Captain’s log, star date 160509. I’m halfway though the Westfield Study Tour on a plane between London and Berlin. The past 10 days can only be described as overload and I’m sifting through the notes. A few things are becoming apparent.
We all know that like Planet Earth, Planet Retail is going through a fast and irreversible change process. Not all of these changes are a result of the GFC. Sure, the classic American retailers like Williams Sonoma have rationalized their expenses, battened down the hatches and are calmly acknowledging reduced sales for the near future. In the USA and the UK the general feeling is of cautious optimism- light at the end of the tunnel. It’s just a question of sitting tight and not panicking. But the real challenges lie elsewhere.
For example, control has now shifted to the hands of the customers. Using social networking, they are broadcasting their own messages about our brands in voices that are more credible to their peers than ours. Not only are they talking behind our backs, they are using price comparison sites and online discount codes to white ant our margins. Deflation in the price of goods means that it’s not enough just to sell stuff any more- a layer of service or added value is expected. For example you can buy a pair of football boots in many high street stores in Great Britain. But in the Nike store on Oxford Circus you can have them made to your specifications, and in your colours. In fact you can fit out your club in team colours, sponsors included. One entire floor is taken up with this. One more floor is by appointment only. Yet another floor offers a comprehensive stride analysis and fitting service to runners. Personalisation is their point of difference.
Another example: in transit a few days ago I lost a key from my Mac- I called in at an Apple Store and they replaced it in five minutes at no charge. If this was a PC you’d be reading this column with no Z’s. The thing is, as an Apple customer I expected no less. It’s just how they do things, and they never disappoint.
Innovation is not just nice to think about, it’s now a mandatory. I just looked at a store called Never Too Busy to be Beautiful. I usually yawn at the thought of another cosmetics store, and online sales are making a big hole in the category, but this store has taken the notion of single branded cosmetics and turned it into a cocktail bar with a Bollywood overlay- quite a heady mix and a highly engaging shopping experience. The point being that to sidestep the competition you need to be highly innovative.
The other message that we’re getting loud and clear is that it’s a global market. Our new competition will come from overseas. It’s already happening in the UK with the arrival of the Spanish (Zara, Bershka, Desigual) and the Swedes (H&M.) Britain, after a creative revolution to keep up with these brands, is now sticking it to the US with the likes of Top Shop. No doubt this will spark a similar flurry of creativity there. Wait till Australia gets the combined invasion from Europe and the USA - it’s not far away. Better start thinking now.
All forward thinking brands are seeing the GFC as an opportunity. The weaker players will be weeded out, leaving the stronger with more room to play. Even crusty old HMV, the last man standing in the music retail sector, is taking notice, using space in stores more productively by use of concessions, and starting a loyalty club offering not store credits but “stuff money can’t buy.”
The only future of retail lies in innovation. And that’s because it’s what our customers are expecting of us.
Full speed ahead, Scotty.
Gary McCartney is Managing Director of design company brands in space, (
www.brandsinspace.com) He can be contacted on gary.mccartney@brandsinspace.com.au