ADVOCATE COLUMN 4th WEEK JUNE 2013

The recent closure of a well-established, highly thought-of inner-city retail outlet gives cause to reflect on the difficult business environment faced by independent operators in this particular sector over the least three years. Like all businesses they have had to deal with the tight economic conditions created by the GFC. However as well as the GFC they have had to face the challenge of increased compliance costs, falling foot traffic, changing consumer behaviour, new technology and proliferation of large format retail. Changes in consumer behaviour as a result of online technology and increased connectivity are often cited as one of the biggest challenges facing this sector. There is no denying that the proliferation of online marketing has increased competition and in some cases this competition has not been operating on a level playing field due to the fact that some of this competition is off-shore and can avoid compliance costs. However the reality is that e-commerce is now a normal part of the marketplace. It cannot be ignored and it can provide an opportunity for traditional retailers to boost sales and increase their share of the market if they were to adopt an integrated approach to their marketing. For the small independent operators e-commerce allows them a sense of scale that may not have previously existed. There is overseas evidence that suggests that while more and more people are researching online, they will still go to a physical location to purchase the goods they have been researching. At the very least it will provide an additional door to their business and extend their market reach beyond those people walking past their premises. It does however require an investment in a website that is easy to use –no matter the device – fast and secure. This is not intended as a criticism of traditional retailer behaviour but rather as recognition that the environment in which retailers now operate has changed. The traditional retailer should also understand what their point of difference is and play to their strengths. Product knowledge, level of service and long-term relationships will always be important. Much of what is needed for the retailers change of behaviour is relatively easy to implement and requires a low level of investment. At the end of the day, as long as the consumer purchasers your product is does not really matter how they buy it.