As a purveyor of luxury goods, Mary Poulakis is used to dealing with quality over quantity. It’s an approach that’s served her well as the owner of the inner-city upmarket institution Harrolds.
But as the state of Victoria emerges from its weeks of COVID-induced slumber, the seasoned retailer has found herself pining for quantity, faced with a CBD devoid of shoppers and little prospect of short-term salvation.
“Its going to take a long time for the CBD to have its foot traffic back,” she says. “I don’t need high foot traffic to do my business, but right now I need the quality and the quantity.”
From smaller shops to major chains such as JB Hi-Fi and Coles, the exodus from Australia’s inner cities is just one of the many effects of the coronavirus pandemic shopkeepers fear could persist well beyond the six to 12 months until the world has its vaccine.
Broader changes, like the rapid acceleration of online shopping, will be widespread and unstoppable. Retailers are already re-assessing their moribund bricks-and-mortar stores and spending millions on online platforms. “Omnichannel” (along with “resilience”) has been the jargon du jour for merchants through the recent corporate reporting season.
But under the surface lies a swathe of smaller, more nuanced changes, ones just as likely to change how Australians shop for years, or even forever.
On Wednesday, supermarket giant Coles proudly announced it had printed 32 million fewer paper catalogues since announcing a switch to digital brochures in September. At the time, chief executive Steven Cain lauded the move as a sustainability initiative, but it was one doubtlessly driven by COVID-19 and shoppers’ growing aversion to all things physical.
It’s hard to imagine that the sensory-rich experience of shopping could ever be under threat but retailers, including Coles, are already preparing for hygiene to be a key tenet of retailing for years to come.
“It’ll be interesting to see how much of that sticks over time and whether people will get back to kissing each other on the cheek when they see each other,” Cain says. “That will be fascinating to watch.”
Purchasing trends in Coles’ aisles also show how pandemic-induced routines may permanently shift our habits.
People are making fewer trips to their local supermarket but, when there, are buying bigger baskets of goods as they pass through the checkout. Products used in home cooking, such as flour and herbs and spices, are being sold in higher quantities. More at-home cooking, driven by more at-home working, will also stick around, Cain predicts.
“I’m absolutely convinced that we will see more people working from home as being the biggest change, and I think that’s a change for the good,” he says.
Spending more time in our home offices has also changed our attitudes towards online shopping.
It’s no secret that Australians are now more comfortable than ever when it comes to buying online. Digital penetration – the percentage of total retail sales attributed to online – is expected to double by 2025 to 20 per cent, rapidly accelerating the pace of change in the sector.
This has meant big business for well-established online sellers such as Kogan and Amazon, but has left many of the country’s premier stores playing catch-up. It has also led to a dramatic shift in Australia’s commercial property market, powering a boom in demand for large, unassuming ”sheds” which retailers use to sort and send their thousands of online deliveries.
Every dollar spent on e-commerce requires four more metres of space than shopping through traditional bricks-and-mortar stores, says Richard Seddon, industrial manager with the $8.4 billion diversified developer Mirvac.
It’s taken up by storage, sorting, deliveries and returns – nearly half of all clothes bought online get sent back by consumers. All this need for space is causing a surge in demand for warehouses across the country.
Amazon, just one of many retailers, is building a 200,000 square metre centre in Sydney packed with the latest robotics technology to speed up deliveries and double capacity.
The shift of goods into big sheds is proving extremely profitable.
Industrial landlord Goodman, which reported an operating profit of $1.06 billion in June, is now Australia’s largest property player.
And the instant gratification of click consumption is making us restless shoppers. “We’re becoming increasingly impatient as consumers and we expect things the same day or the next day,” Seddon says.
Richard Murray, the chief executive of electronics retailer JB Hi-Fi, says shoppers increased familiarity with online shopping will prompt a re-think of what are ”low involvement” and ”high involvement” purchases.
“People will still go to the shopping centre if they need a lot of things, but there will be times where they just need a new watch band, or a new cable, and they’ll just jump online and get it delivered,” Murray says.
Deliveries are speeding up and retailers are scrambling to keep up and build warehouses with sophisticated supply chains, or lose market share and wither away.
Running in tandem to the scramble for more sheds is a similar flurry of retailers looking to cut loose their expensive leases in major shopping centres and inner-city strips. Both Myer and David Jones have ramped up their plans to slash their store networks over the next three years. Mosaic Brands, owner of chains such as Noni B and Rivers, wants to close more than 300 stores by the middle of next year.
In response, shopping centres are desperately pitching themselves as safe places to shop in an effort to attract and retain both customers and merchants. Australia’s second-largest shopping mall owner Vicinity Centres, recently rolled out costly pandemic-busting technology – heat mapping, digital shopping queues, contactless concierge and COVID-officers – to protect retailers and make shopping safer.
Analysts predict a period of upheaval as top-tier malls try to manage what was once their biggest drawcard – high foot traffic – with the new norm of social distancing expectations. The real-time heat-mapping technology being used by companies such as Vicinity is designed to actively reduce the congestion in its malls in order to mitigate the risk of superspreading.
But amid the sector’s upheaval some are more sanguine.
Driving home this week, Retail Apparel Group chief executive Gary Novis, found himself listening to the 1979 hit Video Killed the Radio Star. Within its boppy lyrics, he believes lies a reassuring message to any shopkeeper fearing for the future of bricks-and-mortar retail.
“It got me thinking of all the industries that have been disrupted over the years, like with Netflix and the movies, and even with all that disruption around, industries have come back to normal,” he says.
“And I think there’s no doubt that customers still want retail stores. They want to go on an outing, try things on, go to the malls.
“Retail will be around in its bricks-and-mortar format for a long time to come.”
Source: Thanks smh.com