How Aussie retailers can succeed in 2019

Aussie Retailers empty trolley in empty carpark

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With increasing economic pressures, Australian retailers will need to do more than simply focus on the next short-term win if they want to survive the New Year, according to Ben Wilson, group account director at full-service agency, Spinach.

With political uncertainty and continued downward pressure on house prices combined with increased cost of living, 2019 could be a potentially devastating year for retail, he says.

“The likelihood of banks raising interest rates will be highlighted in the media and credit will be harder to get as financial institutions further tighten their practices on the back of the scathing Royal Commission.

“Global recession may come one step closer with a jittery US stock market agitated by rising US interest rates, the final realisation of the impact of nutty nationalism and accompanying tariff trade wars.

“The pressure will be on to deliver results while at the mercy of forces entirely out of retailer’s control with the heat felt strongly in the marketing department. At its most basic, the marketing function’s role in a retail business is to stuff the pipe with clicks and feet, build the brand and drive consumer preference.

“Success is mostly defined by traffic; both in-store and online, then ultimately, sales. Marketing teams typically know that they need to build the brand and drive preference to ensure their business exists beyond the short term.

“Curating relationships with customers that are built on more than just price is the long-term objective. The hope is that over time, the consumer’s preference to shop increases as the brand means more to the consumer than just price.

“That elevates retailers and allows them to divest, at least partially, from heavy price-focussed communications because price-focussed communications typically don’t differentiate one retailer from another.

“A quick look at arguably the country’s most successful retailers tells a consistent story. Aldi, Dan Murphy and Bunnings all offer strong value propositions, but they talk about themselves as being about much more than price.

“Aldi is good but different. At Bunnings, price is only just the beginning while Dan’s has the retail trifecta of range, advice and price. They never appear to panic (at least outwardly), and they understand that their consistent branding is what will keep the opposition at bay.

“But that’s not true of many of Australia’s retailers. The weighting of the marketing team’s conversations with their agencies are often heavily in favour of short-term promotions to drive sales.

“While there will always be pressure on sales, it seems that once sales panic sets in, the first change that’s made is the advertising; the emphasis on price, value and savings becomes even more fierce. A bandaid over the wound perhaps?

“A deeper dive into operations and the effectiveness of the product mix on offer, among many things, may identify some easy wins.

“The ones who make it will be brands that Australians want to survive and even thrive, that have invested in connecting with the consumer and building a value proposition beyond price. Those who were a dollar cheaper or featured super aggressive ads – because they had nothing else to fall back on – certainly won’t.”

Ben Wilson

Ben brings over 10 years of account service experience across many categories. A stickler for detail, he’s committed to ensuring the agency delivers positive commercial outcomes for our clients.