It’s only the first week of February and already dozens of popular stores have announced they are shutting up shop. Harris Scarfe, EB Games, Bardot, Jeanswest, Bose and Kaufland have announced they will be closing stores in the next couple of months.
Retailers are struggling to differentiate themselves from other brands, relying on discounting to get customers into their stores and more Australians are choosing to buy online.
But the rise of online is not as straightforward as it seems. Two years after launching, Amazon has not made the impact on Australian as predicted. Consumers have been frustrated by the limited range of products and long wait times to get products shipped to them. Indeed, Amazon recently launched Amazon Flex, an ‘Uber-esque’ delivery service, in Australia to speed up delivery times.
So, let’s take a look at why the retail store in Australia is here to stay and what advantages retailers with stores enjoy over their purely online competitors.
Online shopping is a small piece of the retail pie
More Australians are choosing to shop online, but it still makes up a small portion of overall spending in Australia. In December 2019, 50.1 million parcels were delivered by Australia Post, a 23 per cent increase on the same month’s figure in 2018, but this still only makes up 10-11 per cent of what’s being bought in Australia.
Australian retailers do have to have a compelling online offering, but the reality is that most retail purchases are still bought in-store.
No shipping costs
Most pureplay online retailers charge for shipping. Brands that leverage their store network as distribution centres can offer services like click and collect at no charge to the customer.
Click and collect
Click and collect, also known as ‘buy online pick-up in-store (BOPIS) is the Australian retailer’s secret weapon. While click and collect penetration still remains low, 62 per cent of consumers regularly spend more when they choose to click and collect options.
Customers love it because it’s convenient. Click and collect allows them to pick up their goods in their own time and not have to worry about being home to wait for an item. It also gives them assurance that the item will be delivered. While most of the time deliveries are reliable and effective, there are cases where this doesn’t happen.
Click and collect, whether it be in the form of a parcel locker or in-store, provides the assurance to the customer that the item is securely delivered and can only be collected by them.
Furthermore, if the customer picks up the item in-store, they get the opportunity to inspect the goods before leaving, ask staff any questions they may have, or return the item if it’s not what they expected.
Free and easy returns
When shipping is involved, returns incur additional costs, usually covered by the consumer. Not true for retailers who can offer free and easy returns in their stores. Crucial to a positive customer experience is the ability to process those returns in-store and even process an exchange if that’s what is preferred.
Customers want their items now
Although free delivery may sound like a convenience, anyone who has received a “Sorry we missed you” slip from a courier service or Australia Post knows otherwise.
Whilst we all love a bargain, shopping is also about the experience and convenience. Retail stores mean customers don’t have to wait to get their item. If they see something they like, they can purchase and enjoy it straight away. They can touch and feel the merchandise in-store and interact with an actual person when considering a purchase.
So, yes, pure online players will continue to take market share and, to some extent, they are a threat to bricks-and-mortar retailers, but when it comes to convenience, Australian retailers who have one ‘live’ inventory, where they can see exactly what stock they have and use their stores as mini-distribution centres to get their products to customers fast, will continue to thrive.
Graham Jackson is CEO of Fluent Commerce.
