Internet crucial to thrive

By James Fuller

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As tough economic times continue for the Bay of Plenty's retailers what lies in store for them? The Bay of Plenty Times Weekend speaks to one man who predicts a changed landscape in the coming years.


Change or be left behind is the message to local retailers from a Tauranga business leader.

Chamber of Commerce chief executive Max Mason says downtown retail shopping will be redefined in the next two years.

He has identified 10 business trends which are either already happening, or are on their way, which will affect that transformation.

"It's not the death of the High Street but it is a change. In the next two years, the face of the High Street is going to be changing more rapidly than it has possibly ever done in the past.

The retail scene is changing. Retailers should be aware of that and build in changes to their business model.

"It's happening now and it's very threatening and distressing for some businesses.

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"A lot of retailers are blaming the recession, and there has been a real pull-back in New Zealand on consumer demand because people want to get on top of their debts, but at the same time, they [customers] are looking for different channels.

"The internet and Trade Me are really hammering our local High Street," Mr Mason said.

However, the effect of the internet on traditional retailers could still be turned to their advantage.

"Any business that hasn't embraced social media and hasn't a strong online presence is in danger of being left behind," Mr Mason said.

"The online threat is a real and present danger but it's also a tremendous opportunity.

"Whilst change is nearly always resisted by people, the ones that have the ability to do that and embrace new technologies are going to be the ones which retain the loyalty of their customers."


Pressure on small independents

Mr Mason predicted the continued growth of data mining and analysis of purchasing behaviour.

"We know the big supermarkets and chains do this reasonably extensively already but this will spread to the smaller businesses as well," he said.

"There will be software packages available to small businesses where they will be able to get a very good understanding of their repeat business customers."

Greater technology, marketing, merchandising and customer service skillsets would be required going forward. This trend would put a lot of pressure on small independents and was one of the reasons Mr Mason said he believed their days were numbered. They would be squeezed out by branch operations and franchises of larger concerns.

"As these branch operations become more efficient the small retailers who try to keep up with them are going to get squeezed out. I think it's a great pity because when we lose the individuality of our shops and retail offering we lose our soul.

"Regrettably I think that's the way things will go.

"The greater marketing and organisational muscle which is behind these branch operations will be very hard to compete with and they will eventually win out."

He said "piggybacking on a good branch operation" could become a necessity for some business owners.

However, an area where smaller independents could establish an advantage was in a growing trend towards niche stores.

"The days are going of one-size-fits-all retailing," said Mr Mason. "There are growing niche products, markets and services which retailers will need to satisfy. For example the 'tween' [9-12 year-olds] demographic has to be catered for now, whereas earlier it would not have been considered. Other markets are fragmenting into smaller segments and that's a trend which will continue."

In the future, a greater emphasis would be placed on customer service and relationship development. This was designed to retain custom and develop a person's relationship with that company and brand.

"It won't be too long before every retail outlet in Devonport Rd gives out free coffee to its customers," said Mr Mason.


"There will be more of that process where you can give something which doesn't cost you very much and it's going to create a longer relationship with a particular customer.

"That's already happening in some stores and underlying it is a desire to create a stronger relationship with the customer and therefore a greater sense of obligation and brand loyalty."

Environmental awareness was a growth market, said the Chamber's chief executive.

"Concern around the environment will continue and even for the average retailer a green outlook will become a must have." This would be driven by customer wants and regulatory demands.

"This will grow the whole green retailing sector. People will pay a premium for looking green. You're already seeing a lot of it abroad, things such as emission-free delivery vans, or packaging which details how many food miles are on a particular product."

Mr Mason also said the size of retail outlets would become smaller and stock fewer items.

"Many will run as demo model stores, where one stock item is used for display purposes, you choose the item you want, pay for it, and it will be delivered to your home. Much in the same way that mobile phone stores operate. That will be extended to other categories of products such as kitchenware items, ornaments, technological products, furniture, high design-type items, in fact, virtually anything, he predicts.

Mainstreet Tauranga manager Kirby Weis said businesses had to adapt to the changes brought on by the internet but could deliver something the internet could not in terms of personal service.

"The retail sector is continually evolving and no longer are businesses only competing with their neighbour or region, but now they have to compete on the worldwide stage," Mr Weis said.

"Online shopping is growing and some retailers have thrived with the challenge.

"Although this has proven to be great for the consumer, it has impacted on how the street retailer now conducts their business.

"With the online shopping experience has come greater competition for each retail store and the challenge is in them finding their niche and focusing on how they can best present this to their customers.

"Customer service, product knowledge and providing the customer with the ability to touch and feel the product should not be underestimated but the new challenge is in how they entertain their customer to the degree that they Online lure brings customers into shops want to come back again and again for the experience, something the internet cannot provide; the personal touch."


Molloy's Menswear in Devonport Rd is one business which has embraced new technology.

Owner Jason Dovey said he believed the importance of the internet would only increase.

"We've had a website going for 18 months and it's probably the best thing we've ever done in business. The average answer when you ask a new client what brought them to you is that they googled you.

"If you're doing a good job online it's good enough to bring them to you," Mr Dovey said.

"We haven't really got e-commerce where people can buy online but what we want our website to do is stand out from the rest and get people into the store.

"You're much better getting them into the store than buying product online because the nuts and bolts of our business is we fit people and do a lot of tailoring so you need people in for that.

"If we didn't have that online presence I agree, I think we would be losing business to the big cities. People would be hopping in their cars and driving to Auckland."


Vast points of difference

Mr Dovey, who has worked at Molloy's for 20 years and took over ownership a month ago from previous owner Brian Molloy, said he would welcome chain stores in the CBD.

"Personally I don't think you'll get chain stores coming into the CBD because they're mostly mall operators. If they did, great. When Glassons moved into town from Papamoa, brilliant; best thing that could've happened.

"People have made the comment in the last six months that the town feels empty. So if chain stores did come in it could encourage people as a drawcard. It's better to have the empty stores full."

He said he was not concerned by the competition bigger stores might represent.

"My view is if you're a good owner/operator you've got vast points of difference from chain stores, such as customer service, product knowledge and good product. A lot of the product in chain stores is very stereotyped, you go to one branch and it's the same product from the North Island to the South Island.

"An independent retailer, if they do their job properly will have points of difference and that's how they will survive."

Development of customer relationships and high standards of customer service were high on Mr Dovey's list.

"You want to make it an enjoyable experience. That's what we strive for. It might be a bit of a pain driving into town, parking and walking, but people know what they're going to get when they walk into Molloy's."

Broncos Sports, in Willow St, is another store which has benefited from its online presence.

The store was purchased by the Tuck family 37 years ago, in 1975, and is run by father-and-son team Ben and Glenn Tuck.

"Business is always evolving and as technology changes you've got to move with it and if you don't move with it you're left behind," said Glenn Tuck.

"Websites and the use of Trade Me, we started about three or four years ago. It is a big part of the business but the products we sell are 'touch and feel' type products. You have to be fitted to them. So you have to come to the store for that, really.

"It's generated a lot more interest though, the phone constantly rings and we get emails non-stop, people coming in from places all over the country who say they've seen the product online and they've come in to see the product.

"When you're fielding calls from Central Otago and Southland that is clientele you've never had."

Mr Tuck said the business had to have tactics for competing with the larger chain stores.

"It is difficult, they have bigger buying power. What we try to do is become a bit more obscure in what we do and so have things which other people normally don't have. You can't compete on having the same product as everyone else because customers can go from one store to another round the city, or the country, and see if they can badger you for a better price."

He said being seen as experts in their field was important for business. "We've had to become more savvy, we've had to learn how to promote ourselves better. Traditionally New Zealanders aren't very good at talking about themselves but we've had to learn to do that better.

"We've done it in what we specialise in, which is gun-fitting, in saying we are the best in the area at doing it.

"My father [Ben] is also the head coach [of clay target shooting] at Tauranga Boys' College and they just won the Super 8s for the sixth time in a row. No other school has ever done that in any sport. It shows that we know what we're talking about."


It's about loyalty

Bernadette Rowlands has owned the High<inline type="recurring-inline" id="1003" align="outside" enforce-sites="no" /> Street Boutique, in Devonport Rd, for seven years. She said her speciality was stocking predominantly New Zealand brands.

"It's a quality thing, New Zealand designers making clothes for New Zealand women," Ms Rowlands said.

"My thoughts initially were that online was going to be quite difficult for me to combat but my market likes to have the variety and options and the whole shopping experience. That's what we target and it's hard to get that online of course."

She said customer service and relationship development is "absolutely huge for us".

"Social media is hugely important but at the end of the day it's about customer service. I've got fabulous staff who know what they sell, they know the local people. It's not easy but we keep working hard to give the people what they want," she said.

"It's about loyalty and our customers are loyal.

"I know people come to me because of the labels I stock, some of these labels people have been buying for years. A lot of people ring from out of town for a particular item because it's out of stock where they are.

"Perhaps younger people are buying more and more online but if you're buying online you have to be the perfect figure. Will it fit, what's the returns policy? It's a risk." Mrs Rowlands was also not concerned by the threat of the chain stores. "My customers wouldn't be buying their wardrobe from a chain store."

And she added that she felt the days of independents were far from numbered. "I believe there's a real market for independent retailers."

- BAY OF PLENTY TIMES

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