Investing in software-as-a-service could give retailers an upper-hand in the global market, writes Tony Hou.

Commentators have spent several years writing obituaries for the Australian retail sector but to paraphrase the legendary US writer Mark Twain, reports of its death have – happily – been greatly exaggerated.

That’s not to say conditions have been anything approximating buoyant. In fact, the reverse.

Stagnant wages growth, changing consumer tastes, increased spending on ‘experiences’ rather than items, technology disruption and fierce competition, both online and in the shopping mall, have combined to buffet the sector and sink scores of established players.

The casualty list in recent times has included Roger David, David Lawrence, Payless Shoes, Marcs, Dick Smith Electronics, Aussie Farmers Direct, Pumpkin Patch and the Australian division of Toys ‘R’ Us.

Analysis by insolvency specialists SV Partners published in early 2018 suggested there were almost 1500 Australian retail businesses at risk of imminent collapse, including 260 with turnovers greater than $10 million and 18 with turnovers greater than $50 million.

Sailing into sunnier conditions

Judicious investment in software-as-a-service (SaaS) infrastructure could see those local retailers which have weathered years of lacklustre conditions and withstood formidable online and multi-national competition well positioned to go global.

A growing number of Australian retailers have done just that and are killing it on the world stage. They include Zimmermann, the Sydney label which has found a sweet spot selling its upmarket clothing and swimwear to fashionistas in the US and the UK, Showpo, the millennial fast fashion outlet which makes more than a third of its $30 million turnover outside Australia and Byron Bay boho brand, Spell and the Gypsy, whose indie chic is attracting a loyal following, at home and abroad.

High tech infrastructure which make it easier to predict and respond to customer demand, launch new features and functionality and engage with customers in a consistent and compelling way across all marketing and communication channels has been critical to their success.

These now-global brands from Down Under – and other SaaS-savvy local players like them – are investing in cloud-based digital solutions which can be ‘tried on for size’ quickly and easily, retained if they’re a good ‘fit’ and discarded if not.

Swapping upfront investment for spend-as-you-go software roll-outs

This technology model represents a significant deviation from the way Australians retailers have implemented and utilised software historically.

Large retailers traditionally purchased platforms and solutions which were costly and time consuming to implement, less than flexible once installed and expensive to support. There was a dearth of equivalent solutions for mid-sized players – which generally found themselves at a competitive disadvantage as a result of their absence.

The rise of subscription software has levelled the playing field. Mid-sized retailers are now able to choose from an array of off-the-shelf solutions which can be rolled out quickly, and augmented easily with specialised modules from third party developers.

Consequently, we’ve seen household name companies like Myer and David Jones struggling to keep pace with smaller and nimbler rivals who’ve been prepared to dive into this new computing landscape, testing and learning as they go.

Hosted in the cloud, these subscription-based solutions don’t necessitate heavy investment in hardware, in the form of servers, nor do they incur the running costs associated with upgrading and maintaining in-house infrastructure.

Capital expenditure is replaced by operational expenditure – which means retailers no longer find themselves in the position whereby acquiring new technology means spending large sums up-front, in the hope of realising a benefit months or years down the track.

In fact, in many instances, introducing SaaS applications is not regarded as an IT projet at all. Thanks to the simplicity and usability the cloud revolution has ushered in, a growing number of companies are allowing the marketing teams which typically use these tools to oversee their implementation.

Do digital or die?

Choosing to dip out of the digital race is no longer an option, even if you’re a retailer whose business remains firmly rooted in the bricks and mortar world. While customers may not be making their purchases online, it’s where they’re increasingly beginning their journeys – researching via Google, browsing social channels and checking prices and availability before making a trip in to the store.

A dynamic digital presence that allows retailers to be responsive to evolving customer needs – and proactive about anticipating them – is not a nice to have. It’s a must for retailers which want to avoid meeting the same fate as Roger David, David Lawrence and the host of other once-proud Aussie brands that bit the dust this decade.

SaaS solutions can help retailers run their operations more nimbly and efficiently, without the need to spend unaffordable upfront sums in the process.  For Australian retail ‘survivors’ that are prepared to embrace the model, the outlook is anything but gloomy.

Tony Hou, Founder and Managing Director, Moustache Republic