The retail environment is changing, and fast, in a new digital world. Photo / Getty Images
The retail environment is changing - and fast. In a new digital world, retailers need to be everywhere their customers are - it's either adapt or risk being left behind. Zoe Hunter reports.
All retailers apart from local dairies and speciality stores should have an online presence or risk being left on the wrong side of the digital divide, new research suggests.
Bay of Plenty business experts say it is the only way businesses can keep up in a fast-changing digital world where more people are shopping online.
Covid-19 has been a "game-changer" and the need for instant gratification is now driving "major changes" in the retail sector.
Westpac's latest Retail Report showed the traditional retail model was changing with digital technologies disrupting retail supply chains, transforming operational processes, and revolutionising how products were marketed and sold.
"For retailers that ignore these changes, it may be business as usual for a while, but over time they are likely to lose ground to competitors that have transformed," the report said.
Westpac NZ industry economist Paul Clark said in a digital world all businesses should have an online presence and retailers on the wrong side of the digital divide may get left behind.
Most retailers other than sole trading speciality stores and the corner dairy have or were already moving from brick-and-mortar to online, he said.
"It also means establishing a social media presence."
Clark said retailers had to get four key things right to be successful and "the old hat" of understanding the customer was first on the list.
With more sophisticated data and analytical tools, understanding customers had never been more important for retailers seeking a point of difference, he said.
Retailers needed to make the shift online and be "everywhere their customers are" as well as be able to "sell the experience of shopping".
Lastly, Clark said retailers needed to respond quickly to customer demands, which meant moving away from "off the shelf" to "on-demand" product availability.
The Bay of Plenty's retail sector turnover last year was about $6.3 billion and about 2300 shops employed about 3400 people.
According to NZ Post, online shopping in the Bay totalled $316 million in the year to June 2021 - up 11 per cent compared to the previous 12 months - with an average basket size of $104. The region ranked fifth in the country for total spending in the same period.
Website design company Zeald launched the Get Ecommerce Movement in the 2020 lockdown and has since approved more than 1000 applications from small businesses nationwide for free websites to help businesses get running online.
There were 20 Bay of Plenty businesses live on the GEM website, of which 70 per cent were setting up websites for the first time. A total of 75 per cent were retail businesses.
Tauranga-based Zeald agency director Jarra Borman said being digital enabled online and contactless trading during lockdowns and beyond.
"It's the only way businesses are going to keep up and stay competitive in this fast-changing digital era."
Borman said online shopping was always expected to become the norm but "it has accelerated really quickly".
"The biggest impact we have seen from Covid is that consumer buying behaviour has changed quite drastically.
"We saw a massive spike in online shopping out of the first lockdown and that didn't go away.
"A lot of people were forced to take the plunge and start using e-commerce that hadn't done before. They realised there is a whole new world there.
"Retailers have seen how powerful it was with more people buying online and have invested more into it."
A disparity emerged between businesses and those with a strong online presence were more resilient and recovered faster from lockdowns compared to those that didn't, he said.
"Not having a digital presence means you're not where people's attention is to make a sale.
"But people are now spending huge amounts of time online so if you want to be successful as a retailer in 2021 and in the future, you need to be where people's attention is."
Rotorua Chamber of Commerce chief executive Bryce Heard said retail was undergoing "major changes".
"We have seen the move away from CBD shopping areas to large malls with easy parking and easy access."
Future changes would vary across different businesses, he said.
"For some, the days of the old niche retail store are losing popularity.
"This seems to be driven by a combination of convenience, younger generation behaviour and the move to quick solutions and instant gratification from buying online."
Supermarkets also needed to add online and delivery options to the selling "toolkit".
"High-end fashion retailers will require very different sales techniques to commodity clothing. For other businesses, scale and upmarket showrooms will be important.
"There is no 'one cap fits all' solution."
Tauranga Chamber of Commerce chief executive Matt Cowley said the "buzz word" in retail was omnichannel.
"We live in a diverse world with lots of customers who prefer different ways of shopping."
Cowley said omnichannel provided a seamless experience between browsing in-store, thinking about it at home, buying online, and vice versa.
"This integrated approach can be expensive to set up, but it can have strong payback periods."
Covid was a "game-changer" as more people were forced to buy online, particularly during levels 3 and 4, he said.
"As more people feel comfortable making purchases online, there will only be more online purchases, not less."
It was all about knowing your customer and understanding your competition, he said.
"Many retailers will continue to do just fine with running their brick-and-mortar store only if their customers don't feel comfortable buying online.
"But the sun will set on this model over the next few decades as digitally native generations make up the majority of the consumer market.
"Younger generations, with low wages and sky-high housing costs, are being forced to sample in-store and look for cheaper options online."
Priority One chief executive Nigel Tutt said there had certainly been a shift towards digital capability in many businesses.
"It's hard to imagine businesses that wouldn't have some kind of online footprint.
"While businesses needs will vary, the key is for all businesses to use digital tools to get the best understanding possible about their customer, then use other digital or in-person tools to engage with them."
Retail NZ chief executive Greg Harford said the Covid-19 environment meant it was more important than ever retailers looked at expanding online platforms.
While shoppers should expect to see a wider online offering from retailers it did not replace buying in-store, which was also "incredibly important" to keeping local retailers thriving, he said.
"We expect to see retailers focusing on customer online needs like click and collect, greater marketing tools and transforming operations and supply chains."
Moving and improving online has changed how some Bay of Plenty retailers do business as they stay relevant in a fast-changing digital era or risk being left behind.
Tauranga's Robyn Parker said her small sewing and knitting supplies store "would have been dead and gone by now" if she hadn't invested in a website.
The owner of Robyn's Cottage in Greerton took her business online during the first lockdown last year. She remembers the day very clearly.
"It was my birthday."
Instead of spending money on a cruise, which she had planned to do, Parker invested in a new website.
"I wouldn't be without it now," she said. "It runs side by side with my store."
With her new website Parker was now sending products throughout New Zealand, something she said she had never been able to do before.
"It's more than just sales though, it's about presence.
"The whole world is stepping forward digitally, and being online keeps me in front of my customers, as that's where everyone is now.
"It has put us out there. For the small shop we are the website had given us a much bigger profile."
Parker said she had also noticed more people were browsing online first before buying in-store.
"They bring in pictures downloaded off the website and say: 'I want this'. People know exactly what they want".
Pat Ward and Anne Billing of Katikati-based Happy Horizons have also upped their digital game.
Ward said the business, which sells organic health and body care products, was set up in 2014 with a basic website for customers to find their address and place orders.
"It was a very modest online presence," she said. "It wasn't that we weren't online, we just weren't online very well."
Ward said their business was "hit hard" when the 2020 lockdown happened as most of their business came from attending local markets.
Upgrading their website was "always on the to-do list" and after seeking some help the pair launched their newly upgraded website in March this year.
While they were still fine-tuning their digital strategy Ward said online sales have since increased.
"We are definitely trending in the right direction," she said. "It's a whole new world."
"If you’re loyal to them, they will be loyal to you."