Retail in 2019: “Tech savvy” SMEs punch above their weight, but Australia is still behind on delivery

After a difficult Christmas retail businesses across the country are bracing for the year ahead, investing in new technology to get an edge and more generally trying to figure out ways to beat the retail blues.

For those in categories particularly exposed to discretionary spending the stakes are pretty clear, already this year menswear business Ed Harry and luxury skincare retailer Crabtree & Evelyn have fallen into strife.

Those SmartCompany have spoken to in recent weeks describe feeling tentative about the year ahead, with strategic investment planned to ensure they don’t fall behind the curve.

For Derek Sheen, owner of online retailer Yellow Octopus, 2019 will be a year for investing in artificial intelligence and machine learning.

Sheen tells SmartCompany the more than 4,000 product listings on his company’s website can often overwhelm customers, making shopping more challenging than it should be.

“By using machine learning, we aim to provide adaptive recommendations based on individual user behaviour and enhance customer conversion rates,” Sheen says.

Sheen isn’t the only retailer investing in AI, retail expert Pippa Kulmar, who has just returned from the world’s biggest retail conference, the NRF Big Show, in New York, says demand in the experience economy and stiff competition in fast-moving commodities is driving investment.

“These things are forcing a discussion around how many stores people need, but equally about investment in IT and what the organisation of the future looks like,” she tells SmartCompany

“It’s all about how I can get it to you quicker and faster if it’s just a commodity product.”

Big business competition heating up

Competition is for those consumer dollars is heating up. A global study of SME attitudes in 2019 released by TradeGecko today found stiff competition from large businesses is the number one barrier to growth for local SMEs.

The research, which includes views from over 100 local businesses and many more overseas, identified Aussie small businesses as relatively technologically savvy compared to their American counterparts, with respondents more likely to be leveraging technology than many overseas counterparts.

Nevertheless, age-old business tasks like product sourcing are taking up lots of time, an average of 53.6 hours a month, meaning efficiency opportunities remain to be capitalised on.

Kulmar says Australia is still far behind the global eight-ball when it comes to retail delivery though, pointing to emerging technologies in Asia such as JD.com’s autonomous delivery vans at the forefront of cracking the infamous last-mile conundrum.

“Everyone is looking at China, JD.com and Alibaba have basically leap-frogged what’s happening in the US … they’ve basically got Amazon lockers on wheels,” she says.

“When you talk about AI and machine learning it’s about how you can use that to fulfil last-mile deliveries, and to be honest Australia is so far behind.”

Retail delivery, and indeed returns, have been a big issue for Australian retailers, from large chains to independents.

Sheen says while Yellow Octopus already offers multiple delivery options, including click & collect and same-day delivery, it remained a “pain point” for customers.

“We are simply not at a large enough scale to develop our own shipping infrastructure. For the time being, we therefore still have to continue relying on couriers like Australia Post and Star Track etc,” he says.

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