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Success in Australia’s tough retail market comes from the quality of the customer experience that companies offer in their physical stores, industry players say.
It can often be the difference between firms floundering, or flourishing. “Australia has one of the highest spending levels per capita on retail but people want to have a good experience every time,” says Zelman Ainsworth, senior manager of retail services at agents CBRE.
“Whether it’s fashion, food, glasses or bakeries, it’s the experience and interaction that gets them into the store, rather than just buying online. If companies engage with their customers with marketing, a high-quality fit-out, a good product and staff who see the value of customer service, then those are the ones seeing growth, despite everything else happening in the market.”
Times are tough for most retailers, with many more international brands providing fierce competition, as well as high costs of labour, tax, shipping and commercial rents. There’s also the problem of having opposite fashion seasons to Europe and the US.
But despite all this, many Australian retailers are still able to create robust businesses that even manage to expand globally, said Mr Ainsworth, citing M.J. Bale menswear, Cotton On clothing, Bailey Nelson eyewear, stationery and gifts stores kikki.K, Aesop, Accent Group, Bonds, Kathmandu, Seed, Smiggle, and sportswear brand Lorna Jane.
Executive director of the Australian Retailers Association Russell Zimmerman said that while there was currently growth of about 8 per cent a year in the clothing sector, it was still difficult as there were more players battling for a share, and most landlords were looking at 5 per cent rental growth year-on-year.
To do well, those companies had to have something extra.
“You look at some of the companies and they really understand who their customer is and they have strong engagement with them through their websites and social media and then when they come into the stores,” Mr Zimmerman said.
“It’s becoming very evident that people have to have a seamless customer experience through all the different channels, whether by bricks and mortar or online with mobiles, iPads or laptops. Someone might try on an outfit in a store, take a selfie to ask friends what it looks like, but may then buy online.
“But if she buys the wrong size, or colour, then she might be able to swap it at the store, or she can have something delivered or picked up herself the next day. That customer experience must work all the way through.”
Matt Jensen, the founder of quality menswear label M.J. Bale, with 30 standalone stores, said customer service was a big factor in his success.
“It comes back to old-fashioned principles of a great brand, great product, great people, great service and a great experience,” he said.
“The theatre of shopping is expected to be quite compelling these days. You’ve got to entertain people as they part with their money and they’re today looking for brands that do that.
“People talk about ‘experiential retail’ and you’ve got to make it fun. We love what we do and are passionate about it, and so hopefully that comes across in what we do.”
Eyewear company Bailey Nelson has the same philosophy. For them shopping for glasses had often felt like an unpleasantly clinical medical experience, with the testing; and was also perceived as an expensive event.
“We wanted to turn that on its head,” said co-founder Nick Perry. “Why not make eyewear one of life’s pleasures? We saw that as a real gap in the market. So we make sure customers have a wonderful examination with staff who are passionate about what they’re doing and make it exciting.
“On the Australian retail landscape now, you’ve got to be vertical to win. Like Aesop, who sell beautiful products in inviting stores, we make our own beautiful products and take a lot of inspiration from them. It’s important to adopt a new approach, and give customers a great experience.”
At stationery and giftware company kikki.K, chief executive Iain Nairn said their success has been to give customers more than just great products.
”Our purpose is to inspire and empower people to live their best life, every day – so we’re about so much more than just a beautiful product that people want in their workspace or home,” he said.
Companies in well-defined niches – such as stationery or upmarket menswear and eyewear – were doing well, said Simon Fonteyn, head of Leasing Information Services.
It was much harder for middle-market companies that were now having to compete with so many well-heeled international brands, especially with Amazon also about to arrive.
“But the luxury market and the upper-middle market are still doing pretty well,” he said. “Australia is one of the best performing countries in south-east Asia for luxury brands.”
But even some of the non-luxury companies are still thriving. One of these, clothing chain Cotton On, has been in business for 25 years, and started competing in the international market 10 years ago.
“You have to be really true to your model,” says Cotton On chief executive Peter Johnson.
“Our proposition is everyday products accessible to everyone at a great price, and adding something to distinguish it from our competitors. We see our people and our culture as being the main reason we’re successful.
“So we hope the shopping experience reflects that culture. We give customers a reason to come into a shopping centre, come into our store and we know that experience is really important. That might be store design, or service from our team who are all trained well and motivated and passionate about retail and our brand.”
All such successful Australian companies, which have strong brands and results, with a faithful customer following, are now receiving international attention. With that, there’s certainty about their future, as well as massive scope for expansion, said CBRE’s Zelman Ainsworth.
“Customer experience is the one thing that stands out in these businesses, which might mean tight databases, contact with customers in a strictly organised manner with relevant information and value deals and products, as well as good packaging and well fitted-out stores.
“In that way, they prove very resilient and competitive, and ahead of the competition. They all have great potential for further expansion.”