Retail recession? Rubbish!

There has been much talk recently about the retail sector in Australia with many “experts” talking about a retail recession. The definition of recession is consecutive quarters of negative growth. Whilst we understand that retail is often cyclical with peak periods of the year and traditionally slower times, a like-for-like, year-on-year comparison across our retail networks shows that talk of recession is overly negative and not truly indicative of the current retail environment.

Although it is true that foot traffic in retail stores is down across all location profiles, this is indicative not of an economic downturn or consumers’ inability to purchase, but a seismic shift in consumer behaviour that retailers have failed to identify. The definition of madness is repeating the same action expecting different results, and that’s what we’re seeing with retailers applying old school theories and practices to what is essentially a modern problem. Today’s retail consumer is still 63 per cent more likely to purchase in a bricks-and-mortar store than online for various reasons across many retail verticals, in particular fashion where trying an item on for fit and the tactile response to certain fabrics are critically important to making a purchase decision. This is according to a 2019 report by Blis.

Traditionally, consumers were significantly higher up the sales funnel and would often browse many different stores knowing that they were looking for a top, but not certain of which SKU they were likely to purchase. With the rise of e-commerce and mobile phone shopping, this habit has shifted from offline to online as demonstrated by the decline in multi-store visit numbers. In short, when consumers visit a shopping centre, they’re going into fewer stores. 

So, despite the fact that in-store traffic is down, consumers who do set foot in-store are far more likely to purchase than they’ve ever been.  What’s more, so long as a retailer has adequate staff on hand to maximise service delivery, we’ve found that these consumers are prepared to spend more in store too!

Instead of cutting overheads by reducing staff numbers, retailers should be looking at optimal staff to customer ratios and rostering accordingly, while concurrently investing in training their floor staff to maximise up-sell opportunities and deliver a level of personal service likely to encourage customers to return to stores in the future.

This isn’t just theory. With the Kepler System in place, retailers that have committed to investing in their retail store network have seen like-for-like, year-on-year increases in transactions, ATV, revenue, and most importantly, sales conversion rates.  Understanding and responding to this change in customer behaviour will deliver improved retail results across your retail network and will lead to a better customer experience for your shoppers. 

To find out more about how understanding your customer behaviour can increase your retail network profitability, please feel free to contact us at Kepler Analytics here.

Comments

1 comment

  1. Avatar

    roy norbury posted on August 26, 2019

    Gary has experienced a downturn and so have my wife and I in our large independent showroom in Sydney. Our manager of 18 yrs has left us and the industry to work in another industry and earn 20% higher salary for the same hours? Retail furniture as far as we can judge is on a slide and we as owner -operators must consider that 2020 will be our swan song as we must consider another industry to earn the average wage which is now $73,500 pa for females and $100,000pa for males! Our wages have been way below the average for the past 10 yrs, especially plunged this 2019? reply

Comment Manually

I have read and agree to the Terms and Conditions and Privacy Policy.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inside Retail Polls

Do you offer staff the opportunity to earn degrees/certifications while working at your business?
Vote

Twitter

Nominations for 2020 Retailer Awards are officially open! Tag retailers you believe provide exceptional customer ex… https://t.co/wkhQq3UjFE

1 week ago

Retail industry bodies including @OZretailers and @retailaustralia are calling on @QldGov to abandon plans to make… https://t.co/8u1zPN0CAg

2 weeks ago

At the @OZretailers national retail awards! Looking forward to see who takes what! #retail #nra #awards https://t.co/T9ZlkgQaFm

2 weeks ago
x

SUBSCRIBE
FREE NEWS BRIEFS Get breaking news delivered