‘Amazon’s Australian Invasion’ has been a constant headline and theme dominating business blogs and conferences in Australia in 2017. The view that Australian retailers will feel the crushing pressure of the online retailer’s expansion within this market has left many business owners rethinking strategy and business journalists filling their columns with disastrous predictions.
Amazon is the hype, the buzz and the unfortunate (for retailers) reality of the future. Amazon took years to become Amazon, and the truth is Australian retailers rarely have the time, talent or budget to become Amazon, but they do have the ability to catch up and compete with and against the big giants in the industry.
The reality is, Amazon is not the problem. Amazon is simply an opportunistic beast who has risen out of the complacency and non-delivery of retailers around the Globe. Amazon did not invent online shopping, and they did not digitise the access to products at a low rate. They just do it better than any other current platform. The problem is how Aussie retailers view online and their place in that digital space.
This past week we saw statistics indicating that while foot traffic in physical stores has fallen by 5% this year, there is a growing flexibility around how physical retailers can optimise the tools and technologies available to compete effectively with giants like Amazon. A great relief indicating a move and commitment towards digital and offline retailers trying to complement strategies. Yet, this isn’t new either so why are we only discussing it now? Research shows that many Australian retailers have not focused on collecting, understanding or generating insights from data. In fact, many bricks and mortar retailers often think of data analytics as a separate silo to foot traffic and in-store purchasing metrics. The mistake, of course, being, that the two types of transactions simply do not exist in silos.
One of the most progressive ways retailers can compete is by investing in the technologies that deliver valuable insights into the complex data that shapes actions. The traditional method of harvesting basic demographics is simply not serving retailers in a way that can allow them to meet the needs of their actual customers, attract new customers or compete in market. The move away from basic demographics provides the unique opportunity to have a 360° view of shoppers, ultimately influencing strategy and ensuring promotions are effective.
Discussing the importance of generating actions from insights is one thing, and sounds great in a strategy meeting – but how do Australian retailers actually execute this? A good example would be the approach of leveraging a store’s WIFI network to build shopper profiles based on how they move and dwell within the store’s physical environment. Are they browsing all aisles or do they know what they want and where it is located? Are they engaging across the breadth of a retailer’s visual merchandising or are there limited opportunities to cross-sell? The technology that facilitates this would ultimately generate psychographic and behavioral profiles based on shopper movement and dwell data in conjunction with volunteered information such as demographics along with actual purchase data.
By understanding this well, retailers can then create a more targeted and personalised approach to marketing campaigns that actually ensures the right shoppers are being presented with the right opportunities at the right time. It is also important to understand if retailers are actually acquiring shoppers who will ultimately deliver the highest lifetime value for the associated marketing cost and for all businesses, cost-effective acquisition and retention of the most valuable customers is what drives long term growth and profitability.
If all of this sounds somewhat familiar it’s because it is already being done in the online world, which is a significant factor in the growth of online retailers such as Amazon. Free platforms such as Google Analytics provide incredible details on how online shoppers navigate an eCommerce website, how long they spend in each section and the marketing campaign which drove them there in the first place.
It is now time to educate Australian retailers that there is an opportunity to adopt these technologies and practices to the physical world so that bricks and mortar retailers can not only sustain operations, but compete.
The path to digital transformation, data consolidation and analysis happens over time. Big data has been around for years now and many retailers still haven’t solved that puzzle. We know that having huge volumes and variety of data can be valuable, combining data sets even more so, then applying prediction, machine learning and of course human analysis and opinion to the data now gives it a three dimensional feel. Yet, the next steps once the data is understood, is to apply action to these insights, then look back at the data to ensure they are working on a basis of truth and confirmation. From here once fluid in the integration, reading, understanding and application of data, retailers can look to use their expert knowledge to apply theory that is now measurable and repeatable, creating new and innovative services and experiences.
The technology is now at the level where it is functionally robust enough to work across a range of retail verticals and now cheap enough that businesses of any size can use it.
One solution across all retailers simply does not exist; while a grocery shop may be looking at user movement and campaign optimisation, a corner store may be looking at shelving locations as a primary focus. The varying and different methods of analysis and testing can be overwhelming at times.
For retailers entering this space such a commitment to data can be daunting but there are many suitable data partners with both the experience and technology to help retailers on this journey.
The real wake up call for Australian retailers, is not the arrival of Amazon. It is the self-awareness that technology already exists allowing bricks and mortar to have the same insights as their digital competitors, but that they have been slow to adopt. The question now is, will they invest in the right technology solutions and adapt in time.