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Posted by: Sportslink on 08/11/2017

Compete by creating a ‘retail destination’

Compete by creating a ‘retail destination’

For many consumers, shopping is more than just a utilitarian process. Rather than going to buy a specific product, consumers relish the activity of shopping, so says the Australia Consumer, Retail, and Services Research Unit.

The unit forms part of the Monash University business school and provides research and trend tracking services for a range of customers.

Here Research and Corporate Partnership Assistant Clarice Huston (pictured) tells of the importance of in-store experiences for consumers:

Amazon is coming. Since the announcement in April that Amazon will begin operating in Australia, newspapers around the country have been speaking in doomsday rhetoric, claiming that Australian retail as we know it will perish.

Research by Nielsen indicates that 58 percent of Australian consumers intend to purchase from Amazon, with intention driven by price, range, and accessibility of the online marketplace.

Competing on price and range seems unlikely due to Amazon’s enormous distribution network, and Amazon will likely dwarf any smaller websites, if the 110 percent increase in monthly searches is anything to go by.

However, Australians spend a huge amount of money in physical stores, with online purchases representing only 7.4 percent of spending in May 2017 when compared to bricks and mortar sales.

Will this figure change once Amazon has entered the Australian market? If so, how will Australian retailers be able to compete with the enormous online marketplace?

The Experience of Shopping: For many consumers, shopping is more than just a utilitarian process.

Rather than going to buy a specific product, consumers relish the activity of shopping – browsing, touching and feeling, interacting with staff, and completely engaging in the experience of a store or shopping centre.

The physical store can be more than just a place to buy something – it can be a place to enjoy, relax, entertain, surprise, or excite.

Create a positive experience and customers will be more likely to return in the future.

Some retailers around the world have taken customer experience to a new level and are opting to place dollar conversions secondary to creating a unique in-store experience for customers.

For example, luxury car brand Cadillac opened an art gallery and café under its New York headquarters where cars cannot be purchased – legally, consumers have to buy from a dealer.

By creating this space, Cadillac deepens brand relationships with consumers through model vehicles, artwork, and food.

Retailers in Australia can still balance the importance of dollar conversions with the need to create an immersive experience through manipulating the senses and ensuring the highest degree of customer service available.

An Australian brand not traditionally associated with in-store experience is Bunnings Warehouse. The stores are generally concrete, dull grey, and Bunnings green. However, Bunnings is a master of product displays and have long had an immersive customer experience.

Customers can feel doorknobs, see the brightness of lighting, explore kitchen displays, and smell the sizzle of sausages wafting from the store-front.

It is the total experience of a Bunnings’ store that has contributed to the brand’s lasting success.

Another example of immersive displays is any IKEA store, where the displays allow customers to see what the product would look like in a home environment.

Rather than simply going to purchase a product, customers often venture to IKEA for home and decoration ideas, becoming inspired by the efficient use of space and aesthetically appealing room designs found in the showroom.

Wandering through the maze-like showroom is an experience in itself, not to mention the café and product hall.

Some overseas retailers have introduced technology to engage customers in the browsing experience.

Polo Ralph Lauren introduced smart fitting mirrors into its Manhattan flagship fitting rooms that allow customers to view products through 3D models.

Customers can match products to a range of suggested complementary products or request a sales associate for assistance when needed. Furthermore, customers can alter the lighting and language to ensure a pleasant fitting experience.

So back to the question: How will Australian retailers be able to compete with the enormous online marketplace? 

Amazon has price covered, if its US operations are anything to go by.

Australian retailers need to experiment with new technologies and retail ideas to capture the attention and imagination of consumers.

Look to overseas examples where retailers are creating innovative store designs and environments.

Invest in staff to ensure that they can provide consumers with the best possible customer service.

Create an experience, where your store becomes more than a transactional space – it becomes a retail destination.

• Clarice Huston is a Research and Corporate Partnership Assistant at the Australia Consumer, Retail, and Services Research Unit (ACRS). This article was first published in ACRS’ Retail Insights newletter for July.

The ACRS forms part of Monash Business School and provides a range of research and trend tracking services for corporate, non-profit, government organisations, and industry associations. For more details, contact ACRS at acrs@monash.edu.