The future of retailing

The “coming together” of bricks and mortar retailing and online retailing has “been coming” together for almost a decade. With the advent of the internet, the premature death of retailing was called. However, retail stores haven’t closed their doors, a number of large and successful pure online businesses have emerged, and retailers have spent the past three years really trying to hone their business models around online retailing to provide a great experience AND make money from it.

I spoke at two retail conferences last month, with one of the topics focusing on good online shopping services being offered by traditional retailers. Of specific note were the US department stores Nordstrom, Apple and ASDA (the very innovative UK arm of the world’s largest retailer Wal-Mart).

I was also fortunate to be able to look at two good small retailers, one a hybrid and one a pure online play, to better understand how they are harnessing this opportunity. Finally, late in the week I read an article out of the UK on how the John Lewis Partnership, a long standing icon in UK department store retailing, was tailoring the internet arm of its business to fit more comfortably with the store shopper experience.

Having looked at all of these differing models, there appears to be a few key elements that are common to the most successful of these online offerings.

Importantly, across every single one of them, irrespective of size, sector, country or currency, the sales and profit trend was identical; sales are growing and profits are growing.

I’ll try to distil the key elements as they appear to me having investigated each of them.

Firstly, there is no difference whatsoever in offering between walking into the retail store or buying online. What I mean by this, is that the look and feel of the website “fits” with the look and feel of the store.

Secondly, there is no difference in the range of items being offered, nor in the unit pricing of the items. If they have been discounted in store they are being discounted online. If they have been discontinued online, they have been discontinued in store. If you can buy a gift voucher in store you can buy a gift voucher online.

Thirdly, the only difference today between online and in store is that you pay a shipping charge for delivery of online orders. This shipping charge is in lieu of the cost of standing up from behind our PC or Mac, driving, parking and breathing as we go into a store. Several online retailers, Apple in particular, allow us the choice to pay no shipping charge, and just collect the item, pre paid, from the store.

A retail journo who recently arrived here from the UK, asked me when the “shipping charge” would disappear and we would have absolute price alignment between store and online. The answer is when shoppers expect it to be the norm.

That hasn’t happened yet. It probably hasn’t happened because we all understand the time and energy we expend going to a store, and sometimes, just sometimes we choose not to go and happily pay for a different kind of service.

This online retailing space will be a significant contributor to all retailers’ sales and profit numbers going forward. If you have a retail store and don’t have an online service you need one. If you own shares in retailers, have a look at their online offerings. If you like the experience as a shopper, and the back end is being managed well, chances are they will improve dividend payouts and share values will increase going forward.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.