Retailers have been adapting to change since online shopping began picking up in popularity in 2010. In a bid to turn around stagnant growth some are looking back at how retail was done before the advent of the internet.
The impact of e-commerce has been felt by retailers significantly over the past years as the spend on online versus in shops has jumped up to about 9 per cent in this country. This is expected to break into double digits over the next couple of years as New Zealand follows trends in Britain, Australia and the United States.
But the sector is coming round full circle. Once service-based and margin rich, retailers are revisiting offering services to draw shoppers into their stores as margins have become depressed and shoppers embrace the convenience of shopping online.
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Chain retailer Overland Footwear is one example of this.
Shane Anselmi, managing director of the retail company which operates about 59 stores throughout Australasia under the Merchant and Mi Piaci brands, believes the key to survival in New Zealand's tough retail sector is being service-based. It is a belief that department stores, including David Jones, appear to be adopting to drive growth.
Bricks and mortar stores could no longer only be about a transaction, Anselmi said.
Service-based retail had become a focus for Overland, which Anselmi said had been drawing inspiration from how retail used to be done pre-1990s.
"Bricks and mortar will always be there but in order for bricks and mortar to survive and thrive it needs to do more than just sell product. That's why experience is important," Anselmi told the Herald.
"The future of retail is combining experience."
The rise in online shopping had been its biggest challenge - and change within the sector - that Overland had been forced to adapt to over the past 30 years, he said.
Overland's web stores were four times bigger today compared to three years ago, and to keep its stores profitable, Anselmi said, it had move to improve its in-store experience.
"For us, in high-rent malls and being smaller stores, our costs are high, and the cost of employing our [staff] is going up all the time, so we need to be a premium product and service."
In response to the need to improve its in-store experience and the consumer trend towards sustainability, Overland has begun opening cobbler workshops within its stores. It opened its first in its flagship Chadstone store in Melbourne about 18 months ago, and its second in Westfield Newmarket in Auckland earlier this month.
In addition to shoe repairs, it has began a monogramming service, and is working on "bringing back the great old-fashioned shoe shine experience" to its stores, Anselmi said. It plans to roll out these services to its larger format stores.
It has also introduced new products to tap into the growing "athleisure" market.
The third-generation company opened its first retail store in Westfield Newmarket in 1990, when Anselmi first got involved in his father's discount footwear retailer Shoe Town, which at that time had about eight stores. Shortly after he rebranded the business, moving from a discount to upmarket offering.
Seamstress services and shoe repairs were once a part of retail stores, though over the years have been phased out through cost-cutting moves. Anselmi reckons these services are coming back for good.
While it was harder to be an independent operator in the current retail environment, Anselmi said he believed there was still a place for such stores in the market. He said retailers needed to adapt with changing consumer trends in order to survive.
"The true retailers of the future are the ones that have an emotional connection and an omnichannel service."
In Australia, Overland operates six stores. Anselmi said it had no immediate plans to increase its store footprint in Australia, and was at capacity within New Zealand. It could not share its financial position but said its growth had slowed in recent years.
The impact of wanting that bargain
New Zealand shoppers, particularly millennials, were now conscious consumers, mindful about sustainability and after goods that are of a higher quality and last longer, Anselmi said.
But while consumers are after quality, it appears that they are not necessarily wanting to pay the price that comes with it. Retail NZ chief executive Greg Harford said New Zealand's bargain-based psyche was also reflected within the country's labour market.
"There's definitely an increasing trend for customers wanting quality, ethically sourced and sustainable goods, but these come at a higher price, and customers are very price conscious and often vote with their wallets. It's part of a broader contradiction that we also see in labour issues," Harford said.
"We live in a country where we want everyone to be paid at or above minimum wage, get regular holidays and be well-treated by their employers – but at the same time many customers are willing to shop offshore and have their shopping fulfilled by warehouse staff in countries where workers are not as well treated as they are in New Zealand."
New Zealanders "love a bargain" and are always on the hunt for a good deal, but this, coupled with the rise in online shopping and increased competition from overseas, had made the retail sector an increasingly tough sector for operators.
"Retailers have responded to customer demand for great sales deals, and this has become increasingly expected by customers. It has created a cycle where often we are waiting for sales before we buy big-ticket items, and it has had the effect of depressing retailer margins across the board. Some retailers are trying to move towards an every day low-price model, but it is challenging to move customers away from the sales mindset."