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Australia retail predictions for 2017
The retail industry globally is seeing shifts in the way business is done, and these changes are being felt in Australia too. I’m expecting 2017 to be an exciting year for the industry; one full of change and challenge for retailers, and the people they employ.
Looking back on 2016
From a global perspective, retail saw massive growth in SME businesses in 2016. Customers are looking for specialty stores with lots of personality, and these businesses are responding by creating a more personal and intimate retail experience.
Meanwhile, bricks and mortar-focused retailers are becoming less fashionable for customers. We’re seeing national retailers, even those overseas consolidating their store portfolios, their real estate and their personnel, to increase overall business profitability. Last year saw retailers close stores if they were duplicating themselves with multiple outlets in a region, with unprofitable stores being shut down completely to reduce overheads and improve profitability. Success in retail is no longer determined by the size of a retailer’s physical store portfolio, it’s more than that now; it’s about international reach and offering multiple retail platforms for accessibility and speed.
Ecommerce is driving business growth; with fewer people going to brick and mortar stores – especially with shrinking store portfolios, there are fewer stores to go to. This means that for retailers to thrive, they have to utilise the reach of multi-channel to go beyond local markets.
What will change in 2017?
For 2017, I’m anticipating a lot of disruption in the Australian retail space. Amazon’s first Amazon Go store is set to enter the Australian market imminently, increasing competition in the online space. Just having an online store will no longer be enough for retailers, who will have to innovate to keep up. For example, Amazon Go will allow customers to shop in the real world, but automatically purchase online when you leave the store, eliminating queues and maximising convenience. This is likely to lead to other retailers following suit, to offer their customers an innovative shopping experience, including click and collect services and drone services for same day delivery.
To save time and provide customers with convenient and innovative shopping solutions, UK-catalogue retailer Argos, as well as luxury fashion label Burberry, have introduced concept stores to their existing portfolios. Argos’ concept enables customers to shop online and collect their purchases at a local-store within 60-seconds of entering, while Burberry’s London flagship store offers an interactive video experience.
Social media has become a retail shopping platform itself, and customers will expect more availability on their favourite social channels in the coming year, where the modern day consumer, who is becoming increasingly time poor can combine shopping with interacting with their network. Research shows customers are visiting social media (for example, Instagram) to shop rather than going to a store, because social media has become such an everyday part of our lives. Leveraging this trend, there are boutique fashion labels that only operate online and thus need a very heavy digital/social media presence – and focus on online marketing to achieve sales.
Meanwhile, at the more traditional end of the retail spectrum, we’ve seen UK retailer John Lewis recently enter the Australian market, with Debenhams and Decathlon following this year. As a result, I expect to see more opportunities created for retail professionals in the Australian market, and more competition for the top talent from retail businesses.
In demand retail roles
Adding to the candidate squeeze as stores in Australia consolidate their store portfolios, we’re expecting that retail is likely to remain a candidate short market due to it being a niche sector.
Although self-checkouts are commonplace in supermarkets, within luxury and premium retailers, there is demand for specialist retail workers, where consumers tend to seek advice and guidance from expert staff.
The junior to mid-management market (for example the assistant store manager and store manager level roles) are traditionally the toughest to recruit for, because there are more vacancies than there are candidates. Retention remains difficult with candidates being highly sought after for new opportunities with offers of salary increases and career progression.
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2017 will be an exciting year for the retail industry for Australia. Key trends include:
1) Bricks and mortar-focused retailers are consolidating their store portfolios, real estate and personnel, to increase overall business profitability.
2) Ecommerce is driving business growth with fewer people going to brick-and-mortar stores.
3) More global players entering the market will increase competition in the online space.
4) Customers are visiting social media to shop and retail marketers need to develop a heavy digital/social media presence
5) Retail is likely to remain a candidate short market due to it being a niche sector. Junior to mid-management market are traditionally the toughest to recruit for, because there are more vacancies than there are candidates.