Bernie Brookes: We’re in the midst of the ‘third retail revolution’

Myer chief executive Bernie Brookes believes the Australian retail sector is in the midst of its third “revolution” in 50 years and it’s more important than ever for local retailers to integrate their physical and online offerings.

Ragtrader reports the retail veteran, who plans to step down from Myer’s top job in August, outlined his view of the retail landscape at a NAB event in Melbourne this week.

The first revolution, according to Brookes, happened in the 1950s and 1960s, when retail went from a model in which shopkeepers generally selected items for their customers, to a preference for consumers to pick their own wares.

This was followed by a second “revolution” in the 1980s, in which new technologies such as price scanning and electronic payments, transformed the retail space, says Brookes.

Brookes says the third revolution, which we are in the midst of now, is all about digital and retailers must focus on “establishing a point of difference”.

“Once you have a bricks-and-mortar presence such as a flagship store, you build up trust and recognition, and people are more comfortable about buying the product online,” he said.

“What we are now seeing is the advent of fully integrated retailers taking preeminent positions in the retail market.”

Brookes also addressed some of the challenges faced by clothing retailers such as Myer, which is now competing with international giants Zara, Topshop and H&M on its own turf.

He said focusing on exclusive and designer clothing ranges, improving the speed at which products go from the “runway to rack”, and using data mining to better understand purchasing trends will all hold local retailers in good stead.

Brian Walker, managing director of the Retail Doctor Group, told SmartCompany he “absolutely” agrees with Brookes’ comments.

“Digital technology is revolutionising the consumer experience, so in turn, it is revolutionising retail,” says Walker.

“We’re in the phase of ‘customer in control’,” says Walker, which he says is being driven by global transparency about brands as well as consumer feedback being fed through social media communities.

“The supply chain has shortened … and lines of classic supply chains are being blurred,” he says. “Manufacturers are becoming retailers and retailers are becoming manufacturers. Everything is up for grab.”

Walker says the “fourth retail revolution” will be about predicting consumer behaviour through neuromarketing. “In fact, it’s already starting to happen.”

However, Walker believes the physical retail experience is “still the jewel in the crown”.

“The difference now is stores are much more experiential than ever before,” he says.

Brookes says today’s consumer has much more information at their fingertips and is influenced greatly by current affairs.

“We have five million Myer One customers and we get some very interesting data from them,” said Brookes.

“We’re seeing them as being a lot more frugal, we’re seeing in the focus groups they’re very concerned about what’s happening in the economy, particularly things like the cost of education, the cost of healthcare, and constantly coming up is the amount of money they don’t get back from their healthcare provider,” he said.

“We’re seeing significant issues they are talking about in terms of the cost of electricity and gas … [and] they’re worried about employment levels.”

Brookes says Myer customers are “saving for a rainy day” and the impact of events such as the federal budget on consumer confidence shows how “fragile” they are.

“We’ve got a consumer that’s incredibly fragile, and we see a front page paper headline of what’s happened in the Ukraine or front page headline of the budget and you can almost watch and follow your sales on a daily basis,” he said.

“As an old retailer, we used to have nice consistent sales … now we see wild swings.”

“The day the budget hit was a demonstrative day for many retailers,” said Brookes. “You talk among retailers and that week was a pretty poor week and it has taken a while to recover that confidence back.”