The mindset of our most successful retailers
If there is one trait that today’s thriving retail businesses share, it’s resilience. These retailers thrive due to their agility and responsiveness, turning risks into opportunities by adapting their business strategies to meet customer needs and generate growth.
That is the finding that goes to the heart of the latest Commonwealth Bank Retail Insights Report. While many retail leaders acknowledge and accept a range of risks, those that lead resilient businesses tend to focus on factors within their control. They are able to identify and embrace risk factors relating to data and insights, brand, and strategy and translate them into a competitive advantage.
Adopting the appropriate leadership approach is also crucial to building resilience. Leaders of successful retail businesses cultivate a strong, passionate culture, foster a growth mindset in their team and empower staff through a stronger sense of connection.
These traits then help enable the teams to be customer-centric and forward-looking, and to develop strategies that ensure their ongoing differentiation. Encouragingly, the majority of retailers – 63 per cent – report moderate to high levels of resilience to the challenges that characterise their current operating environment.
Reflecting on that mindset, overall confidence among retailers has significantly improved over the past year. Some 86 per cent of retailers surveyed now expect business conditions to improve or remain steady over the next 12 months and almost half – 49 per cent – anticipate that revenue growth will exceed five per cent during that time. That is up by five percentage points from the previous year.
Hallmarks of resilient retailers
The report shows that resilience is very much underpinned by strong leadership, a collaborative mindset and an attitude of seeking out and taking advantage of new opportunities.
Leaders of resilient retailers understand that, to drive growth, they need to remain relevant to their customers and as a result they focus on customer-centricity and differentiation. They also invest more in data and technology, and are guided by evidence in order to protect their capital and profits.
Robust fundamentals but not without risks
In spite of the well reported challenges facing the industry, the fundamentals of the Australian retail market remain strong. Many retailers reported rising online sales and more in-store visitors over the past year. Online continues to take a greater share of sales, and the proportion of online sales made on mobile devices grew an impressive 56 per cent this year, to 40 per cent of total online sales.
Of course, challenges and risks exist – the three most commonly cited are competition, the economy and missing market trends. But many retailers are attuned to these. As a result,
they have a laser-like focus on adapting to a rise of marketplaces, competition from local businesses and international entrants, and keeping pace with trends such as shifts in buying
Landlords can make a real difference
The support provided by landlords can affect the resilience of retailers operating bricks-and-mortar stores. More than two thirds of retailers who lease their premises view their landlords as supportive. In fact, one in four describe their landlords as very or extremely supportive. Our research suggests that bricks-and-mortar retailers with supportive landlords are more likely to have a positive revenue outlook and higher levels of resilience.
Resilient retail leaders have attributes in common with supportive landlords. Both have a well-founded confidence in their business and the market in which they operate. They also share a strong focus on their customer – easy to say, but as we’ve found in previous Retail Insights reports, hard to do well.
Both the supportive landlord and resilient retailer are forward thinking and outward looking. They develop their strategies to meet or counter new trends and influences, as they work towards growth goals.
Above all, their people are agile and adaptable. As one retail landlord commented, “It’s like Darwin said; it’s not the fastest animal or the fittest animal, it’s not the strongest animal. It’s the most adaptable that survives.”
Jerry Macey is the National Retail Industry Lead, Business and Private Banking at the Commonwealth Bank. The CommBank Retail Insights Report is a wide-ranging analysis of the Australian retail sector. The seventh edition is based on surveys carried out by ACA Research on behalf of the Commonwealth Bank. Respondents included 638 decision makers from small, medium and large retailers across Australia with turnover ranging from less than $1 million to more than $500 million.