Despite other reports suggesting that the Australian retail industry is still struggling from the cautious consumer environment, the Business of Retail report offers an optimistic outlook is on the economic horizon.
The report, launched by BRW and AMP Capital Shopping Centres, found that although there was cautious optimism about some short-term prospects, the majority predicted a more robust economy in three years.
The online responses of nearly 300 retailers were supported by 8 per cent rating ‘expanding the business’ as their top business goal in 2011. Retailers also emphasised that 39 per cent of them will be maintaining and/or growing sales while one in eight are looking to control costs. This was closely followed by 9 per cent saying thy will priorities their staff; either hiring, training or retaining and finally 2.2 per cent ranked online investment as a key issue.
Stuart Langeveldt, head of marketing and communications, AMP Capital Shopping Centres, said these statistics are indicative of a wider trend.
“Based on our in-depth conversations with retailers, they understand they are dealing with a new and more demanding consumer. The key now is to take this knowledge and really apply it to marketing strategy, particularly as local retailers are now, thanks to the growing penetration of e-commerce, competing in a global marketplace.
“A web presence is certainly important, as shoppers now expect a seamless transition between the on and offline environment. Having said that, there are still plenty of reasons why customers elect for a real world store; that’s why retailers have to prioritise differentiation through great customer service, well trained and motivated staff, clever advertising and use of social media and loyalty schemes, as well as establishing meaningful credentials around the community and environment.
“Fundamentally, this is a hugely responsive and evolving industry that reacts quickly to changing consumer needs. There are exciting times ahead as retail continues to evolve.”
The report also said despite the ability of respondents to identify plenty of business needs and plans for 2011, one of the surprising findings was how few retailers had gone on to develop a comprehensive business plan.
One in five (20 per cent) of survey respondents hadn’t developed a strategy for their business while almost half (45 per cent) have had discussions without forming a concrete written approach, while a third (35 per cent) of retailers interviewed has a documented strategic plan.
When asked ‘what’s holding business back’, themes as relating to cashflow and the global economic environment were raised. Nearly a quarter Nearly a quarter (24 per cent) rated economic uncertainty as a key concern while 19 per cent blamed increasing costs and 16 per cent cited a downturn in spending.
This demonstrates the ongoing tough conditions that many Australian retailers are having.
Kate Mills, BRW editor, said despite the strength of the Australian economy, there are still a couple of major issues facing retailers.
“Firstly, we’re expecting interest rates to go up, which will make consumers nervous again; secondly, and perhaps more seriously, the strength of the Australian dollar has made the US and other destinations significantly more attractive,” she said.
“Australian retailers need to work really hard to keep that dollar here at home. The one thing they should take away from this research is that service is critical to winning back shoppers; I would urge them to invest in outstanding customer service as a priority.”