Australia: A Year of Reckoning Ahead

By Andy Wright

There were two distinct sides to the Australian retail coin heading into 2013. More shoppers have been flocking online to buy a better range of products at lower prices than ever before, causing post boxes and corporate mailrooms to fill up across the country. Unfortunately, as those mailboxes indicate, our mainstream brick and mortar retailers can’t report as exciting an experience. In 2012, the gap between the Australian consumer and the Australian retailer widened, and the lack of creativity and differentiation in the Australian retail market became apparent. Australia’s reputation as a testing ground for new products hasn’t translated into retail experimentation. International retailers and digital entrepreneurs have identified that this market is wide open for disruption.

While the Australian economy is faring better than its counterparts across the globe, the majority of domestic retailers are still finding it tough. Results towards the end of 2012 saw an almost 3 percent annual improvement in retail sales. According to government data Australians were eating their way to recovery, bringing better than expected results for food retailers but disguising relatively flat results in categories such as department, clothing and footwear stores.

Despite a sector-wide quest for digital presence (and a game attempt to boost e-commerce with “Click Frenzy,” a national online shopping promotion that launched during America’s Black Friday 2012), in-store experience improvements lagged in 2012. As overseas counterparts spotted digital and international opportunities, Myer and David Jones finally launched online and mobile shopping offers. A painfully slow step in the right direction, although cynics would argue that if customers aren’t walking in off the street, why would they click through online?

A Choice (the public face of the Australian Consumers’ Association) customer service study proved grim reading for Harvey Norman, although Bunnings put in a “standout performance,” no doubt helped by a strong focus on culture. Woolworth’s and Coles continued their price and freshness war, but we saw more promising momentum in technology and store experience from Coles and similarly contemporary thinking by retail property group, Westfield. Facelifts and fit-outs for Rebel Sport and JB Hi-Fi were launched, but nothing resembling the countless international case studies on customer experience and integration that were presented and reported throughout the year.

In 2013 we hope to report a step change in Australian retail, and that Australian shoppers are flocking to new, fresh and interesting offers. It’s clear they’re just waiting for one of their own to find focus and take some calculated risks, proving that new models can work at scale and reinvent the retail experience. Which brands will rise to the challenge remains to be seen.