Retail brand Roger David recently announced that it will be closing its doors after administrators failed to find a buyer for the iconic Australian business.
This is without question sad news for the 500 staff employed across Australia, not to mention it occurring on the stroke of Christmas.
The case again highlights that no business – large or small – is guaranteed to be in operation forever, even if it’s one that has been around for three-quarters of a century.
Roger David’s collapse has also led some of the doomsayers to again cast the same old predictable observation that bricks and mortar retail is on its last legs as online shopping becomes more prevalent.
While it is certainly true that traditional retailers need to adapt and evolve to the everchanging retail environment, there needs to be some perspective added to the discussion.
For starters, as outlined in the most recent online NAB retail report, online sales still only account for the equivalent of 8.9 per cent of traditional bricks and mortar retail. Moreover, the NRA forecasts that online retail spending for the Christmas trade period (second-half of November and all of December) will come in at $3.2 billion. That is in comparison to the more than $50 billion that is predicted overall for retail sales during the festive season.
Overwhelmingly, the vast bulk of transactions still take place in a physical store and not behind a laptop or iPhone.
While not wanting to diminish the significant role that Roger David has played in Australian retail, it is important to note that many businesses (across all sectors of the economy) came and went long before the rise of the internet. Although the emerging online sector presents a challenge to traditional retailers, there are ways that they can not only navigate the digital environment, but also use it to enhance their business.
All retailers should (if they haven’t already) investigate how having an online channel can complement their physical store/s and help maximise sales. Embracing an omni-channel approach that involves constant, relevant and value-adding digital engagement with customers is an effective way of turning a business threat into an opportunity.
We are now seeing bricks and mortar retailers utilising better analytical tools to obtain more effective information on their customers and how to best serve their contemporary shopping demands. Rather than being the death nail for traditional outlets, in many cases digital technology is helping retailers to thrive.
Another phenomenon that is helping bricks and mortar stores fend off the online competition is the rise in experiential shopping. We’re seeing a shift towards more luxurious centres that offer shoppers an experience, filled with mixed-use spaces, greenspace and other services. Many customers go shopping these days to do more than simply make a purchase, they are also after a retail experience that can’t be replicated sitting behind a computer.
When international goliath Amazon entered the Australian market, many pundits predicted that it would spell the end of several local retailers. Although Amazon is in many ways still establishing itself in Australia, it was revealed in August that the company recorded an $8.9 million loss in its first year down under.
As the NRA has pointed out previously, the economic environment here is very different to the US or Britain – Australia has higher transport costs due to a thinly spread population; significantly less transport infrastructure to move goods at lightening speeds; higher wages; a more complex and rigid industrial relations system; and stricter competition and consumer legislation.
While Amazon’s sales will almost certainly grow over time, there is no denying it is finding the Australian market more challenging than it has elsewhere.
As with all sectors of the economy, the retail landscape is continually evolving but there is no doubt that bricks and mortar will continue to play a strong and important role in the future of Australian retail.