Over recent months there has been much discussion about Australia’s retail industry. From the big players to the smaller operators, it appears there are many struggling to come to terms to a new consumer environment where the consumer has abandoned many retail environments for the relative convenience of online shopping or different experiences (e.g. Travel).


What is concerning is that so many of these discussions have been focusing on the symptoms of change rather than causes. There has been talk of punishing consumers (with a GST on online purchases under $1000) and suppliers (who deliver online as well as retail sales channel). Punishing those you seek to influence or engage, attempting stopgaps on trends when you cannot possibly control, suggests a lot of effort for zero outcomes.


This is a challenging but exciting period for the retail industry. It is a time where all players need to accept that what made them successful today will not make them successful tomorrow. The opportunity exists for retailers to revolutionize the industry in Australia. Here are five steps that retailers should undertake now to ensure ongoing and sustainable growth and profit.



In many recent discussions about challenges in retail sector, many retail chiefs are blaming everything from the GST to social media for their current predicament and retailers seem to be focusing on the symptoms of change rather than the cause.


The consumer has changed. While consumers are probably enjoying the cheaper price of online purchase, I suspect this is far from the only or main reason consumers have gravitated to online shopping.

I believe many are chasing another type of saving – the most limited and treasured resource for most of us – time. If online shopping results in more time with family, at work, at leisure then online is a very valuable option.


How is your organization justifying and rewarding your customers for the time they’ve taken to engage with your organization, whether in-store or online?

Retailers need to accept and acknowledge today’s very different shopping environment and carve out a place for themselves within it. This may well require significant transformation for your organization. You may not like change: but I suspect you’ll like irrelevance even less.



It appears that big retailers spend more time eyeing off their competitors when creating strategy. The problem with competitive strategy (which is the principle behind most traditional strategy) is that it’s restrictive and limits growth and profit opportunities. Competitive strategy means we assume that the criteria upon which we all compete today is absolute.


Customers (and importantly, non-customers) are a better barometer of changes in the marketplace. Chances are your customers (or former customers) started purchasing online years before your competitors even realized that online shopping was going to impact on their stores. Chances are your customers won’t care about your fabulous new look store and multi-million dollar fit out if there isn’t enough staff available to serve them and an experience that rewards their time.



I still hear many retailers defining themselves as bricks and mortar retailers, which is the type of restrictive thinking that can limit growth.


What is your purpose? To facilitate a transaction between a product/service and a consumer within your store at a specific location; or is it to facilitate a transaction between a product/service and a customer? When we simplify our purpose, we create an environment for transformational and creative thinking that might identify exceptional growth and profit opportunities we would never have thought off with a more complex, (and limiting), purpose.



Where an organization pursues innovation alone they often completely bypass the consumer by creating innovation for innovation’s sake. Where companies pursue value only, they may create customer value but they’re rarely going to set the world on fire or create significant market share.

Value innovation is where the two come together.

Value innovation contends: don’t make your strategy a trade off between a differentiation or low cost strategy. Pursue both!



For a strategy to be successful there must be a three-way focus and alignment between value, profit and people.

Value refers to the creation of value for the customer.  Is there a compelling value proposition that offers the customers something they value at a price they are willing to pay? Be clear about how value is provided to the customer. (For example a website designed to simply profile your latest catalogue or give store locations is not providing value to the customer.)


The profit proposition is specific to the financial modeling. How are you generating revenue? Are you managing costs and expenses effectively? Are there hidden hotspots? Are the areas of marketing and customer service staff viewed as assets or expenses?


The people proposition is the critical proposition for execution of strategy or change. It includes your staff, your suppliers, your shareholders and/or stakeholders. It is important that those you engage to service your customers and/or manage the administration of your organization are informed about the direction of the organization and their role in achieving organizational strategy. Resistant staff only leads on a failed strategy. Are they engaged with the vision, do they understand why things must change? Do they know their role and how their performance against the strategies KPIs will be measured?


There are opportunities to engage with suppliers in new and creative ways. Can you engage your suppliers to deliver a series of offerings or sales channels to your customer in a way that brings value to all? This is where true value innovation can be practiced.


When a strategy or product/service fails it is invariably because the strategy has focused on one of the three propositions at the expense of one or both of the others. Always pursue all three propositions and ensure they are aligned.


These are challenging times for retailers. But those who seek to understand the changing environment and the consumer of tomorrow; those who see these changes as an opportunity to create new value for customers and their company; they will be the successful retailers of tomorrow. Embrace the challenge – innovate now!


Robynne Berg