include a widget on their website that unlocks a deal or discount for customers with a local postcode. The offer of free or discounted delivery for local shoppers could also be a strong incentive, particularly as this is one of the foundations on which Amazon is winning over customers. To double down on their strategy, retailers who use their online channels to steer shoppers in-store see particularly strong results through a unified experience, too. 

Then there’s the appeal of unique and locally-made products. Today, many shoppers are being more conscious and considered when it comes to the products they purchase. They want to make meaningful purchases, avoiding fast fashion or products produced in enormous quantities. Therefore, retailers who effectively communicate about what makes their products unique, or the materials that were used to produce it, stand to gain. 

If a product is limited edition or created with local materials and labour, retailers should be proud to promote that. By explaining the love, care and materials that are involved in the production of their clothing, their luxury soaps, or whatever else they make, retailers are also better placed to explain why their product might come with a slightly higher price tag than mass produced products. 

Retail always has, and always will be, built on meaningful connections and relationships between retailers and their customers. We want more than a transaction, we want a connection. A quarter of Australian shoppers prioritise businesses with shared values. Whether it’s talking about the sustainability of their products, promoting community initiatives they’re involved with or talking more about the business’ missions and values, consumers are increasingly engaging with brands they’re aligned with on a deeper level. Ultimately, today, the more involved they feel in a business, the stronger their affinity and loyalty to it becomes. We’re increasingly seeing retailers tapping into that.  

Opportunities are still in abundance in 2024. We know that retailers using Lightspeed are feeling optimistic and pursuing growth in the months and years ahead; not by taking on bigger competitors at their own game, but by focusing on relationships over transactions, meaningful consumerism over fast fashion and being local over being everywhere.

Words by: Andrew Fraser, Managing Director, APAC at Lightspeed.

About the Author: Power Retail

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