IS RETAIL DEAD? Mono-Brands Vs Multi-Brands and the Hoohaa of Online

 

What’s happening in the retail market in Australia is happening globally. The traditional retail concepts and local retail stores selling multi-brands are having to look at how they market to consumers who are choosing more and more to buy online. 

Landlords in Australia continue to seek higher rents, particularly in A Grade sites. These shopping centers demand enormous rent and occupancy costs, so generally only the big brand retailers can continue a presence – with smaller retailer’s having to find alternate ways into the market.

Key shopping strips in Melbourne have undergone huge changes, with their traditional retail fashion stores that once drew in traffic now being replaced with hospitality – cafes, restaurants, bars and health and beauty business. High end fashion strips like Chapel Street, Prahran, Bridge Road, Richmond and Burke Road, Camberwell have undergone enormous change, which has had an impact on landlord’s and their returns.

Whilst many people still enjoy the village local shopping strip experience, with consumers now buying products online, at outlet centers or major shopping centres, the small retailer is under ever-growing pressure. Online shopping has now been fully embraced by Australian consumers in fashion, white goods, household furniture, coffee machines, sunglasses, appliances, rugs you name it !

My recent experience buying a fridge and washing machine on line with their being delivered and plumbed in within a few days and their taking away the old ones with no fuss and very good service was an easy nostress and time efficient experience. I didn’t have to go and shop and talk to salesmen!

The whole shopping experience has undergone change, as have consumers expectations. Aligning the consumer expectations with the retail experience is the challenge retailers now face. Retail shops and sales will always be with us, but retailers are becoming more consumer focused and more brand selective in their offering. Retailers need to give the consumer an experience or a draw card offer to entice them into their shops, rather than just ordering online.

Brands now have even greater impact on consumer choice and many well-known and global brands have identified that rather than selling a product in a department store where they are competing with a multitude of other brands focusing on a stand-alone mono branded store has greater impact and appeal and is easier to control from a marketing perspective.

Mono-branded stores can be totally dedicated to one brand and attract consumers with special promotion and instore activities – becoming a destination for the brand such as Apple stores, Telstra shops, Pandora and Adidas. The presence of mono-branded stores also sends a message to the market that the brand is strong and dedicated whether it is a franchise or licensed outlet. A Mono-branded store can also be more successful for the operator in terms of management, stock control and marketing.

Although the same product can often be bought online for less than in a retail store, retail will continue to exist because people still want the physical shopping experience. Multi-brand stores will continue to exist but they need to lift their game and find points of distinction – how they deliver their product range to their customers, and the effectiveness of their in-store experience.

The days when I used to sell cameras and projectors for my brother at Ted’s in Elizabeth street in 1976 when I had no idea how the Sanyo projector worked are gone. Which is a shame as they were fun days! Consumers now expect top-notch service when they walk into a retail store, otherwise – why bother?

Sales charm only goes so far these days, staff need to be trained and have product knowledge as the consumer has most likely done their research before they walk into the store.

When a brand supplies to a multi-brand store, there is less control over how that product is marketed, how the sale staff offer that product against other competing brands in the store and the brand has less control over the shopping experience. Mono-brand stores are not a new invention, however there is no doubt that with the changing trends in retailing, online shopping and the cost of operating a retail enterprise, there will be a focus on mono branded retail stores. The mono-brand store can offer a variety of experiences, education and entertainment. There is also the feeling of belonging with the offer of membership, loyalty rewards, dedicated launches and events.

So is retail dead? No, just changing.

Robert Toth is a Partner of Marsh & Maher Lawyers, with over 30 years of experiencein franchise law. He is an Accredited Business Law Specialist with expertise in franchising, licensing and distribution and franchise dispute resolution (acting for both international franchisors and franchisees).

 

rxt@marshmahercom.au

www.marshmaher.com.au