ry move. (World Future Society – Trend #1) Buying and owning things will go out of style. (World Future Society – Trend #5) The social pendulum (via Roy H Williams and Michael Drew) is about the swing from a ‘me’ culture to a ‘we’ culture. It is not a matter playing a bit of catch up by going online. In order to understand how the consumer now shops, take the time to carefully look at this image from the Boston Consulting Group. In a world that has already changed, and one in which change will accelerate, what is a retailer to do? How do you respond to this new path to purchase? (Did you note that only three of the 10 touch points are instore?) THINGS NOT TO DO #1 Do not go online and attempt to give the customer as much choice as possible. (This is silly in the real bricks and mortar world too.) That particular horse has bolted, unless you have extremely deep pockets or a very large ego. Already the market share of total online transaction value is skewed in favour of one or two big players. Taobao (China’s) 79 per cent and Rakuten (Japan) 30 per cent and Amazon (USA) 17 per cent. (via BCG) Amazon lists more than 2800 SKUs of facial moisturizer and Tabao stocks 800 million products. You can’t compete with that, so don’t. #2 Don’t think that it does not apply to you. Boomers are still the biggest spenders and will be for the next 10 years or so before they will be overtaken by Millennials (who shop differently), but with every passing year the impact becomes greater. If you own single shop, maybe in a small centre or a strip and you feel your business thrives on the local custom and won’t be affected, think again. Trend #1 above will slowly change every single business, right down to the kebab shop that relies on the 3am trade from the night clubs will be affected. #3 I have written before that multi-channel is not for everyone. Look before you leap. Multi-channel retail is far removed from traditional retail. Madonna is an artist. Monet is an artist. But they are not quite the same are they? THINGS TO DO According to the NAB Online Retail Sales Index (all business sizes), the value of online retail sales in Australia for the year to July 2012 was $11.7 billion, which is 5.3 per cent of traditional retail sales. This number is growing, and unless you have strategy, your share of the game will decrease. How far can your sales decline before you reach the tipping point of going out of business? A bit of catch up won’t save you, but it is a necessary start. The Sensis e-Business report (2012) found the proportion of SMEs with a website was 62 per cent, but only 15 per cent of SMEs reported having an actual digital business strategy. #1: HAVE A PLAN BCG identifies the following four key challenges that must be planned for: The Informed, Empowered Consumer. How will you continue to attract business and build loyalty? Complex, Multichannel Shopping and Marketing. With the explosion of touch points and data, in what new ways will you reach shoppers most effectively and deliver the best experience? Shifting Real-Estate Demands. With even grocery shopping going online, what role will your stores play in the future, what will they look like, and what will drive traffic their way? An Evolving Supply Chain. What technologies and configurations will give you the flexibility and efficiency you’ll need for tomorrow’s demands? To help you plan you can of course ask someone to assist. There is government support too. The Australian government has more than a dozen different digital support initiatives that can be explored. If you are a small business, then the site they created at Building Success: Spotlight on Small Business is a good entry point. I will only briefly refer to the two remaining steps since it won’t matter much until you have a plan. #2: PROCESS Put in place the processes that will deliver on your plan. #3: PEOPLE BCG also reports that two thirds of transformation obstacles are people issues: poor communication, politics, lack of buy in, inadequate skills etc., all play a role in putting the best laid plans to waste. Of course it shouldn’t be necessary to say this because it is obvious, but I will say it nonetheless: Nothing changes unless something changes. Have fun, Dennis If e-commerce is something you want to participate in I am doing something special and fans of Inside Retail are invited.