ARA Retailer Magazine 56 February 2017

Retailer THE Issue 55 – February 2017

A new reality for retail

Amazon’s Arrival Bezos’s behemoth has its sights set on the Australian retail market

Employment & Expansion Recruitment plays a critical role to managing rapid retail growth

Sustainable Success The power of ethical operations and socially-conscious retailing

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In this issue:

Features 10 AMAZON’S ARRIVAL: PREPARE OR PANIC? Australian retailers are bracing for battle against the e-commerce juggernaut 20 A NEWREALITY FOR RETAIL The potential of Virtual and Augmented Reality has captivated the retail industry, but do these emerging technologies deserve the hype?

ARA PRODUCTION TEAM

Editors Katherine Mechanicos Benjamin Staley media@retail.org.au

Advertising Account Manager Hussein Hamka 1300 368 041 Hussein.hamka@retail.org.au

32 HILL STREET CLIMBINGMOUNTAINS IN TASMANIA How can retailers alleviate some of the growing pains during business expansion?

Graphic Design Damien Dunstan

External Contributors McCartney Design, Temando, FCB, The Retail Doctor, Pronto, GMG Digital, Paul Farina, Experian Australia, Pronto Software

AUSTRALIAN RETAILERS ASSOCIATION

Phone (toll free): 1300 368 041 Fax: (03) 8660 3399 Victorian Office Level 1, 112 Wellington Parade East Melbourne VIC 3002 New South Wales Office Suite 104, 40-48 Atchinson Street St Leonards NSW 2065

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RETAIL TRENDS 22

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From the Executive Director Retail news from across Australia Recognising Remarkable Retailers Predicting the 2017 Economic Climate

Is Sustainability the Secret? Retail Trends Set to Shape 2017

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Generation Z: the Powerful Influencers

IN-STORE 12

E-COMMERCE 16

Small Stores Creating Big Impact The Importance of Small Pretty Things 5 Tips to pull customers into your store with Visual Merchandising

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New Year Resolutions for the Modern Retailer Social Media: Using the Sea of Social Opportunity The Role of Digital in Transforming Retail Businesses Refreshing your Digital Shopfront Supply Chains and Intelligent Future Gazing in Retail

The Retailer is printed on FSC paper stock using vegetable based inks by a printer with ISO14001 Environmental Management System Accreditation COPYRIGHT Contents may not be reproduced in any form without permission from the Australian Re- tailers Association and then only with suitable acknowledgments.

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EMPLOYMENT RELATIONS & HUMAN RESOURCES 14

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Employment Relations Overview 2017 Stepping Up from a Stepping Stone

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2017 Australian Retails Association ISSN: 183404720

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From the Executive Director

Nothing says fresh like the beginning of a new year and 2017 has already kicked off with all guns blazing. I can already feel it’s going to be a great year for the industry with many significant changes set to have a positive influence on the retail sector nationally. Early this year we are hopeful that the Fair Work Commission (FWC) will reduce Sunday penalty rates from double time to time and a half. With retailers currently paying employees double time on Sundays, many retailers are forced to close their doors on Sundays, impeding on retail growth across Australia. Over the last two years the ARA have worked hard to reduce these rates under the General Retail Industry Award 2010 (GRIA). The ARA hope the new year brings this long-awaited amendment as the reduction of Sunday rates will decrease the national unemployment rate and see the retail industry grow strongly. Another issue coming to a head this year is the Low Value Import Threshold (LVIT) for goods purchased overseas. Currently the LVIT allows consumers to purchase up to $1000 in goods and services overseas GST free, giving international retail businesses the upper hand in the Australian market. ARA has led the decision to remove the threshold to ensure that Australian retailers are no longer disadvantaged by this loophole. The GST will be collected via mandatory registration of overseas sellers and online platforms on 1 July 2017 under the Government’s current proposed timelines. The removal of the LVIT will be necessary in growth and sustainability in the retail sector and beneficial to all Australian retailers. The new year is upon us and the nature of customer service is changing. Whilst customers may expect good service as a standard, many are looking for retailers that are sustainably conscious. This issue of The Retailer addresses the top key retail trends in 2017 and gives an overview of disruptive technologies that are reshaping the industry and completely transforming how consumers shop today and in the future. While many people believe that retail is a stepping stone in someone’s career path, we explore retail as a career and how the Retail Institute is engaging the young and unemployed into the retail industry and assisting them up the retail management chain. Christmas is now well and truly behind us with post-Christmas sales a distant memory. We’ve received positive feedback from members with Christmas spending on par with ARA and Roy Morgan’s $48.1 billion estimation for the pre-Christmas period between November 14 and December 24, 2016. We are slowly but surely gathering last Christmas’ actual spend and will notify our members once finalised so definitely keep your eyes peeled. And finally, a quick update on our new website which we hope will make a new

THE AUSTRALIAN RETAILERS ASSOCIATION COUNCIL President Roger Gillespie AM – Bakers Delight Vice President Toby Bensimon – Shiels Jewellers

appearance towards the middle of the year. Best wishes for a robust new year of trade.

National Councillors Robyn Batson – Sussan Group David Bisset – LS Travel Retail Pacific Wayne Curnuck – Curious Grace Graham Dear – Leading Edge Group Luke Dillon – Swisse Ralph Edwards – Bright Eyes Mhairi Holway – Pandora Jewelery Steve Plarre – Ferguson Plarre Bakehouses Mary Poulakis – Harrolds Liz Siminsky – Angus & Coote

Russell Zimmerman Executive Director Australian Retailers Association

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NEWS

Retail news from across Australia

Aussie retailers experience success in the UK

The number of Australian and New Zealand retailers expanding their footprint into the UK is on the rise, with the likes of Mon Purse, Typo, Disrupt Sports and Lorna Jane setting up international stores in 2016. With over 60 million consumers making 320 million transactions a week and a mature e-commerce market where consumers spend more online per head than anywhere else in the world, it’s little wonder that the UK is a prime destination for Australian retailers looking to expand their global footprint. Not only is London the top retail destination in Europe, the UK is also leading the way when it comes to retail technology. Many stores are adopting innovative technology including augmented reality mirrors, smart change rooms and wearable technology. The UK ecosystem supports innovation in retail tech, with programs such as TrueStart and JLabs, and the BT concept store, which enables retailers to explore how they can transform their physical stores to meet needs of new digital shoppers. In short, it’s the place to be for the developers of innovative retail tech to get ahead of the curve. The UK’s Department for International Trade (DIT) has offices in all major Australian cities and a team on hand to provide free and bespoke support to help retailers set up, expand and be successful in the UK. Their free services include market research, access to socio-economic and demographic data, support in finding and comparing locations, plus information on company set up, recruitment and visa advice. They also have a network of specialists providing expert advice on issues such as e-commerce, luxury goods retail, tax and planning.

Toll launches its first pop-up delivery service inWestfield centres Toll Group recently launched its new consumer-to-consumer parcel delivery service with the opening of new pop-up delivery hubs in selected Westfield shopping centres. Launching just in time for the 2016 Christmas rush, the service provides shoppers with greater flexibility – allowing them to skip the queues and access competitive pricing for fast domestic parcel deliveries. Toll’s pop-up delivery service has tapped into a market ready for disruption as this initiative offers a convenient delivery alternative that is both consumer and retail friendly. Although retailers have improved their digital shopping experiences at the front end, the limitations of logistics in Australia has constrained e-commerce growth. Not only has consumer feedback from these pop-up hubs has been overwhelmingly positive, this innovative service also supports Australian retailers, as it provides their customers with greater flexibility and convenience for product delivery. This year, Toll will look at expanding the pop-up delivery service to additional retail outlets during future peak periods in 2017 such as Christmas and Easter.

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EVENTS

Recognising Remarkable Retailers

By Benjamin Staley – ARA

The time has come again to celebrate the cream of the retail crop at the 2017 eftpos ARA Australian Retail Awards.

with mystery shopping initiatives and field agency surveys, the impartial panel of judges will be well-equipped to make the difficult decision of deciding the retailer deserving of the 2017 crown. Alongside the presentation of the Awards, attendees will enjoy industry insights from inspiring guest speakers and valuable industry sponsors alike. At this stage the speakers are being kept under wraps, but we can confirm that these industry experts will be sharing their profound advice and lessons learned from their incredible success in retail. The 2017 eftpos ARA Australian Retail Awards breakfast is also an opportunity for Australian retailers to come together to celebrate the success of their peers, network, and learn from other’s experience. With entries now open for this year’s Awards, the ARA is calling on Australian retailers to put themselves forward and join the running to be recognised by their peers and the broader retail industry. The streamlined entry process is simple and well worth the effort for potentially joining the esteemed ranks of previous award winners. Retailers large and small, as well as individuals, are encouraged to submit or nominate online at www.retail.org/awards. Early bird tickets are also available for a limited time only.  The eftpos ARA Australian Retail Awards are the retail industry’s largest and longest running recognition of success. This year’s Awards Breakfast will take place on August 3rd at The National Gallery of Victoria in front of over 500 guests.

Thankyou’s Daniel Flynn presents at the 2016 eftpos ARA Australian Retail Awards

T he ARA is proud to announce the Australian Retail Awards. The prestigious event serves as a national stage to recognise the leaders and disruptors in the retail space, celebrating their contribution to moving retail forward. Employing 10 percent of the working population, retail is a vital part of the Australian economy and passionate retailers are at the heart of this pivotal and prosperous industry. The purpose of the awards is to showcase the vision, innovation and excellence of the best of Australian Retail, and if last year’s awards are anything to go by – it’s a retail event that is not to be missed. This year’s program encompasses a range of awards representing the breadth of achievement and talent in the ever- changing retail landscape. The awards span twelve categories reflecting the diversity of Australian retail – from independent launch of the industry’s pre-eminent awards program, the 2017 eftpos ARA

owner-operators, to national brands, industry innovators, outstanding staff and exceptional store-fitouts. Proud to acknowledge these deserving retailers at this nationally publicised event, the Australian Retailers Association is predicting the 2017 award entrants to exceed all expectations in terms of quality and quantity. The coveted 2017 Retailer of the Year Award is set to be one of hardest on record to judge, with the extraordinary calibre of leading Australian retailers in the field. As the peak retail industry body, the ARA has this year reimagined the selection process and worked with distinguished industry experts to determine what constitutes the ‘best in retail’ in this evolving sector. The bespoke adjudication matrix considers several essential factors including; company culture, fiscal performance, corporate responsibility, marketing initiatives and customer engagement strategies. Coupled

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FEATURE

Amazon’s Arrival: Prepare or Panic?

By Benjamin Staley – ARA

With one of the world’s largest retailers to hit our shores this year -Australian businesses are bracing for battle against the e-commerce juggernaut. W ith retail behemoth Amazon setting its sights on the Australian market, there is an undeniable air for differentiating and side-stepping direct competition from Amazon.

is at the core of the perceived existential threat to the industry, yet it also provides a valuable insight into where Australian retailers should allocate their resources to meet the impending challenge. Supermarkets and department stores are at the greatest risk due to the nature of their price-based structures and commodified goods, however these retailers and others with their own ‘home brand’ product lines have a potential shield to minimise the impact. PRODUCT EXCLUSIVITY Retailers with in-house branded products have a distinct advantage through their control of merchandise licensing. The benefit of limiting the sale of these products to selected retailers is as simple as it is powerful – Amazon can’t do it. Exclusive distribution of products can remove the ability of online marketplaces like Amazon to sell these third-party items, and in turn remove the potentially detrimental competition on these products. Some of these retailers may also see an opportunity to capitalise on the hype and strength of Amazon itself as a platform to sell these items – though this will remove some product control and shift the role of retailer to supplier. Alongside product exclusivity, product customisation will prove to be another effective method

PERSONALISED EXPERIENCE

of trepidation around the new arrival and the threat it poses after its damage to traditional US retailers. Amazon’s grand plans to “destroy the retail environment in Australia” are yet to be officially announced, but there are credible whispers of establishing a physical presence here in September. Starting with distribution centres to support fulfilment for the digital store, there is even speculations of introducing physical stores and an online grocery branch, Amazon Fresh. The e-commerce giant sees enormous potential in Australia to exploit high margins and leverage a world-class logistics system, but for the moment it’s all smoke and no fire. Regardless, Amazon is coming – and the first line of defence is assessing the risks and preparing to protect market share and brand value. The most exposed retailers are those that sell third-party brands and commodified products, particularly online. These segments are primarily dependent on pricing, and thus will be particularly susceptible to Amazon’s reported strategy to undercut local retail prices by 30 percent. Amazon’s CEO, Jeff Bezos, initially rattled the cage of Australian retailers with his now infamous quote – “Your margin is our opportunity”. This philosophy

Innovative Australian retailers will be able to find a competitive advantage in an area where Amazon lacks – personalisation. Amazon may have the upper hand in regards to price point, consumer choice and data- driven recommendations, but customised products and experience are weak points due the sheer size of their operations. It’s no secret that personalisation plays a significant role in consumer decision making and fostering engagement, and these effects are enhanced on smaller scales. Australian retailers are already embracing the power of personalisation beyond the traditional online store - allowing shoppers to build custom products online, creating unique in- store environments, and providing seamless omni-channel platforms and mobile shopping experiences. Forward-thinking retailers will be wise to concentrate on their personalisation efforts to retain the attention and allegiance of their customer base.

CUSTOMER LOYALTY

An invaluable weapon in reducing the potential attrition of customers to Amazon is rigorous effort in building and nurturing

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“ The e-commerce giant sees enormous potential in Australia to exploit high margins and leverage a world-class logistics system, but for the moment it’s all smoke and no fire.”

light drizzle. In either case, the best strategy for Australian retailers is to focus what is in their control. Preparation is vital, and if nothing else Amazon will serve a catalyst to refocus resources and double down on customer- centric strategies. Australian retail is as resilient as it is up for a challenge – if the jungle is coming to us, it’s time to sharpen our machetes.

customer loyalty. Product exclusivity and personalised shopping experiences will go a long way, but there are other strategies to develop deep connection with customers. The lessons from the most successful retailers centre around this idea; build meaningful relationships with customers, communicate ‘the story’ of the brand, be honest, and genuinely

value the people who choose to buy from you. It’s basic advice, but its critical. The fact of the matter is – it’s far easier to retain a customer than it is to potentially try to claw one back from Amazon. Only the coming months will tell whether the looming cloud over Amazon’s arrival turns out to be an earth-shaking tempest or just a

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IN-STORE

Small Stores Creating Big Impact

By Gary McCartney – McCartney Design

It’s not how big the store is, it’s how you use it.

We’ve all heard the term ‘less is more’ and this will ring true for retailers this year as they opt for smaller store formats, reduce operational costs and creatively capitalise on unconventional retail spaces. Although consumer confidence and purchase intent is rising, shoppers don’t want to waste time wandering around enormous stores. They know what they want to buy and don’t want to waste time looking for it. This shift in consumer behavior has already seen some retail giants move to downsized retail locations, providing more curated selections and stripping back their inventory and stock lists. Although smaller stores can be difficult from a design and visual merchandising perspective, this minimised format gives retailers a chance to be innovative about their limited space to attract consumers. ATTIK Clothing has applied this ideology in a unique way, teaming up with McCartney Design for their first venture into the world of major shopping malls. Specialising in creating beautifully simple design solutions for retail stores, the task of the design team was to build a strategic point of difference for ATTIK’s newest store. The space was undoubtedly challenging - a 60 square metre box with a two-storey high shopfront and a huge column almost on the leaseline. With the cost of full-height glazing not in the budget, a unique solution was needed to make the most of the space. Combining innovation and elegance, a big idea emerged - combining the shop with the shopfront and the shopfront with the shop. As mall shopfronts no longer need to have conventional glass windowed elevations, McCartney Design set about realising the vision of a simultaneously secure and

aesthetically appealing store. Promoting such an innovative approach, landlords like Westfield even encourage designers to be highly creative in defining what a shopfront actually is. McCartney Design decided to use the full volume of the six metre tall retail space and make a visual statement. To create impact and highlight the theme of the ATTIK brand, the team constructed a gable end roof complete with attic and stairs. They defined the rooftop with a welded steel framework and alluded to the stairs in perforated steel. Beyond the shopfront, the attic style continues with a tall ceiling lined with unfinished plywood and rough timber trusses. Some of the back wall is mirrored, giving the appearance of a much bigger space. The store’s illuminated sign and its exaggerated depth fill the space that it’s in, creating an environment reminiscent of an Escher Sketch. Design decisions like leaving the column intact and untouched effectively compliment the incomplete look of the store and saved costs for specific features too. For example, the merchandising system is made up of unpolished steel rail, normally used in back of house situations, but appropriate to the unfinished look of the store. Although McCartney Design achieved the required amount of space for merchandise, we know that space is also required to convert sales. A conscious choice to omit a stock room meant ATTIK could have four oversized dressing rooms, to which McCartney Design added distinctive floor tiling and detailing to create warmth. Combining exceptional LED lighting with the lofty space and timber finish, the space creates an environment that’s welcoming and

shows the merchandise at its best.

The store is performing well above expectations with feedback from customers loving the openness and accessibility - a perfect example for other retailers looking to make big things from small spaces. 

Gary McCartney is the owner of McCartney Design. We create

beautifully simple design solutions for retail stores everywhere. Find out more at www.mccartneydesign.com.au

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SALES REVENUE MARKETING UPDATES

NURTURE YOUR RETAIL STAFF AS YOUR BRAND AMBASSADORS And they shall do wonders for your customers and your brand.

THE HEART OF RETAIL IS ITS PEOPLE Your staff is the single most valuable resource that contributes to your retail chain’s success.

People don’t buy products—They buy solutions to problems.

Your staff can be trained to: Understand different customers needs . Build rapport with anyone who walks into your stores. Confidently close sales, up-sell and cross-sell . IDEAS FOR IMPROVING RETAIL PERFORMANCE Upskill your people—Your business will thank you for it. Create a progressive learning culture. Share knowledge, engage all staff, and create a workplace where your people are valued and love coming to work, and where customers love to shop. Use the best training tools. Train fast with ready-made lessons from our on-demand Marketplace; quickly upload, customise, copy or create training content; and manage all training activities from one user-friendly and affordable Learning Management System (LMS). Enable mobile and microlearning. The right technology enables more training in bite-size stints no matter how busy your schedules.

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EMPLOYMENT RELATIONS

Employment Relations Overview 2017

By Nick Tindley – FCB

Looking to the year ahead in retail employment relations.

T he New Year is upon us and once again it’s time to prepare for what is shaping up to be another big year for the retail industry. So, what are the key employment issues that ARA members should be aware of in 2017? 1 CONCLUSIONOF THE MODERN AWARD REVIEW PROCESS: The ARA devoted significant time and resources in 2016 towards the Modern Award Review, fighting the case for an employment

relations framework which enables members to improve efficiency and increase their competiveness. The four-yearly Modern Award Review undertaken by the Fair Work Commission is an enormous task and it is fair to say that the process has dragged on far longer than was initially anticipated. While the decision to insert award provisions for the cashing out of annual leave was welcomed, the ARA continues to argue the case for a reduction in weekend penalty rates. Paid family and domestic violence leave is another key issue being considered by the Fair Work Commission as part of the Modern

Award Review process. The ACTU and others have proposed an additional entitlement of 10 days paid domestic violence leave for those persons experiencing family or domestic violence. The ARA considers domestic and family violence to be a serious issue for the Australian community. However, the Association also recognises that not all businesses have the capacity to honour a new category of leave. The ARA has therefore decided to support the submissions of the Australian Chamber of Commerce and Industry. After seeking feedback from the members of the Association, we have found

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that members typically work sensitively with employees who might be experiencing domestic violence, often voluntarily granting time off work, access to leave and other arrangements. Some members even have formal arrangements to support their employees impacted by domestic violence. It is expected that 2017 will see the conclusion of the Modern Award Review process with the ARA continuing to provide its members with regular updates in relation to any significant developments. 2 UPDATES TO THE EMPLOYMENT RELATIONS MANAGEMENT SYSTEM (ERMS): ARA members enjoy free and unlimited access to the Employment Relations Management System (ERMS). The ERMS functions as a virtual Human Resources assistant, providing the tools to make HR administration easy and compliance simple. The upcoming year will see the beloved ERMS undergo a complete facelift, with members expected to benefit from a cleaner and simpler user-interface. The ERMS provides members with basic employment documentation including template policies and contracts, as well as a range of workflows to assist with managing tricky employment situations. Keep an eye out for a range of exciting new developments that are set to go live in 2017! 3 FAIRWORK OMBUDSMAN SET TO RECEIVE INCREASED POWERS: Wage scandals featured heavily in 2016, with the Fair Work Ombudsman (FWO) taking significant steps to ensure compliance with Australia’s workplace laws. We are again reminding members to get their houses in order before the Ombudsman comes knocking. The ARA Employment Relations team are ready

eye to worker exploitation within their franchise network. 4 BE PREPARED FOR THE ANNUAL WAGE INCREASE: Members are reminded to prepare for a wage increase towards the middle of the calendar year. The Fair Work Commission is currently conducting its annual review of award wages with its decision expected to be handed down around mid-June 2017. As is consistent with past practice, any wage increase is expected to become payable from the first full pay period in July 2017. The annual wage increase is generally between 2-3 percent, however, an alert will be published notifying ARA members of the decision as soon as it is handed down. Members are advised to contact the ARA Employment Relations team to access the updated pay guides or if they have any questions about the wage increase. As always, ARA Members will be notified of any employment relations updates throughout the year by the Employment Relations Team.  For more information regarding Employment Relations issues, please contact the ARA Employment Relations Team on 1300 368 041.

to assist any members should they have any concerns in relation to their compliance with workplace laws. In the wake of the 7-Eleven wage scandal, it is likely that the FWO will receive increased powers and additional funding early in 2017. This would significantly assist the organisation to enforce Australia’s workplace laws more effectively. The FWO continues to push the boundaries of the accessorial liability provisions of the Fair Work Act. This comes as no surprise with the Fair Work Ombudsman herself, Ms. Natalie James, having publically expressed her view that such prosecutions are crucial in reinforcing the roles and responsibilities of key personnel within an organisation. HR Advisors, managers, directors, accountants and CFO’s have all been caught by the accessorial liability provisions and personally held liable for their involvement in workplace breaches. What does this mean? It means that if you knowingly took part in a breach of workplace laws, you can be found personally liable for such breach, and are prevented from hiding behind the “corporate veil” of the organisation in an attempt to avoid personal liability. Franchisors have also come under increasing scrutiny over the last year with the master franchisor of Yogurberry being penalised for its involvement in the exploitation of four workers at one of its stores in Sydney. The precedent-setting judgment should put all franchisors on notice that they can no longer turn a blind

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E-COMMERCE

NewYear Resolutions for the Modern Retailer

By Sheeda Cheng – Temando

Being prepared and self-aware early in the year will not only please your customers but lead you to success.

W hether you’ve been naughty or nice last year should not blind you from the fact that 2017 can be your best year. With global retail sales projected to continue its upwards trajectory to US$26.83 trillion this year, how well you plan and execute your retail strategy right now will determine your share of this pie. Let’s start with five resolutions to help you achieve your goals: 1 I SHALL SURPRISE MY CUSTOMERS “Put your customers first” is easier said than done. Dell CIO, Jerry Gregoire, updated this old adage when he said, “The customer experience is the next competitive battleground”. This is never truer than now when customer-centricity can mean anything from flying in warm pizzas to your hungry customer by drone, to turning a customer complaint on Twitter into an idea to execution in six days. However, you don’t need drama to make a big statement. Turning your attention to solving common friction points such as overly expensive or slow deliveries, complicated checkout, or inflexible returns will delight your customers, and encourage conversion.

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E-COMMERCE

“With Brexit, Trump, and Pokémon Go defining 2016, you can never be too sure about what will happen, or whether market conditions will sway favourably this year. That’s why it’s important to plan for the unexpected.”

2 I’LL USE SHIPPING AS A SALES TOOL Shipping shouldn’t be hard, nor should it take a chunk out of your already narrow profit margins. While delivering orders was quite a novelty a decade ago, it’s now the norm. Nowadays, there’s a trove of technologies to support your shipping and fulfillment objectives, to increase shipping options, lower carrier onboarding costs, or transform retail stores as mini distribution centres. Shipping has been used by modern ecommerce stars including Amazon and Australia’s very own THE ICONIC, as a tactic to increase conversion and loyalty. For example, over a billion items were delivered by Amazon over the holiday season, and THE ICONIC’s customers continue to gush about the company’s deliveries and returns. With shipping-related woes being the main culprit for 64 percent of abandoned carts, investing in great shipping and fulfillment technology will help pave your way to success. 3 TAKE A SELF-AWARENESS CHALLENGE Forbes published a great article by John Hall, CEO and Co-Founder of Influence & Co., on how setting yourself a self- awareness challenge can help improve your performance. By increasing your self- awareness - be it through open feedback from your team and customers, or by seeking guidance from subject matter experts on areas of the business that’s underperforming, you’ll be in a better position to make the right decisions for your company. Being self-aware also gives you a competitive advantage as you’ll be able to flex

towards changing consumer sentiment more deftly. Three Seattle-based retailers, Filson, Eddie Bauer, and Nordstrom, are innovating the retail space to find “new ways to tell their brand story by investing in the in-store experience” as a direct response to the muted experience of online shopping. As a result, they heightened the shopping experience; giving shoppers a strong incentive to engage. 4 BE PREPARED FOR THE UNEXPECTED With Brexit, Trump, and Pokémon Go defining 2016, you can never be too sure about what will happen, or whether market conditions will sway favourably this year. That’s why it’s important to plan for the unexpected, such as when an aggressive competitor emerges, stock- outs happen, or legislation changes. Instead of reacting when the threat is present, how about being proactive? To start, you’ll need to assess your level of control over your operations. Could you easily scale your business across borders with your existing infrastructure, or are you stuck in time-consuming practices? How about your customer journey - are you allowing sales to slip away with a difficult checkout process, or outdated shipping options? With 39 out of the world’s top 250 retailers currently operating in Australia, and more expected to hit our shores, local retailers who stand idly will be pushed out of the market. 5 STICK TO S.M.A.R.T GOALS Lastly, make sure that your initiatives are tied to ‘S.M.A.R.T’ goals (Specific, Measurable, Attainable, Realistic, and Timely). While it

may seem easier to proceed into the year with entrenched habits and not challenge the status quo, you’ll never realise your full revenue-earning potential by doing the same- old. By ensuring your objectives are tied to S.M.A.R.T goals, your team will confidently stand behind the new tactics you’ve included in your 2017 strategy. These resolutions may seem unattainable at first glance, but if you stick to them throughout the year, there’s every chance that you’ll succeed. Your retail business, team mates, and customers are counting on you, so don’t give up!  Sheeda Cheng is the Marketing Manager of shipping and fulfillment technology company, Temando. For more information head to http://temando.com.au

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These benefits are offered through CGU Workers Compensation who have partnered with ARA to reduce workplace injuries and achieve sustainable return to work outcomes. Call us now for an obligation free quotation to see how your current insurance premium and cover compares to ARA Insurance.

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1300 368 041

FEATURE

A New Reality for Retail

By Benjamin Staley – ARA

The potential ofVirtual andAugmented Reality has captivated the retail industry, but do these emerging technologies deserve the hype?

unlike any other platform, opening the door to revolutionary possibilities for shoppers to experience brands and products. Spreading fast through countless industries, the burgeoning VR movement has retail firmly in its sights. Driven by big players in VR headsets including the Oculus Rift, Samsung Gear and even Google Carboard, this previously inhibitive and expensive technology is rapidly becoming more accessible for both businesses and individuals. At this early stage, VR applications are primarily being trialled in bricks-and-mortar environments due to the required resources of devices and software. American home-improvement retailers, Lowes, have been innovative pioneers in utilising VR to overcome several buyer challenges through their Holoroom concept. Through transforming customer’s visions of remodelling projects into realistic 3D virtual environments, Lowes has empowered shoppers to try out new room designs before they buy. Leveraging VR technology to eliminate consumer concerns and facilitate informed buying decisions has proven to be remarkably successful for the brand. Closer to home, Myer and eBay collaborated in mid-2016 to create the world’s first VR Department Store. Australian consumers can browse Myer’s range of over 12,000 products on eBay entirely within the virtual environment, made possible through ‘Shopticals’ - cardboard VR viewers for use with smartphones. The seamless integration of physical and online shopping provides

Image: Pulse Communications

V irtual reality (VR), along with its sister technology augmented reality (AR), are poised to reshape the retail experience and completely transform how people shop today and in the future. Met with a mixture of excitement and trepidation, each new application of these disruptive technologies holds a budding promise of a new horizon for retailers and customers alike. From Pokémon GO, to Snapchat filters and the ubiquitous use of mobile devices for almost everything, Australians are undoubtedly

embracing the virtual revolution with open arms. For retailers, the question remains; Is this the beginning of a new reality for retail? In a time where potential customers are more distracted and bombarded with choice than ever before, VR platforms are rising rapidly as a viable solution to this retail dilemma. Virtual reality can engage users on a previously unattainable level, as viewers are entirely immersed in a simulated, three-dimensional environment. The richness and interactivity of artificial worlds engage the senses in a way

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an integrated experience for customers to personally engage with brands and to research, explore and purchase products. Although VR has garnered much of the limelight for the transformative effect on industries including gaming, entertainment and real estate, AR is deservedly carving out its own place as a technological game changer. AR technologies facilitate an immersive experience through the overlaying of virtual objects over the surrounding physical environment, seamlessly blending the physical and digital worlds. Emerging AR platforms utilise current technologies including smartphones and tablets, allowing retailers to experiment and innovate with fewer barriers to entry than Virtual Reality counterparts. The current and potential applications for AR technology have piqued the interest and investment of many prominent and forward- thinking retailers, enhancing both the in-store and online customer experience. Projections of the virtual world can enable customers to digitally visualise and interact with products before they click ‘buy’ or head to the counter. International beauty retailer, Sephora, has recently trailled an Augmented Reality Mirror in-store allowing shoppers to test virtual cosmetics on their faces. The photo-realistic simulations use facial tracking technology to map user features and overlay makeup in real-time and 3D. The ability for customers to experiment with products through this novel application has simultaneously increased in-store foot traffic and conversion rates. The ripples of this digitally-enhanced bricks-and- mortar experience are set to make waves in beauty and fashion in retail. Early-adopters of this technology are already seeing the benefits of addressing and eliminating barriers to purchase, resulting in enhanced customer interaction and increased sales. The opportunity of these platforms to dissolve consumer pain points, create unique shopping experiences, and set new standards of customer service has deservedly captured the attention and imagination of many Australian retailers. Now that brings us back to our original question – does VR and AR reflect the future

Image: Phoria

“ In a time where potential customers are more distracted and bombarded with choice than ever before,VR platforms are rising rapidly as a viable solution to this retail dilemma.”

revolution. Though it’s yet to permeate the mainstream retail market, the billions of innovation dollars invested in this technology can’t be ignored. The truth is; the nascent promise of virtual and augmented reality couldn’t be any more real. 

of the retail space, or is it just a hyped-up fad in need of virtual reality check? With the infancy of this disruptive technology in the retail space, only the coming future will hold that answer. However, it’s impossible to ignore the momentum of this digital

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TRENDS

Is Sustainability the Secret?

By Katherine Mechanicos – ARA

Just like fashion, consumer loyalty blows through phases. Is sustainability just another fad or is this loyalty trend here to stay? W ith the new year comes new challenges, retail trends and a shift in consumer needs. a positive impact on people, the planet and animals while also identifying those that aren’t sustainably-conscious. Many retailers have responded to this movement by reviewing and rebuilding their supply chains to directly align with the ethical values of their customers. They are improving these supply chains by implementing sustainable

Alongside omni-channel retailing and emerging technologies, sustainability is slowly embedding its way into the industry. This trend is building momentum as more shoppers are becoming invested in environmental issues and expect retailers to echo their sentiments. In fact, according to the 2013 Global CSR RepTrack 100 report, 73 percent of consumers are more likely to recommend companies that are sustainably-conscious. Subsequently addressing important social issues, upholding ethical operations and ensuring business transparency are now becoming highly influential factors in retaining loyal consumers. Implementing sustainable practices in various business models is proving to have a positive effect on retailers, consumers and the broader community. This win-win strategy has deservedly evolved from a risky business idea into a powerful way to make a difference and differentiate in competitive markets. Retailers across the world are seeing the great value of sustainable practices and are making a genuine effort to apply these principles to their business. SUPPLY CHAINMANAGEMENT Consumers and regulators are constantly on the lookout for irresponsible and unethical retail management. In fact, in 2014 Ethical Consumers Australia launched their Good on You app, which provides consumers with a platform that showcases brands that have

Image: H&M

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TRENDS

and recycling old garments. The first products made from these recycled textile fibres from unwanted garments were manufactured and sold in the following year. This ‘Close the Loop’ concept identifies strongly with the environmental values of millennial shoppers and serves as crucial consumer loyalty tool for the brand. SOCIAL IMPACT AND COMMUNITY INVESTMENT Retailers are recognising their potential in this space and are updating their traditional business models to meet community and social needs. According to the Retail Industry Leaders Associations’ Retail Sustainability Report, consumers are now more appreciative of companies that are authentically investing in making the world a better social and environmentally friendly place. TOMS corporate responsibility programs are great examples of delivering sustainable programs for community and social needs. TOMS shoes are made of sustainable and vegan materials including natural hemp, organic cotton, and recycled polyester. Their One-for-One model matches every product purchased (shoes, bags, eyewear or coffee) with a new pair of shoes, clean water or medical treatment for those in need. The brands sustainability initiatives provide health, education and community development programs to help improve the future of children, their families and communities in need. As sustainability develops as a key brand identifier and a priority for consumers, it’s obvious retailers who implement sustainable strategies gain and retain loyal customers. Retailers with strong sustainability programs that directly align with consumer and employee values not only experience the substantial business benefits, but also harness a powerful tool to positively influence society. So will this sustainable trend keep consumers loyal? Or will they too put this movement in the recycling bin, already anticipating the new trend to hit the loyalty shelves soon? 

Image: H&M

and only 13 percent of global electronic waste undergoing some form of recycling, consumers are particularly concerned about the creation and treatment of waste. Drastically increased demand for eco-conscious products, made from biodegradable and non-toxic materials, is driving retailers to consider these factors when sourcing, stocking and selling goods. Providing additional recycling services is another growing practice within the retail sector. A prime example of this is H&M’s garment collection program. This sustainable initiative, launched in 2013, evolved H&M’s retail business to an eco-friendly service by reselling, reusing

strategies into their business operations, from sourcing to manufacturing, packaging and distribution. Logistics is a key area of focus for sustainability efforts and, as a result, we are seeing conscious retailers opting for transportation methods that minimise environmental harm. Conscious retailers are optimising their business models by sharing warehouse and distribution operations to reduce environmental impact and cut operational costs. REUSE, RECYCLE AND RECREATE With almost 80 percent of consumer products thrown away in six months

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E-COMMERCE

Social Media: Using the Sea of Social Opportunity

By Adele Pellizzari – GMG Digital

A deep dive into social media’s emerging influence in the buying decision process.

T he last thing I bought online was an NBA basketball jersey for my boss’ German Shepard. Now, I know what you’re thinking: what possessed me to make such a specific purchase? Is there such a thing for dogs and if so, where can I get one? There’s really only one answer to these questions: social media. SOCIAL MEDIA FORMS A GLOBAL CUSTOMER BASE You would be correct in stereotyping ‘millennials’ as the predominant perpetrators of the social media movement. However, recent trends have shown we are no longer the only group succumbing to this addictive outlet. The likes of Facebook, LinkedIn, Twitter and Snapchat have cast their nets vast and wide, and as a result have experienced significant usage growth among those aged between 30–49. Not only this, but these social media platforms have over two billion active users worldwide – that’s more than 29 percent of the world’s population, including over half of Australia’s population. So, what are the implications of this for established or emerging retailers? And how can conventional millennial behaviour – like purchasing a basketball jersey for a dog – be a testament to social media’s influence in the buying decision process?

FISHINGWHERE THE FISH ARE Social media plays a huge role in revolutionising the customer lifecycle. The saying goes that in order to capture the most fish, you need to be where most of the fish are swimming. Continuing the metaphor, it’s obvious that Facebook and other networks are somewhat trout farms when it comes to social media. They give retailers the opportunity to drop a line into a densely-populated sea of demanding consumers and capture a market proven to

be hungrier than ever. And I don’t just mean for instant self-gratification (although this has surged tremendously). Sensis’ most recent Social Media Report (2016) revealed that over four in ten customers will review a retailer’s social media presence before committing to a purchase if they have not previously purchased from that retailer’s website. While 59 percent of those that used social networks for product research went on to make the purchase online (see figure below).

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