Retail, marketing, online… Key issues and how best to respond

January 22, 2014

Kiwi businesses are, unquestionably, geographically isolated – 2000km from our nearest neighbour, in fact – making online and multichannel marketing essential for us to operate in the global marketplace. However, most Kiwi businesses are only just starting to realise that…

Certificate of Direct Marketing Tutor and Director of Ecommbi and Synapse, Matt Cowie, shares his advice on how to make the most of the opportunities presented in this environment.

Where has multichannel been?
It seems hard to fathom now, but throughout the early and mid-2000s, most retail businesses in New Zealand and Australia hadn’t really seized the opportunities presented by online, instead looking to grow through more traditional means, like by opening more stores.

Unlike us, European or North American companies invested significantly in both the technology and the people resource that would enable them to be strong in that space. The Global Financial Crisis also forced them to innovate and, because of the groundwork already laid online, they became very good at operating in that environment.

With the systems, infrastructure and experts in place, those companies then looked around the world and saw both New Zealand and Australia as open markets, sitting there exposed and without enough of our own filling the void. This has meant a threat to those companies that are closer to home, as those northern hemisphere companies quickly harnessed their technology and experience to embrace cross-border trading and cannibalise the domain of our retailers. In the meantime, the consumer has readily embraced smartphone technology, creating what can only be called “a perfect storm”, with fast acceleration online.

Trends emerging in this space
Firstly, we’re only going to see it get bigger, with accelerated growth in the online space and multichannel marketing. Alongside that, we’ll see more cross-border trading, as the environment, by its very nature, promotes an ease of accessing products (and even services) from offshore. In this environment, we’re likely to see increased channel conflict between manufacturers of brands, distributors of brands and retailers – as consumers look for products directly at a brand level, searching them out from all corners of the globe and disregarding the physical place that fulfils their order.

All that said, the humble bricks and mortar store will remain an important part of the multichannel offering, anchoring and supporting the online model. Done well, the online space is an outward-facing manifestation of an effective IT implementation. As much as businesses want a single customer view of their relationship with that customer, a customer wants to see a single product view and a single inventory view.

Data integration is absolutely crucial here and Kiwi businesses will have to move quickly on their internal data issues and sorting the middleware and systems in place to confidently expose their systems to consumers via ecommerce. We’re behind the “eight ball” in this part of the world and need to understand that the power has shifted to the consumer, in order to quickly, and more easily, transform.

Online spend in Australia and New Zealand is accelerating at a phenomenal rate. Across the ditch, we’re seeing increases of 30% per annum, and here it’s suspected to be around 25%. Either way, it is not uncommon for businesses to be doubling their turnover in online year on year, which I believe is a trend that will continue.

How do Kiwi businesses best respond?

  • Realise the reality, which is that when our nearest neighbour is 2000km away, online and cross-border trading is the only feasible way to a larger market.
  • Learn from the more mature overseas markets – they have been through the growth phases with online, made the mistakes, and invested in key areas. Taking cues from them will enable Kiwi businesses to utilise their budgets more wisely.
  • Seek expert advice and develop an online commerce roadmap, with a view to the long-term. This will mean that you’ll be less likely to have to rip it all out and start over 12 or 24 months down the track. It’s unlikely there will be surprises coming in this wave – it will play out the same way that it has around the world.
  • Accept that the game is changing and that it is as much about technology as it is about trends in human behaviour.
  • Remember that technology is the enabler, not the whole answer. The ideal equation consists of getting the right technology environment + the right people – those who can understand what needs to be done and execute it efficiently.
  • Don’t come to a gun fight with a knife. By this, I mean ‘Suit up!’ – Get what you need in place and do it properly. To compete, you need to compare… at least in some respects.
  • The colloquial Kiwi “she’ll be right” attitude and ‘number 8 wire’ mentality can, at times, be limiting. To punch above our weight and compete globally, we have to harness the best of what is on offer globally and make it our own.