Adaptability key to retailers' success | Stuff.co.nz

PATTRICK SMELLIE

OPINION: They must be the envy of their rival shopkeepers. The cash registers rarely stop ringing in my local op shops, the charity stores that over the past decade have become a focal point of most local suburban shopping centres.

They attract contented customers who seem happy as they leave, as if they have done better than at The Warehouse "where everyone gets a bargain".

They clutch everything from books, clothes, baby gear, china and other kitchen paraphernalia, or have bought beds, bookcases, sofas and other furniture to be delivered to their homes.

Op shops have a significant advantage: they usually get their stock free ? and you can't do better than that. People donate things they no longer want, feeling they are doing their bit for a favoured community fundraising effort.

The manager of a Kapiti Coast shop tells me that the daughter of a highly prominent businessman gave them most of the contents of his grand home after he died. This generosity helps explain the slimmer pickings at many weekly auctions (Dunbar Sloane no longer manages one every week) and why so many second-hand and antique shops have disappeared.

Sales people in many op shops are volunteers, working for a host of charities and churches, so wages and salaries aren't a problem. Some pay minimum wages ? it can be hard work ? including to young people who would otherwise be unemployed, giving them a start in the retail sector.

The growing number of op shops represents a significant change in society. Many struggling families or older folk make ends meet by buying their clothes and other things there.

My mother wouldn't have been seen dead in a second-hand dress: when money was short she made her own or visited the neighbourhood dressmaker. These days well dressed women visit op shops looking for smart labels; others sell classy outfits they are bored with to specialist second-hand clothes stores.

The growth of op shops ? they are just as numerous in Britain where some are very upmarket ? is just one factor behind the extraordinary changes under way in the ever-changing world of retailing.

Retail analysts are struggling to explain the reformation in shopping that is under way, both internationally and in this country. Like why are The Warehouse's fortunes slipping, yet rival Briscoes' continues to flourish?

Why have the number of customers and sales dwindled at high-class stores like Kirkcaldie and Stains in Wellington and David Jones in Australia?

Hallenstein Glasson's fortunes have recovered, but even they are cautious about the short-term future in the difficult Australian and New Zealand markets. Kathmandu's earnings have swung back to unpredictable. What has gone wrong at Dick Smith, forcing its owner Woolworths to put the chain on the market and close 100 stores?

A common explanation from retail analysts is that in these difficult times people are much more careful with their money and are concentrating on reducing their home mortgages or saving in case they are made redundant. Spending power has also slipped badly for many Kiwis who lost heavily in finance company crashes, and don't have cash for non-essentials. These are all real and plausible explanations.

But it doesn't fully explain why some retailers are doing much better than others. Why is The Warehouse going through a bleak patch, when discount rivals like K-Mart and BigW in Australia are faring better? Customers aren't willing or able to cut back on supermarket spending. Sales at Countdown stores rose 3.4 per cent in the December quarter, and its parent Woolworths and Foodstuffs plan to spend around $600 million upgrading and opening new stores. Woolworths and Coles are doing well in Australia.

Retailing is increasingly split in two. In analyst-speak, traditional stores are now termed "bricks and mortar" to differentiate the online traders whose customers buy from their home computers. To survive, many traditional stores are moving into this sector, or indulging in heavy discounting. This is forcing them to cut profit margins to try to stay competitive, with a resultant drop in profitability.

There are also signs that customers are being more discerning. Briscoes puts its successful Christmas sales period down to selling more expensive brands at good prices: judging from its recent ads The Warehouse is also attempting to move upmarket.

People with good jobs and incomes are also finding new ways to spend their money. They spend more on dining out, entertainment and alcohol than earlier generations. They also travel overseas more: the travel industry is gearing up for a bumper year and large numbers of Kiwis are expected to fly to the United States, Europe and Asia encouraged by stories of how much further their money will go, thanks to the strong Kiwi against sterling, the US dollar and euro. This will mean less money for local retailers.

Retailing has never been an easy game, but the current era presents new challenges, especially for traditional department stores and specialist book and other stores. To succeed managers must be ready to adapt constantly. The latest profit figures show some are succeeding ? but others will find this year a considerable challenge.

- BusinessDesk

Source: http://www.stuff.co.nz/business/opinion/6405778/Adaptability-key-to-retailers-success

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