1. Mixed messages.
That is the essential characteristic of the current marketplace. Depending on the information source, differing perspectives, forecasts and analyses are shared.
Little wonder the currency of the term alternative truth.

In recent weeks scientists around the world marched in support of truth. 
Unbelievable.
The number of participants was disappointing.
 
Now is the time to respect the thoughts and orientations of others, and then get on to making the best of your own reality.
One must avoid the temptation to retreat.
Isolation is no joy or answer.
 
For those who truly want to make a difference, do your own thing.
Believe in it.
Share it and promote it.
 
That, Prime Minister, is the requisite fundamental to commercialise commerce.
No more mixed messages.
Barry Urquhart

 
2. FABULOUS FADS – THE SAVIOURS 
Insipid.
Prior to Christmas and during the first quarter of 2017 the broader retail sector, Australia in particular, has languished.
It has lacked direction, focus, an underlying driving force and, as a consequence, sales revenue and profits.
 
New products, services and applications have been scant.
Therefore, gift selection was difficult.
To many consumers the offerings have been same ol’, same ol’.
 
Perhaps what the sector, and commerce in general need is a “Fad-led Recovery”.
Discretionary expenditure is down, noticeably.
Induced purchases have become more important.
Scope exists for further use of the means.
 
Fads stimulate interest, generate energy, and above all, are short-term accelerators of revenue.
There have been in the past, and could be in the future, direct sales for specific events and periods … like Christmas!
 
Post-war baby boomers will remember, generally fondly, the seeming bi-annual launches of Yo-yos.
They were so popular.
Many models were sponsored by entities like Coca-Cola.
The colours of the units were influenced, if not determined by the sponsors.
It was a fashion statement and early evidence of the importance and influence of branding.
 
They’re back!
Yo-yos are becoming more evident in the streets and in the parks throughout Australia.
Similar case studies abound.
Hula-hoops were popular, and the gyrations of the hips did wonders for the body shape and self-images.
 
Through the decades, fads, as is their nature, have come and gone.
The products’ life-cycles are typically measured in weeks.
They fulfill wants, but lack the capacity to satisfy and to sustain longer-term needs.
 
Football “Swap Cards”, featuring what would now be AFL (Australian Football League), NRL (National Rugby League), A-League (Soccer) sporting legends, were a staple annual promotion initiative for newspapers, which enhanced circulations with tied offerings, that were readily taken up by an adoring and supportive public.
 
Rubik cubes were a fixation for a short period of time.
So too were Cabbage Patch Kids and the collectible packaging of the now politically incorrect FAGS (cigarette) lollies.
 
More recently, the conspicuous presence and practices of Pokémon Go fanatics created widespread comment, annoyances and frustrations, not to mention accidents and injuries.
 
Significantly, over the years the appeal of fads has broadened. A recent national study in Great Britain conducted by Hambley’s, the upmarket toy retailer, found that some 35% of adult respondents declared the purchase of fads was for their own use, indulgence and pleasure.
 
BALANCED EVALUATION
 
Introductions, promotions, marketing and the selling of fads will not correct the structural deficiencies of the global, regional, national or local economies.
These initiatives are essentially transactional, (that is a business strategy that focuses on single, “point of purchase” transactions) and therefore, short-term.
They will however, improve cash-flows and consumer traffic counts.
 
In many instances they will be directed at, and taken up, by children and youths.
That in itself is an attractive marketplace.
Pester-Power purchases – that is, those initiated or influenced by children – is estimated to be currently worth around $120 billion per annum in Australia.
That presence extends beyond the $300 billion p.a. mainstream retail sector.
 
If nothing else, fads have the potential to reintroduce FUN into the lives of kids, consumers and – importantly, to business owners.
Significantly, Woolworths, which is well advanced into its 5-year recovery competitive strategy has just concluded a deal with Disney.
Marvel Hero Super Disks are now available in some 980 Woolworth stores throughout Australia.
Alas, a new fad.
 
ESSENTIAL PHASES
Successful fads require fundamental disciplines to be formulated, documented and implemented.
Six phases are readily identifiable, being:
1.     Identify a product – usually small, interactive and inexpensive.
2.     Seek out a sponsor – fast moving consumer goods are appropriate, because of regular repeat purchases.
3.     Collaborate with a retail network – being readily accessible is imperative.
4.     Involve a media group – publicity and exposure are self-generating demand inducers.
5.     Maintain a small inventory – prepare for rapid decline in sales.
6.     Promote product ambassadors – high performance individuals create challenges.
 
 
3. FUTURE RETAIL TRENDS – INCREASING STORE CLOSURES
Inevitable.
The physical consequences of the growth and increasing omnipotence of on-line business, plus the ever-continuing cascading effects of the GFC (Global Financial Crisis) and mining sector down-turn are becoming more conspicuous.
 
Store Closures.
Behind the headline and statement is the stark reality of significant and strategic changes in supply chains, logistics and distribution networks (call them what you will).
 
The United States of America present as a striking case study.
In the current calendar year, up to 6 April, a total 2,880 store closures of publicly listed and high profiled entities have been announced.
Countless (unannounced) smaller outlets have fallen to the same fate.
 
In Australia and New Zealand the Liquidators and Administrators of failed groups have typically reviewed operations, and in a large percentage of cases, have immediately and progressively begun closing unviable retail outlets.
The probable and unfolding future for retail precincts and certain sized shopping centres is writ large and loud.
 
Scenario planning and strategic audit, workshops have identified the need for the recalibration of business models, supply chains in particular.
The era of on-line businesses has tempered and qualified the need for local physical presence.
 
Hub stores, within a 30 minute access radius of target audiences, have been isolated to a be a preferred and desirable feature.
Business leaders need to recognise, and increasingly do, the necessity to reorient their thinking, perspectives and planning away from the physical, to a primary focus on access, regardless of the channel.
 
In the future, terms like global and national will not necessarily be determined by the number of physical outlets.
 
On-line will become integral to omni-channel and multi-channel operations.
So too will decreasing margins (Amazon in the USA is reported to have effected a 9% reduction in the profit-margins of competitors, including Wal-Mart) and the costs of delivery – which will be central to consumer expectations.
 
Productivity, and its optimisation, will be foremost among operating KPIs (key performance indicators).
 
Having had the pleasure to facilitate many strategic planning workshops, I am encouraged by the creative, innovative nature and focus of so many executives.
 
The challenge exists.
The rewards will be plentiful.
And the casualties will be numerous, for those who do not recognise, isolate, analyse and address the need for change …. and to possibly rationalise and reduce physical presence.
4. AGEISM – AN OLD, ENDURING TALE
Well intentioned, but potentially ill-advised
There is an initial and superficial appeal in the drive to reconfigure products and services, to be modern, young and youthful.
Millenniums and females aged 25 to 44 years remain high in the rankings of desirable, high-spending target audiences.
The two sets of characteristics are aligned.
 
However, ignoring or neglecting older age consumers can be, and are expensive practices.
This subgroup tends to be more brand loyal, stable in expenditure in patterns and have the greatest capacity for discretionary expenditure.
 
Those in the younger sects are generally more promiscuous, price-driven, less loyal and suffer greater instances of debt-stress.
Thus, repositioning brands, products and services can come at a a cost, including losing key, established customers – and greater volatility in demand.
 
AN ALTERNATIVE
Modern, young and youthful is narrow-focused.
More engaging and open are the alternatives of refresh, relevant and resonating. Retaining existing customers while attracting new ones is appealing and financially rewarding.
 
Certain marketing fundamentals should be recognised and respected. Numbered among those is the life-time value of customers.
Repeat and referral business are consistently six to eight times more profitable and enduring than attracting new customers. 
Older customers determine many purchase decisions on fulfilment of needs and underpin such with valuing continuing, mutually rewarding relationships.
 
NOT EITHER, OR
Effective contemporary market segmentation is not binary. Targeting one consumer group to the exclusion of others is appropriate in some, but not all instances.
Inclusive and embracing strategies have proven to be effective in countering or minimising the effects of seasonal and cycle trends.
Better understanding of all consumer subgroups or segments avoids often unintended discrimination and stereotyping.
 
For example, there is no digital generation.
Many post-war baby boomers who are only now entering their 70s are astute, adroit and selective users of on-line channels, digital marketing and social media.
 
THE LESSONS
The key point to be made is that is possible, probable, appropriate and desirable to broaden, rather than to change the market positioning of products and services; Mercedes, Volvo and Lexus have been able to do so very successfully, … ah, so refreshing.
  
5. AMAZON – RIVER OF CHANGE
Be aware. Be prepared, but not alarmed.
The impact and consequences of the pending arrival in Australia of Amazon will extend well beyond the expectations of many local business leaders.
 
A disturbing 72% of owners and managers who participated in a 700 person February, 2017 survey stated they were not concerned about the introduction of Amazon in Australia, and would not be affected by such.
Implicit in such responses were the belief and perception that the product/service range of Amazon has primarily focused on books, compact discs and, more recently, fruit and vegetables.
 
Wrong. Wrong. Wrong.
 
There are few businesses in Australia that will not be subjected to changing forces, and thus, demand.
 
Retail pharmacies, tyre outlets, travel agencies and even Australia Post will need reflect on, and plan for, their “altered future”.
 
Consumers, including Australians, are already purchasing on Amazon platforms household items, electrical goods, furniture and a host of other merchandise and services.
 
Indeed, hundreds of Australian businesses, families, couples and individuals have use and will continue to use the Amazon channels to conclude sales, both locally and globally.
 
BUYERS’ EXPECTATIONS
The primary target audience for the Amazon Australian initiative will be consumers.
Their positive experiences will change forever expectations, buying routines, brand preferences, pricing structures and delivery demands.
 
Thus, the competition will be direct and consequential; those business entities that do not meet, and exceed, standards will experience considerable and ongoing sales and revenue leakage. 
In short, the prevailing and pervading business models throughout the commerce sector – many of which have their genesis in the 1950s and ‘60s – will quickly become obsolete and redundant.
 
The fallout from resistance to change will become conspicuous, and costly.
 
THE NEW NORM
Multi-channel and omni-channel supply lines and communications will be imperative.
High-impact, laser focus, personalised and consistent stories will be key and compelling characteristics.
 
Around-the-clock access to information, purchases, payment systems and delivery offers will be pre-requisites for sustainable competitiveness, preferences and success.
 
Enhanced productivity, sales velocity and time-measured responses will rapidly become essential KPIs (key performance indicators).
One-touch management practices will extend beyond logistic operations and warehouses.
Inventory monitoring and minimisation will enable retention of optimised profit margins.
 
And prices?
They will inevitably fall, to the benefit and delight of consumers.
In the United States of America, the evolving presence of Amazon has reportedly been instrumental in Walmart, the largest trading group in the world, lowering retail prices by 9% during the past year.
It is the latter entity’s ambition to be at 15% cheaper than competitors.
That is now a “stretch” goal.
 
Activity is apparent in cost-cutting, renegotiations of supply contracts and heightened accountability of team members for sales performances.
The challenge exists, has been accepted, and continues. There will be an awakening of such in Australia among the survivors and thrivers.
 
NO-ONE IS IMMUNE
Bunnings is, justifiably, a much lauded Australian business.
It too will not be quarantined from the force and presence of Amazon.
 
For example, the Bunning website is largely inert.
Consumers can not transact sales, make payments or elicit immediate, direct and personal responses.
 
Richard Goyder, outgoing Chief Executive of Wesfarmers, owners of Bunnings, recently made a telling statement.
He effectively said that Amazon will eat us for breakfast, lunch and dinner.
That is a sobering declaration.
 
It is conceivable and probable that Amazon will identify this as a marketing opportunity.
After all, on-line business is its forte.
Supply agreements will be sought, be received and will evolve possibly from hardware buying groups, marketing networks, manufacturers, distributors (many of which will have been denied access to the existing bricks and mortar stores) and, yes, from individual independent hardware operators.
 
Amazon, like UBER, is a channel, an application and an alluring retail supplier, which has an unbroken 10-year record of increasing sales and share price increments, a market value which exceeds $US400 billion – and has never recorded a profit.
All surpluses are reinvested into the business, and its pursuit of continuing growth.
 
Australian electrical appliance retailers are particularly exposed. In 2017, some 18% of sector sales are on-line.
That is the highest of any category in the nation.
Consumers are clearly accepting the offers, the brands and the delivery details.
The commodisation of many products, models and services has accentuated the importance and appeal of lower prices.
Store loyalty becomes a fading memory.
 
GEOGRAPHIC ISOLATION IS NO PROTECTION
The nature of Amazon and on-line retailing is such that they are accessible to all, at all times.
Businesses operating in regional and rural localities are not protected from intrusion.
Indeed, restricted trading hours in specific areas can be, and have been, the catalyst for local consumers to seek out alternative, available, accessible and responsive supply sources.
 
Self-interest and the wish for instant gratification generally override considerations for, and the influence of loyalty, relationships and the co-operative spirit.
Business needs to be fought for, and won, consistently and persistently.
The key components of value have changed, and are changing.
Mobility, accessibility and responsiveness are foremost factors.
 
Overt personal expressions of gratitude for the businesses remain important, and reinforce the “correctness” of purchase decisions among some people.
However, in the contemporary marketplace recall fades rapidly.
Even-playing fields abound.
Relationships can and do marginally tilt the ground in the favour of some.
However, that “tilt” is less pronounced than in the past.
 
Pragmatism, complemented with a philosophical touch is needed for the new, and prevailing reality.
 
TIME TO RECALIBRATE
All is not lost.
Those who rise to the challenge, will re-engage with existing, prospective and past customers and clients, study and analyse the current buying criteria, negotiate new supply agreements with manufacturers, distributors and suppliers, seek out mutually rewarding collaborative initiatives, enhance supply chains, improve distribution services, upgrade premises and invest in the training of team members to elevate customer service standards will present an attractive and compelling value- proposition.
 
The good times are over.
There is no place for complacency, naivety and indifference.
Better times are ahead.
With the pending arrival of Amazon … just go with the flow.

THE AUTHOR

Barry Urquhart of Marketing Focus is an internationally respected business strategist, consumer behaviour analyst and conference keynote speaker.
Barry Urquhart
Marketing Focus
M:      041 983 5555
T:       08 9257 1777
E:       Urquhart@marketingfocus.net.au
W:      www.marketingfocus.net.au
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