Think global, focus local

There is little doubt that Australian consumers have become much more global in their outlook in the last 12 months.

The rapid rise in the Australian dollar has lead to a sharp increase in the purchase of goods from overseas websites.

Consumers now have an innate understanding of how global supply chains affect local pricing. And they realise that Australian retailers have been getting away with some pretty impressive mark-ups for some time.

But according to some research commissioned by American Express, consumers haven’t completely forgotten about local retailers – 48% said they were actually buying more local goods than they were a year ago.

American Express says this is being driven by consumers’ expectations of what a brand should represent – the most common responses were “trustworthy”, “responsible”, “ethical” and “environmentally friendly”.

While I would have thought the best word to describe what consumers want out of a brand is “cheap”, there is a certain logic that says local brands are somewhat better positioned to meet these brand expectations.

Or perhaps more accurately, the face-to-face customer interaction and community involvement that local retailers can provide can help them meet these brand expectations much more effectively than an overseas website.

This idea speaks to the theory that it is the middle ground where retail survival is becoming more difficult.

The very biggest retailers (and many of them are now online) will focus heavily on cheap prices and, to a lesser extent, range.

Smaller retailers will focus tightly on becoming part of the fabric of their local community (whether this is a neighbourhood, a city or a state) building a loyal customer base, getting involved in local causes and groups and delivering as much personalised service as possible.

The middle ground – retailers who neither compete hard on price or demonstrate high levels of service – are the ones that are under pressure. We’ve seen that with Borders, Angus & Robertson, Clive Peeters and Colorado Group. It’s something department stores all over the world are also grappling with.

Localisation and personalisation stand out as two ways smart retailers can stand their ground, while holding the line on prices.

Just make sure you don’t get stuck in the middle.