Stuart,

Always enjoy a debate on the "to be" Vs "what was", but when you forget to mention the most critical ingredient to all retail formulas (the customer) then one can only question your argument.

Long live our key stakeholders.

Happy selling.

Andy Jensen
www.flypaperconsulting.com

As an online retailer and digital agency.

Half of the problem is poor advice from the industry itself.

Harvey Norman is a classical example of someone that SHOULD be able to crush it online. But they are implementing it in the wrong way.

It's not about bricks and mortar vs online.

Many of our clients are the biggest offline and now fastly approaching the largest online also.

WITH DIFFERENT PRICING ONLINE & IN-STORE

Can be done.

Marc Lindsay
http://www.mercurianmedia.com.au

Most B&M retailers believe there are only "pull" factors for customers to shop online - I believe that there are only "push" factors and the most important of these push factors is choice (or lack of). Retail buying in this country is at it's lowest ebb and most buyers make the mistake of only buying what their suppliers are selling ie: the best sellers - unfortunately, they are all selling the same thing. If you don't believe me go into one of the department stores and have a look at all the men's checked shirts or try to find something as basic as a pair of plain black, round toed, Oxford business shoes. The buyers in their laziness, arrogance or ignorance have taken away all choice and driven people online.

Multi-channel is not only a good idea but it is the only one. The problem with Australian retailers is that they have not put enough emphasis on the value proposition to capture the customer in different stages of buying. Stuart your brand extension or replacement strategy is one that will deliver marginal value today but is detrimental in the long run.

I believe the focus here needs to be on empowering the customer... I believe it is the unique proposition in each channel to capture a customer during that moment of the sales funnel. Most people shop online and in store. Pre-shop is mostly online and often compare when at a physical store. Sometimes those roles are reversed with a great item found in a store that translates to a search online for a bit cheaper or in a different variation (like colour).

My advice to bricks-and-mortar: use your advantages to your advantage... You have customer facing staff so provide excellent customer service. You have footprint so use it primarily to sell not to show racks of inventory that doesn't interest me. Focus on getting customers in the door through a unique experience, under promise and then over deliver.

To share a little story as proof one day I wanted to buy a shirt from Farage and it was out of stock. The woman in the store asked me if I was in their system and I said yes. She put a note about my enquiry in the account details. A week later I got a call saying they now had it in stock waiting reserved with my name on it and no pressure to buy. I went back in with a friend and ended up purchasing another item instead along with a friend bought something as well. Several days later I received a hand written thank you card in the mail from the very woman who assisted me both times and called me. Yes, you read that correctly a hand written thank you card in the mail with unique details about our interaction. Farage has proven to me that they understand the value (and cost) of customer service, the value (and premium) of the retail experience and how to engage me in true multi-channel: email newsletter about an item, website pre-shop, in store service, phone followup and physical mail.

ALL retailers in Australia can learn a thing or two from my Farage experience and how multi-channel sales and marketing will deliver long term value through customer loyalty.

Stuart you seem to have generated a lot of discussion, an even touched a few raw nerves with this topic! Probably testament to the concerns currently harboured in the retail industry.
I would just like to draw attention to my observation that almost all commentary on this topic lumps all retail sectors together and ignores the fact that different products have different susceptibilities to online dominance.
Food, fashion, pharmacy, electronics, beauty, hardware, banking etc all have products with different qualities and consumer needs and require tailored online integration strategies.

After all, who's going to go online to buy a donut, a packet of screws, a mattress, carpet, or even get a haircut?

Mark Muller
www.markretail.com.au

Absolute worst advice for retailers ever Stuart - totally flies in the face of the successful models being adopted by multichannel retailers in the US and Europe who have turned their online revenues into significant contributors to the business.

One of the reasons overseas retailers have been less impacted is precisely because they had the foresight to come to grips with multi-channel retailing years ago and continue to refine their models. During this time, sadly, Australian retail sat on its hands.

Whether it's too late for some Australian retailers to even bother starting is a debatable point. I hope not.

Stuart Bennie provides an interesting perspective, but eventually one that left me unconvinced. His position of basing multi-channel retail on price is flawed.

Successful clicks-and-mortar businesses are tapping into the service aspect, not price-differentiation.

Thanks for stimulating the discussion, I've truncated my comment as my original post got too long (it's now at http://grokit.drupalgardens.com/content/multichannel-wont-win-online-war-if-you-do-it-wrong).

The only message I'm reading here is, give up on bricks and mortar retail and open a completely different online business instead.

To paraphrase:
- create a new online store brand, a separate entity
- stock different products on that site
- market your online store
- sell at lower prices online
- result: your bricks and mortar store will shrink

It's not terribly insightful advice for retailers to tell them you may as well close.

[These are my personal opinions only.]

Stuart is recommending a multi-brand strategy across multiple channels.

He recognises that the cost to serve for bricks and mortar retailers can be too high when competing with online channels - Is this not all the more reason to develop a multi-channel strategy that breaks down the selling and fulfilment cycles to re-align people, processes, and technology to reduce costs and increase sales?

If productivity within Australian retail businesses is declining while USA retailers are increasing productivity like the Productivity Commission draft report suggests, we really do need to re-examine what we retailers can do within our own organisation to do it better.

The fact of the matter is, that Australia has one of the highest occupancy costs in the world! If your rental component can be as high as 25%, how can you compete with an etailer that is paying maybe 3%. Although we all need to become smarter on how to "embrace" this new era, it is vital that we re-price all our overheads to suit this new environment. Land lords need to realise that the good old days of holding retailers to ransom has come to an end. So its back to the future my friends. If You're occupancy costs are higher than 10-15% you should be knocking on your land lords doors asking for an immediate rent review. And land lords should be aware that when reviews come to "haunt" them they should be prepared for mass exoduses, and if they have the gift of wisdom, will anticipate and participate in this new process. Sure, your "vals" may come down temporarily, but hei ,better that than to have an empty tenancy for an extended time. This is the time to rethink how land lords and tenants can collaborate to benefit each other. People will still pay a little more if they know that they are getting "SERVICE" . And that's where the modern retailer will always win over the etailer. Be smart look hard at your business, make sure your offering good value and get your cost structure right and make sure your selling the experience as much as the product.

Hi Stuart,

A well considered and topical piece.

Enjoyable to read.

Kind regards

Brian

Brian Walker
Retail Doctor Group
www.retaildoctor.com.au

Australian Retailers will NEVER be able to compete with online pricing from Overseas....end of story.(Wages/Rents/Workcare/Super/PAYG/etc)We just have to find workarounds for our B&Ms. The main point missing here is that Australia is the ONLY country (exception: Hong Kong) that has such a high ($1000) tax free threshold. Evidently our Customs are unable to collect Tax the way other country's Customs can. Maybe more education is needed for our Customs workforce? Perhaps a redefinition of "Workforce"? or....perhaps sustitute the second O for an A?;-) Mind you, the Govt. will not change anything they perceive will cost them votes and an ongoing pension!! ;-) Good luck , fellow B&M retailers.....Centrelink awaits us with open arms!! ;-)

For retailers that sell products that are available from other merchants online, this is arguably the biggest challenge imaginable at the moment.

While I agree with Stuart that it would be easier to not go online with the same brand and a different pricing model, the reality is that it is also harder and more costly to go with a new brand. An established brand already has a customer base and may have a sizeable email database that it can use to leverage a rapid move to online. Meanwhile a pure play (i.e. a new online-only brand) needs to start from scratch and build credibility with a new customer base. This will cost a lot more marketing dollars to establish and will take time to gain momentum.

Having worked for a retailer that struggled with their website being cheaper than their physical stores, I can easily agree that it would have been a lot easier for management for us to have gone down the pure-play path. But they wanted to get online quickly and gain significant market share. The brand made this possible. The pure-play option would have taken a lot more time and money.

Ultimately, if the business is serious about going online, they need to evaluate which option is better for them. What is needed is a thorough analysis of the retailer’s particular situation and a clear strategy on how to approach online. If the pure-play option is best, the business will need to give it suitable financial support to make a big enough impact online to make up for not having taken the brand online.

Alternatively, if they do decide to go down the path of using the brand online and having a different service and pricing model they need to evaluate how that can work with the physical business and how to make it work over the long term. This may even include the rationalisation of the physical store network as the profit shifts to online.

There is no doubt service is a big factor as to why shoppers have migrated online where they can. There are a number of other contributing factors such as price, convenience, variety, choice etc. Recent articles in major newspapers referred to the department stores opening extra hours, providing extra services (medical etc) to win back the shopper.
If they and many others can't service their customers now then how will that change with longer hours and associated costs.
I would also agree with Stuart Bennie's comments that shopping centres are under threat especially in these tight times when retail revenues are down but their is no relief on rents, fitouts etc.
Not only does this drive the retailer to look at the online strategies as mentioned in the article but it also makes the suppliers consider how they can capitalise on the online/direct response shift when the margins may be more attractive. It is an interesting journey we are on.