Looking Back at 2018

It’s that time of year…a mixture of slowing down and speeding up. Retailers are coming to the pointy end of Christmas sales, 2019 strategies are being nutted out and consumers are losing their minds in a blur of tinsel and turkey.

Before 2018 bows out at the end of the month, we take a look at the year that was.

End of an Era

In May this year, Toys R Us Australia entered administration after attempts to find a buyer for the company fell through. The collapse of the Australian branch of Toys ‘R’ Us came after the US chain filed for bankruptcy protection in March, announcing the closure of 735 American stores. The end of this once dominant player was a stark reminder that traditional retail needed to find ways to adapt or risk a similar fate.

Australian icon Roger David also announced it was entering voluntary administration in October, citing “the influx of multinational retailers and the rapid, global evolution of online shopping” as the reason for its inability to survive the current retail climate. A statement from Metalicus told a similar tale when it entered in voluntary administration in May 2018: “the classic retail story where wages and rents were far too high for sales.”

The opposite of a ‘traditional’ retailer, Shoes of Prey announced it would cease trade in August 2018. Founder Jodie Fox explained at the time: “When we started Shoes of Prey nearly ten years ago, we had a grand vision for what the future of fashion retail might look like…The early signs were great, from the local market stalls to our first global online orders, it was clear we had created something people enjoyed and appreciated…However, just like every company, behind the scenes, we faced struggles. While all the indicators and data were positive, we were not able to truly crack mass-market adoption.”

 Marketplace Madness

2017 saw the entry of Amazon into the Australian market. And while its launch didn’t quite live up to the hype and industry tension which preceded it, 2018 saw a more strategic entry of Amazon into the market.

Earlier in the year, Fulfilment by Amazon was launched (businesses that wish to ship through FBA send their products to Amazon’s fulfilment centre and Amazon will pick, pack and ship the product on behalf of the seller) and mid-year, Prime, Amazon’s paid membership program was launched. Prime Day also made its mark in Australia, yielding strong results, with the company saying in a press release that Prime Day attracted a record number of shoppers to the Australian marketplace, making it the biggest two days Amazon Australia has had since its launch in December 2017. “Prime only recently launched in Australia, yet we were thrilled to see the number of Australian members visiting amazon.com.au to make the most of the great savings available to them on Prime Day,” said Rocco Braeuniger, country manager of Amazon Australia at the time.

Not to be outdone by Amazon, eBay launched Guaranteed Delivery and eBay Plus, ensuring its paid membership program and fast delivery speeds offered both retailers and consumers an alternative to Amazon’s offering.

After only rebranding to a marketplace in 2017, Catch really hit its stride in the last 12-months. In late 2018 it went multichannel, opening a pop-up store in Chadstone, Melbourne, to take leverage Christmas trade.

In 2018 marketplaces really upped the ante, with eBay, Amazon and Catch all attempting to set the benchmark of what’s possible and capitalising on changing consumer behaviour.

Trending Now, Trending Later

Speaking of changing consumer behaviour….how online shoppers purchase changed dramatically in 2018. While Buy Now, Pay Later isn’t a new concept, in the last 12-months BNPL became mainstream. A change in shopper behaviour has meant that consumers have now come to expect an offering such as Afterpay or ZipPay (or both) as standard. BNPL is like a self-fulfilling prophecy. Consumers are becoming reliant on it as a preferred payment method which means that more retailers are offering it, but it is the very act of more retailers offering that has led to the huge upsurge in BNPL popularity in the first place. Despite its popularity, BNPL wasn’t without controversy in the last 12-months. In late 2018, The Australian Labor Party called a parliamentary inquiry into debt management firms, including BNPL entities, that weren’t included in the financial products listed in the Hayne inquiry (the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry).

The reality is that many BNPL providers operate virtually regulation-free. Unlike banks, Afterpay, ZipPay, Openpay and others in the BNPL space aren’t required to join up to the Australian Financial Complaints Authority which means that consumers have little recourse if there are issues. The Australian Securities and Investments Commission (ASIC) also released a review of the BNPL industry in late 2018, identifying a five-fold increase in the number of customers using the services over the past three years. “The exponential growth in this industry, along with the risks we have identified, means this will remain an area of ongoing focus for ASIC,” commissioner Danielle Press said after the ASIC report was handed down.

For more on BNPL, check out Power Retail’s inaugural Spotlight Series report here.

Path to Purchase

Remember when you couldn’t shop posts on Instagram? Nah, we don’t either. It seems bizarre to think that Instagram shoppable posts only hit Australia in March 2018. It was such a natural shift for the platform, a way to create a seamless experience from the second that inspiration hits. It’s not as if we needed one, but 2018 was a stark reminder that it’s no longer about online vs offline or even web vs mobile. The modern consumer is discovering brands in a myriad of ways; smartphone adoption and the popularity of sites like Instagram have meant that the path to purchase is forever altered.

The last 12-months have heralded a similar message as the years that have preceded them. Staying agile is key. It’s essential to stay on top of new trends, marketplaces and developments and strategise accordingly. Consumer expectations have shifted and retailers keep raising the bar. So what will the next year bring? What are your predictions?

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