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Bricks and mortar still king, according to new study

17 Feb 2016

Despite the rise of online shopping, a new survey has revealed Kiwi retailers are still relying on bricks and mortar stores to drive sales, brand and customer loyalty.

The ‘Big Issues in Retail’ survey was conducted by Massey University’s Centre for Advanced Retail Studies (CARS) in collaboration with Monash University (Melbourne) and Retail NZ.

Those surveyed reported 60 to 89% of their revenue came from their stores, which outperformed all other revenue sources, including websites, social media and mobile.

Lead researcher Associate Professor Jonathan Elms says that while online sales are growing strongly, operating good stores is more important to most New Zealand retailers.

 “That was one of the most interesting results from the survey,” he says. “Despite all the rhetoric around internet and multichannel retailers, most were very firm about the importance of having a significant physical presence.”

Elms says this is because the store is the brand experience,

“it offers a level of personal customer service and provides a direct experience that can’t be emulated online. Even Amazon is opening stores now,” he explains.

Elms says the store experience is the one thing retailers can offer New Zealand consumers that overseas sellers can’t.

“Personal customer service is very important – consumers want to know they have somewhere to go if they have a problem or need to return a product,” he says.

Elms says ecommerce is a ‘complement, not a replacement’ to the traditional bricks and mortar store.

“The important thing going forward is to seamlessly integrate the online and store trading environments,” he adds.

Greg Harford, general manager Public Affairs at Retail NZ, says it is heartening to see that most retailers are feeling positive about the coming year.

“The retail sector is entering autumn on the back of a generally strong summer sales period,” he says. “Although some areas of heartland New Zealand are less confident, retailers in the main centres are generally expecting to meet or exceed their targets over the year.

“We have seen retailers striving over the last few years to create a whole in-store experience, moving away from a mainly transactional environment,” Harford says.

“A great in-store experience is key to driving brand development and consumer loyalty, hence the continued focus on bricks and mortar stores from both domestic and international retailers.”

The Big Issues in Retail survey found business activities have increased over the past three months and retailers appear optimistic about future market changes. However, large businesses are more positive about the future than small and medium-sized businesses. 

During 2015, consumers’ needs were found to be more varied, according to the survey. . Consumers shopped through multiple channels and became more price-sensitive and demanding.

The survey also found that print media still ranks surprisingly high among retailers as a way of communicating with consumers. Print media came third only to social media and search engine optimisation as a preferred communication channel and ranked above email, radio, mobile, television and paid search.

Three-quarters of businesses collect and use data in decision-making, the survey found. Consumer data is collected more often than market data.

According to the results of the survey, improving the in-store experience is the most important customer loyalty strategy, followed by maintaining privacy of customer information and improving the online experience for users. Loyalty programmes, customer collaboration tools and online vouchers for redemption are of lower importance to retailers.

Additionally, large businesses source 20% or less of their products from within New Zealand, while small businesses source 80% or more of their products locally.

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