Business Franchise Australia


Strategic Retailing: The right prescription when times are tough

This article appears in the Jan/Feb 2015 issue of Business Franchise Australia & New Zealand


Barely a month goes by without a regular sale period for many Australian retailers. Pre Christmas, Post Christmas, Mid and End of Season, Financial Year End, Easter – shoppers are beginning to lose trust in retail brands believing margins must be too high.

‘Unfit’ retail businesses, who are heavily discounting, are damaging their brand particularly if they fail to understand the important relationship between price, discount and sales, giving away vital profit by reducing their margin too much. Whilst some discounting is necessary and should be used as a sales strategy as opposed to inventory clearance play, ‘fit’ retailers, who are thinking strategically as opposed to tactically, are winning the survival race. Retailers need to have the bigger picture in mind to be best equipped for future opportunities, rather than becoming too reactive by implementing short term solutions. Thinking strategically means getting your retail business into good mental and physical condition thus avoiding the tactical reduction of margins and staff cuts.

The ‘Fit’ retailer thinks strategically before acting tactically

Brent Dowsett, Managing Director of Australian Geographic Retail understands why so many Australian retailers fall into the cycle of tactical retailing. “It is hard not to revert to tactics when strategies seem to be failing. When all around you are going on ‘Sale’ you need a strong will and belief in your strategies to hold the line. The difficulty with dropping your price when things get tough is that you need to significantly increase your top-line to compensate for lost margin and when customers are not buying, this almost always proves to be the downfall of the tactical move. Tactics should be confined to individual trouble spots, whilst the overall strategic plan is being executed.” As well as giving this great piece of advice to other retailers, Australian Geographic Retail has recognised one of the key strategic imperatives to keeping retail ‘fit’ – it values innovation.

Becoming innovation fit

Innovation in retail should not be restricted to market entrants as it so often is.

Regardless of the economic climate, the shopper is smarter, more connected and seeking more exciting and compelling products and experiences. A ‘fit’ retailer will be constantly innovating and refining the customer experience to make it extraordinary – from the very products offered to the total cross-channel store experience. In doing this, they are creating a value added offer allowing them to retail at full margin since they become hard for shoppers to formally compare with competitors.

Innovation starts at the very top of a retail business and should form a vital part of the executive team’s KPIs. If you create a culture of innovation from the top to bottom, you will include every facet of the business from best practice technology through to merchandising, customer service, shopper marketing and so on. Don’t be afraid to seek inspiration for innovation from everywhere – for example, we source extraordinary examples of global retail innovation and thinking through our global retail expert partners at Ebeltoft Group ( allowing us to advise others through experiences, analyses and global learnings.

Taking your retail business online can be one way to innovate and refresh your total retail experience, but it must be approached as a complete multi- and cross-channel experience with a strong business case. As consumers become more fragmented in terms of where they shop and conduct business through multiple channels, expanding the business beyond the bricks and mortar to online and other forms of e-commerce is a matter of customer service, and being able to offer a convenient and enjoyable shopping experience to new and existing customers wherever they are.

Customer connectivity fitness

To be fit for business, retailers must think strategically when it comes to connecting with consumers and the key to becoming smarter and fitter as a retailer is how you listen and connect with your shoppers. You need to inspire, lead and manage them in new ways.

To inspire your customers, you really need to understand them. We apply our proprietary Limbic methodology – a model for motives and decision-making which is unique and which allows our ‘fit’ retailers to base decisions on genuine shopper and marketplace insights. If you put all the tools in place to listen and analyse what your shoppers want, need or have to say, you have enormous intelligence in understanding what motivates and influences them to purchase. Furthermore, you have the ability to personalise their experiences, whether it’s online or in the physical store space, thus adding value and allowing you to be strategic about how you may decide to get tactical..

So how well do you know your customers?

• Are you employing social media strategies to communicate and engage with your shoppers?

• Do you know who or what influences your customers? Whether it’s a billboard, merchandising display or a friend or family member, if you understand this, you can communicate to and with them more effectively.

• Do you understand how your customers can or have connected with you? What devices are they using?

• Are you making this connection easy for them – from internet path to purchase to a helpful App? Can they navigate your stores easily, access sales staff and the counter?

• Are you personalising their experiences with you from ‘remembering’ their product selections and preferred payment methods to tailoring their delivery options?

• Do you collect details, tailor offers and reward your customers for their loyalty?

• Do you understand the differences in your customers across all your channels?

• Do you employ cross-channel communication techniques for the total connectivity experience?

Customer service fitness

The ‘fit’ retailer understands one of the most powerful weapons in its arsenal is its staff. By investing in increased service levels and staff training, ‘fit’ retailers generate more motivated and confident employees who in turn generate motivated customers. It’s easier for a customer to find a reason not to go back to a store and poor service, poor product knowledge and unmotivated staff are a large contributing factor in specialty retail. By measuring your service levels and rewarding excellence, you create a culture of customer service fitness in your retail business, allowing you to trade on the front foot strategically rather than tactically.

Maintain strategic control

If you feel like the economy is spiralling out of control around you, don’t get sidetracked into thinking you need to react. The hallmark of a fit elite business is its ability to focus on what it can do rather than what it can’t. ‘Fit’ businesses differentiate themselves and prove their worthiness in the retail industry by controlling all the aspects of their business that they can have control of. This means being strategic instead of thinking tactically. One long term sustainable tactic you can take strategic control of is to increase efficiency across the supply chain.

So what can you control?

• Image branding, impact and consistency of visual appearance.

• Measurable positioning, advertising and personalised marketing campaigns.

• Measurable paths to purchase and merchandising.

• Communication with, and analysis of, your customer.

• Customer touch-points though an effective inline multi-channel distribution model.

• Product ranging, quality, clever design, uniqueness and actionable customer feedback channels.

• Supply chain efficiency – speed to market.

• The use of technology to facilitate ‘fitter’ business designs.

• The magnificent store experience from design and layout to customer efficiency.

• The business leadership – creating a culture of innovation and motivation from top to bottom.

• Superb customer service. Training and rewarding performance excellence.

• Measurement of vital ‘health signs’ of the retail business (KPIs).

• Retail economics, cash flow, planning and expense ratios.

So don’t get too tactical when times get tough. Be strategically tactical as part of your overall plan and create a difference to your retail business that makes it impossible for customers to compare it with others. That’s what we call survival of the ‘fittest’.

Happy Fit Retailing!

Brian Walker is Founder and CEO of Retail Doctor Group. Brian specialises in the implementation of insights driven strategy to build business fitness.

For a health check on your ‘strategic business fitness’, contact Retail Doctor Group on:

P: 02 9460 2882