Buying into the fast-changing trends of today’s retail scene

Global store sales in 2012 were approximately $12 trillion, and that’s a lot of cash.  American retail sales make up 21% of this global expenditure, while Australian retail sales make up 1.7%.

The value of sales in Australia is $227 billion, in which retail sales grew 2%. It is expected that retail sales will reach $272 billion in 2017 (approximately 1.6% of global sales). The United States, China and Japan are expected to lead sales in retail, with China consuming 16% of all world retail sales.

In Australia in 2012, apparel and electronics experienced negative growth, while health and beauty experienced a 4% growth. At the same time, demand from international retailers such as Zara, Williams-Sonoma and Topshop have exacerbated the cost of rent in prime locations. For example, international giants such as Apple now operate 18 superstores in prime locations across Australia. And there have been further shifts to Australian retail in the ongoing pursuit of foreign websites keen for Australian shoppers eying bargains. A typical example is English retailer River Island, which has created an Australian website, and upmarket lingerie chain Agent Provocateur, which has opened stores within David Jones and offers goods for sale online to Australian customers.

The retail landscape is continuously changing – from store reinvention and the emergence of new concepts to the use of in-store technology to create a branding story. Woolworths, for example, has opened a beauty bar in George Street, Sydney offering beauty services. Woolworths Bentleigh in suburban Melbourne has modified its fruit and vegetable section, removing shelving in its fridges and instead utilising large vats and tubs overflowing with enticing vegetables and fruit emulating a farmers’ market feel. Even the in-house baked bread and muffins are placed in a stylish wooden display with backlighting. It all creates a pleasant and enticing shopping experience. This is clear evidence that the retailer is moving away from a one-size-fits-all model.

An example of the use of technology is Burberry’s store in London that was set up to emulate a ‘living’ website, the aim being to merge the physical and digital. It’s not just about shopping, it’s entertainment.

In October 2012, Target USA placed QR codes on its top-20 toys so customers could order out of stock products while in-store. The message is that retailers should aim to enhance the digital experience.

In the online world things are markedly different. Global sales increased 17% to reach $521 billion, 4% of total retail sales worldwide. Australian retail sales online rose to $4.6 billion. Apparel sales grew 20% and homecare grew 30%, however, this only makes up 1% of retail sales.

In Australia, 81% of users have access to the internet as opposed to 35% internationally, and per capita Australia has the highest uptake of smartphone usage. It’s no surprise then that there is very active and mobile data usage. At the same time, Android surpassed Apple as the dominant smartphone operating system globally. In terms of speed to market of new innovations, the Apple iPad was launched in May 2010 and was closely followed by the Samsung Galaxy tablet in September 2010.

M-commerce or mobile commerce transactions reached $1.3 billion in Australia in 2012. Its not surprising therefore that the payment industry being led by Paypal wants the mobile phone to become a mobile wallet aided by the use of near field communication (NFC) chips. Currently, Android phones are being manufactured with these chips; however, they are yet to be seen on Apple’s iPhones. Strong consumer skepticism in terms of trust and security will continue to slow growth in this area.

Mobile, magazine marketing and online shopping clubs, m-commerce and s-commerce (social commerce) are the immediate future trends.

Online shopping clubs, including upstarts like DashLuxe, represent a threat to stores online. Shopping clubs note a spike in visits during commute times as travellers browse for deals while on public transport. With the rapid change and evolution in e-commerce trends the saturation of shopping clubs may follow the path and demise of daily deal sites too, time will tell.

The influence of magazine formats is an offshoot of these shopping clubs. Polyvore is a great example of a brand that taps into s-commerce (using social media) and allows users to create collages. These collages can be shared on Facebook and Twitter, and allow people to buy, as it links images back to the original image on websites. Polyvore currently has 20 million users.

Data sources: Euromonitor

Mark Freidin is an experienced chief operating officer, eCommerce pioneer and consultant to fast-growing companies in Australia. Email: mark@internetretailing.com.au.