The retail sector is going through a period of rapid and unprecedented change, and retailers need to adapt fast to stay afloat, consultants say.
Customer service is no longer an added benefit but rather a prerequisite and consumers are expecting more from their shopping experiences, First Retail Group managing director Chris Wilkinson said.
"Customer service used to be the key goal for every retailer but now that's considered a hygiene. Service, like quality, is expected not seen as an added benefit by customers [anymore]," Wilkinson said.
To be successful retailers now needed to provide a unique customer experience to stay relevant, he said.
"Businesses must differentiate themselves, and it's not just about pricing.
"It is about demonstrating convenience, value and reasons why people should shop at one store over another," he said.
"With so many shopping journeys now beginning online - they say over 70 per cent of product and or destination decisions begin with some digital influence, retailers must have a quality e-commerce presence that prioritises their visibility and usability over the competitors."
Wilkinson said a quality e-commerce presence was now essential - not optional.
"Consumers want to know what you sell, whether it's in stock - and have the option of ordering online or picking up instore," he said.
"Put simply they want to be empowered. This means full, descriptive content of the products available, exceptional user experiences and content that updates regularly that keep consumers coming back, regularly."
Consumers could expect to see more self-checkouts and more blending instore and online experiences as retailers move to reduce costs and improve profitability.
Amazon and other "mega e-tailers" such as UK clothing sites ASOS and Boohoo were already impacting the local retail market.
To combat increased competition, retailers need to have a robust digital strategy, he said.
BNZ online spend data shows domestic businesses are holding strong in the face of international competition, but Wilkinson says retailers need to continue fighting to remain relevant to consumers.
"Local businesses can win by having the products available with potentially shorter wait times than overseas competitors, the assurance of dealing with New Zealand businesses, adding value where possible and demonstrating back-story such as history, community good."
David Murray, chief operating officer of retail company Crossmark New Zealand, said he expected to see consumers expectations around value and convenience continue to increase this year, putting pressure on retailers.
"If they shop online, consumers will want not just value but speedy delivery and an easy returns process. When shopping instore, consumers will expect a pain-free experience or they will revert to online options," Murray said.
"There is a great opportunity for both online and bricks and mortar retailers to meet and exceed those expectations but it will require continued investment in pricing and systems."
Bricks and mortar retailers needed to invest in people and training, Murray said.
"New Zealand retail is facing further margin pressures given the recently elected Government's announcement to increase the minimum wage. To reduce the impact of the wage increase, retail suppliers will need to utilise available data as effectively as possible to ensure labour dollars are spent as smartly as possible."
Margin pressure would continue to be an ongoing challenge in the retail market this year as consumers have more online shopping options, he said.