Systemic change and what it means to retailing and wholesaling: Part two

Last week I wrote about feedback from calls I had made to retailers, distributors, sales agents and brand owners taking the temperature of business in and around retail. It was a mixed bag of results across the canvas of Australian businesses that feed our shopping needs and wants, which also reflected the opinions of Australia’s most senior retailers and brand owners.

This week, I had the chance to spend time with around 200 of our nation’s most senior retailers and brand owners at the Australian Food & Grocery Council conference in Queensland. The debate, discussion, presentation and messages from this august group, differed not one iota from my phone calls two weeks earlier. There is a genuine agreement that this value-driven systemic change is real, wide, deep, and will remain a key part of our shopper landscape for several years to come.

There was also a general agreement, even from those struggling to come to terms with this change, that all of this is led by shoppers, and is good for shoppers. We all just need to find our own pathway through this change. Across the board, a more entrepreneurial approach is evident as companies look to take every inch of gain they can in this new “game of inches.”

Previously nobody was interested in a gain unless it was 5-10%. Now, we’re looking at 2-3%. There has been a significant increase in the outsourcing of whole processes to lower internal costs or to free up funding for growth. Growth investment appears to be focused in technology and new markets. In this new “game of inches” the smaller markets like New Zealand, Fiji, and Papua New Guinea are being considered and new plans are being implemented to ensure that profitable growth is pursued and costs are challenged.

Almost every single manufacturer is either looking to, or is already utilising, new sales channels. Channels such as online, duty free, clearance, re-export and group buying are now attracting attention and investment. Technology that assists the capture of data and delivers usable mobile knowledge to stores and retails staff is now very highly sought after as it can help to drive sales in-store.

Value is key. If value can’t be found locally then direct import will become the norm. Retailers and manufacturers are increasingly importing from cost-effective factories from a range of countries around the world, often not in Asia.

It may be popular to look at Asia as our dichotomy. It’s our savior to sell to, but also a huge threat to Australian manufacturing when we buy from there. But many companies are sourcing production in Italy, Poland and, interestingly, the USA. Quality consumer durables, car accessories, cleaning equipment, tyres and small- and mid-size engineering tools made in US factories often have a long life-cycle and are well made, well serviced and well respected products.

Many factories in the US, which are benefitting from a low US dollar and who have re-engineered their processes to be more productive, are cheaper than many Chinese factories. “Made in America” is now appearing on more items in Australia than it has for many years because quality has been maintained.

And in the value equation that shoppers calculate when buying, price and quality are welcome variables. In our new value-driven reality, there is a place for the majority of companies, big or small, new or old, manufacturer or retailer. But only for those willing to embrace the systemic change being pushed upon our businesses by us: the shopper.

As CROSSMARK CEO, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia and across the world. His international career in sales and marketing has seen him responsible for businesses in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands.

CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.