It has actually been suggested that warfare may have been the principle evolutionary pressure that created the huge gap between the human brain and that of our closest living relatives, the anthropoid apes. Whole groups of hominids with inferior brains could not win wars and were therefore exterminated. – Jane Goodall
What does evolutionary anthropology have to do with Australian retail? Well, it provides a bit of a jumping off point, an analogy, to the state of siege many Australian retailers feel they are under.
The charge for dividend returns, low inflation rates, the challenge for public retail boards to compete for shareholder investor interest, the low point on the curve, the rise of private equity investors, mixed consumer confidence, retail sales recently driven by food and hospitality growth, offline retail sales (shops) still comparatively sluggish, online sales still failing to make significant inroads, whilst time marches on and capital reinvestment remains mission critical for many retailers both in business information systems, the emergence of digital, logistics, in shop and customer experience.
Randomly disconnected topics or interconnected in the patterns of retailing today? These are the many fronts and battles Australian retailers are fighting.
How does the board of today, faced with cyclically low inflation rates and competition increasing from a myriad of sources, respond to the challenges before it?
How do boards, advisers and CEOs make the right decisions and, after all, what is the ultimate judgement of these decisions?
Over the last few years we have seen some businesses stripped of ‘excess fat’ resulting in remarkable profit and earnings per share increases keeping shareholders happy, yet fundamentally creating the structural fault lines in their business. These fault lines have opened up these companies internally and externally to dissatisfied customers and declining margins. What price the board that can say our dividend will be reduced this year and possibly for the next two to three years whilst we recapitalise our own business?
Or conversely, the undercapitalised business built in the shadow of the great isolated island that was, and is no longer the case, the Australian retail landscape; sitting somewhat akin to the faded dress amongst all the new party frocks surrounding. Showing all and sundry that defeat is imminent, the white flag of historic isolation, historically good returns with little or no innovation declining sharply amongst the new generation of retailers entering their space.
Should boards, advisers and CEOs really have been able to read the winds of change and have commenced the recapitalisation and innovative practices necessary to compete? Truth is that some did and some haven’t. Who could have seen it coming? Boards, advisers and CEOs probably; certainly for some, their customers saw it coming at a much faster rate.
One conclusion is that the rate of change will only get greater; capital investment into ‘omni-channel’ retail businesses can only increase.
Technology, innovation, digital insights, will migrate from buzz terms to organisation roles. All the rules are being thrown out to accommodate this new order of retail with very disparate starting positions for many Australian retailers.
Happy fit retailing.
Brian Walker is managing director of Australasia’s leading retail consultancy Retail Doctor Group.
Brian Walker is founder and chief executive of retail consulting and advisory company, Retail Doctor Group and the Australian elected member of the global retail expert’s alliance Ebeltoft Group.
