‘Canary Consumers’ on the streets of LA

Standing in a cavernous Banana Republic store on the Third Street Promenade shopping district in Santa Monica this January, I realised how things are changing. 

I overheard two sales associates talking behind the counter, marvelling at the proliferation and purchasing appetite of the Australian shopper. “They’re everywhere,” said one associate. “I know, and they’re buying up big,” returned the other. “Apparently, they get so much better value here.”

The Sydney Morning Herald had reported earlier in the month that on Rodeo Drive in LA “Australian accents were almost as common as American ones”, and I certainly witnessed that first hand.

Aussies were out in force, wielding their newly powerful dollar with glee.

Australians were delighting not just in the prices they were finding (heightened by the after-effects of the GFC and a still-crippled Californian economy), but also in the range and quality of merchandise available, and the service levels on offer. And having tasted shopper’s paradise, they won’t easily or happily return to sub-standard and/or overpriced shopping here at home.

Of course the result of tens of thousands of Australians stuffing their suitcases with bargains in LA is not in itself going to have an impact on retail down under. These are a relatively elite group and they represent an infinitesimal share of the available local shopping audience. But I do think the purchase behaviour is indicative of the wave that is coming. There is a consumer shift going on, that was revealed in the savage reaction to Gerry Harvey & co’s disastrous attempt to encourage a tax on internet purchases under $1000. The Australian shopper is in charge, and to paraphrase that old speech from the movie Network, “they’re mad as hell and they’re not going to take it anymore”.

Back home from holidays, I listened to a hairdresser talking about how she regularly shopped online for fashion during the sales at Saks Fifth Avenue, a business executive bragging about how he saved 50 per cent by snapping up a Bose audio-dock online from the US, and a friend commenting on how she buys all her books out of the UK for a sliver of the price she pays here.

Of course a big part of the attraction of lashing out in LA or purchasing over the net from overseas is the strength of our currency. Forecasts I have seen, however, say that the dollar will stay high for the medium term, and lasting habits will be formed during that time.

The effect is that Australian retail must very rapidly become globally competitive. Pricing must be comparable with international markets. In some cases that will mean manufacturers and retailers having to accept lower margins. In others it will require legislative changes, such as finally allowing parallel importation in the book category. Product ranges must be widened. Service has to improve. And online retail must be totally transformed and catch up with the retail world at large.

The Aussie shoppers on the streets of LA are the canaries in the coal mine of a retail revolution. (And they’re certainly tweeting their friends about what’s on offer!) Retailers must heed their call.

Jon Bird is CEO of specialist retail marketing agency IdeaWorks (www.ideaworks.com.au). Email jon.bird@ideaworks.com.au. For more retail insights and inspiration, visit www.newretailblog.com.

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