The tipping point

My sales director was looking pretty spivvy the other day in a smart new business shirt. The collar was crisp, the fit perfect, the tailoring flawless and he looked, as usual, a million dollars.

“Nice shirt, Steve,” I said.

“Yeah. I got them hand tailored, three for $120,” he told me. “They do great ladies shirts too. I’ll give you the brochure.”

He left it on my desk at lunchtime and I spent a minute looking for an address before I noticed that the brochure was for a UK company.

“Have they got a branch here?” I asked Steve.

“No. I send across my measurements and they send me the shirts,” he said. “Check out their website. They always have a great offer.”

“So how long have you been buying your shirts from the UK?” I asked him.

“Two years. Spilt coffee on a shirt the other day and had to buy one at Rhodes & Beckett for $180. I was really annoyed. It wasn’t any better than the shirts from the UK,” he told me.

And that is the point. The growth in online retail and foreign competition is not new. In fact, the online retail train left the station years ago. SmartCompany and others could not have yelled louder about this emerging trend.

We warned retailers it was coming, covered the changes intensively, debated the topic hotly with a very defensive Gerry Harvey and posted all the comments from readers, many of whom could also see the future.

But there is always a tipping point. And it took a rising Australian dollar that pushed more customers to try, love and spread the word about online shopping on foreign sites to really drive home to retailers the fact that the marketplace has shifted irrevocably.

Now many Australian retailers are realising they are not just competing with online retailers overseas who have terrific sites and are highly skilled at measuring and then trying different things. They are also competing with highly specialised aggregation sites.

Since I started with shirts, let’s take apparel as an example. Since Christmas last year, we have seen a huge growth in “exclusive private shopping sites” such as Brandsexclusive.com.au that scours both Australia and overseas to find the best ‘brand” bargains.

A research report from Experian Hitwise shows that Brands Exclusive wasn’t even in the top 10 online retailers last year and now it is number two with a share of 4.62%.

In fact, private shopping clubs that let members buy highly discounted products from a range of brands at quick fire sales events now dominate the top three places.

What can retailers do? The first step is to realise that all the whinging in the world won’t change a thing. Second is to make sure you have the best website in your sector and become expert at testing, measuring, changing your offer. Retailers have to realise they are actually in a new business called online conversion and that they are starting behind the eight ball.