There’s a sentiment across most Australian retailers at the moment that life in retail will never be the same. What they mean is, they will never make as much money ever again. Whilst they’re all blaming online retailers for their woes, there’s a big factor involved here that no one is talking about. It has nothing to do with people moving their dollars to overseas retailers. It’s called the iphone effect. I keep banging on about this when I talk to retailers my key point is “have you ever seen an empty Apple store on a Saturday?” – Nope. Why? Because we’re spending our money differently.
There was once a time not long ago where a dull Saturday afternoon meant the only way to be entertained was to head out to your local Westfield for a browse, hit the movies and perhaps pick up a bite to eat as well. Times have very quickly changed. Boredom and downtime no longer exists. There’s always something to do at home and because we pay big dollars for technology, we use and abuse it to get our dollars worth. Rather than going out to the shops and putting the kids on a $2 Wiggles ride, we download Angry Birds to our iphones and hand it to the kids. Rather than going to the movies, we download a movie from itunes and pop it on the ipad to watch over and over. Rather than calling our friends and arranging a catch up coffee, we post to facebook and get all our friends involved in the same conversation because time has got away from us. Rather than going to one store for retail therapy, we can browse online and see all stores, price compare, buy nothing and feel like we’ve spent a fortune. The same goes with holidays, I know that I can spend hours online planning a very fancy holiday to Bora Bora. By the time I’ve done all my research online, I’m buggered from my online holiday and am done for the next 6 months satisfied that I know where I would go if I ever got off the computer and could be bothered to pack the bags and book it.
Life has changed and we’re not spending any more money, we’re spending it in different ways. Where we used to buy a new top, skirt or dress each week or something for the house, we now spend that money on internet access, mobile phones and increased electricity costs. We are also spending more dollars online, it may not be everything but it’s certainly more than in the past. When was the last time you booked a flight through a travel agent in a shop? It doesn’t happen anymore.
So how and why do retailers need us? Well, firstly I’m a parent of 4 kids. Like all parents, it’s highly likely I’m going to spend a bucketload of money on my kids in the coming month, parents are the biggest spenders at Christmas time and the toy category is the most lucrative for all wholesalers and retailers. The decision on where I buy is up to me. Buy online overseas or buy local from what they call a bricks and mortar stores. Last week I seriously contemplated buying all Christmas pressies for the kids from online sites overseas and then I thought about it. If I don’t support our retailers in Australia like Kmart, Toys R Us, Target, Big W, David Jones and Myer, it’s likely that at some point their profits will go further down the toilet. They won’t be able to afford the astronomical rents that are charged to them by the Westfield’s of the world and the loss of profits will mean losing jobs that we want our kids to have access to as teens and many retailers may downsize out of your local area.
An even worse outcome would be closing the doors on iconic brands like Big W, Kmart and Target. Yes, the situation is that serious. What will it mean if we lose the big 5? Well let’s just say that without the rent and foot traffic in Westfield, prices will go up on EVERYTHING. That means the milkshake you buy your kids at Wendy’s is no longer $3.30 but $6.60 and we’ll definitely be lacking for choice when we need to run into the local store for a last minute birthday present. Additionally, many of these retailers are owned by Coles or Woolworths, they need to be profitable to exist, I’m not all for their strategy when it comes to competitive behaviour but I do understand that they need to make money. When one of their retail giants isn’t making as much money, guess where we feel it? Yup, in our grocery bills – prices on groceries will go up as well. It’s expensive enough now, we don’t need it to go up any further.
I know for a fact that Kmart & Big W are very price competitive, in fact they aim to guarantee to have the best prices and my own research has proven this. The better Aussies retailers are also recognising that a big percentage of us like to shop online so even though they’ve been a tad slow off the mark, you can find a fair few choices on their online stores Click here for Target Online and here for Big W online. If you want to see what’s available at almost every Australian retailer this Christmas, click here for online catalogue site Lassoo.
American retailers have come up with a fabulous idea, it’s been going for a while and it’s called black Friday, it’s just after Thanksgiving and before Christmas, just when everyone is starting to think about spending serious dollars. Everything is on sale. It’s like our Boxing Day sales but instead of getting people rushing into stores after they’ve spent all their money (that has always astounded me) US retailers put everything on sale BEFORE Christmas and end up getting people to buy more because they’re getting value for money. If Australian retailers were smart they would line up with Black Friday in the USA because this week I received at least 10 emails from US stores telling me they would ship to Australia, TEMPTING, very tempting. Clearly Black Friday works because even Apple recorded their HIGHEST SALES ever and that’s a brand that really doesn’t need to put anything on sale.
We need to ensure that we keep supporting Australian retailers so ensure their survival and to keep them price competitive. If we don’t, there’s no doubt we too will be wondering ‘what happened’ and it’s a lot closer than we think.