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Tag Archives: retail

Will electronic payments and selfish humans eliminate small retail businesses?

21 Thursday Feb 2019

Posted by Malcolm Auld in Advertising, Digital marketing, Marketing, retail

≈ 3 Comments

Tags

digital marketing, online retail, retail, small business

If you’re like most of the population dear reader, you’re probably using less cash these days to pay for goods at your local retail stores. I certainly am. Apparently here in Oz, we’re one of the highest per capita users of electronic “tap n go” payments. Cash is declining rapidly.

This is causing problems for local retail stores, particularly those for which a website is not essential for business – dry cleaners, cafes, bakers, butchers, clothing stores and the like.

Now before the trolls attack me for claiming a retail store doesn’t need a website, what I’m saying is that online sales are not a major part of the revenue for these businesses. If they have one, it’s purpose is more for customer service, providing information and in some cases selling products.

These businesses make most of their money from passing foot traffic, not from customers driving from distant suburbs to buy their wares, or ordering goods remotely. I’m not going to order a coffee online and have it delivered by a bloke on a bike. I’ll go to the café and sit there to enjoy my cuppa and company.

I’ve owned and worked in a local family supermarket (many years ago) and a travel agency (only a couple of years ago), so have some hands-on experience. I’ve even been robbed of our weekly cash takings, which is not a nice experience.

One reason small business owners work the long hours they do – both at the store and after hours with stock and bookkeeping – is the undeclared cash they take from the business. Quite simply, if small business owners had to declare all their income, they might as well get a job working for someone else, as they lose too much in company and personal tax. The hourly rate of return is just not worth the effort. The less tangible reason for owning a small business is the “joy” of being your own boss.

One of my mates is the son of Greek migrants who moved to Australia after WW11. They fled the oppression of post-war Europe and opened one of the first espresso coffee shops in Sydney. My mate said his parents didn’t trust banks after their experiences back in the old country. When he was growing up, he thought everybody was like his family – when they wanted cash, they went to the garbage bags stored in the roof cavity of their home. That’s where his parents stored the financial takings from their café in which they worked 7 days a week.

Am going shopping will just get some cash from the roof…

I’ve recently been talking with retailers about the cash, or should that be, cashless issue. Another mate of mine owns a surf clothing store and is about to close its doors. He has spent a lifetime of more than 50 years in the rag trade. He said the reason for shutting up shop is threefold. It’s a perfect storm – lower cash income, online discounting and human nature.

The human nature is interesting. He said it is astonishing the number of people who use the store as a catalogue, trying on clothes, then photographing them and going online to buy them cheaper. Just confirms the old adage that people only care about one thing – themselves. This is why those two words “You” and “FREE” are still the most powerful words you can use in marketing communications.

I’ll see if I can buy this online – bugger the shopkeeper…

He is smart – he owns his building. So he has an asset he can sell or rent for income. But as he said, “every retailer used to carry a wad of cash in their pocket. Suppliers would always offer deals for cash, particularly if they wanted to offload remainder or excess stock. This made it easy for the retailer to make a decent profit on those goods, or throw in a bonus to loyal customers.”

His store has a website, but it is not as good as it could be and like all retail websites, is not cheap to update and maintain. Yes, it generates additional revenue, but it also adds costs that didn’t exist previously in the P & L. It doesn’t pay for itself. So the more his business has moved to cashless payments, the less it is worth to him.

I suspect this small business closure trend will continue and the side effect will be the loss of convenience stores and other local retailers. Either that, or we will accept paying more for goods. Recent research revealed that humans pay more per item and spend more frequently when they use electronic payment devices, than when they use cash. Apparently we value cash more.

By nature, humans are lazy creatures – we prefer the path of least resistance. If the easiest way to buy something is to do so electronically with a swipe or tap, we will do it that way. Nothing new here:

Interestingly, a café I frequent in Brisbane still offers a discount for cash payment, while many restaurants in Chinatown only take cash. To save my teenagers carting cash around (and losing it) they now carry debit cards. My bride and I control the amount on the cards. My teens use them in the school canteen, or when out with friends at the beach, mall or movies.

But now one of the most frequent requests I get, both verbally and by text message is, “how much do I have on my card?” These “notifications” force me to check the accounts and top-up as required. And you guessed it, my teens relish the habit of “tap n go” and are spending more using these cards than if we restricted them to cash-only. Not sure I’ve done the right thing here?

Have to go now – need to top-up my daughter’s card so she can buy something like sushi rolls for lunch. It’s a long way from my once-a-fortnight vanilla slice treat when I was in high school…

Mmmmm, vanilla slice…

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If the shoe fits, sell it to your database…

25 Wednesday Sep 2013

Posted by Malcolm Auld in BIG DATA, Branding, Customer Service, Direct Marketing, Marketing

≈ 3 Comments

Tags

BIG data, branding, customer service, database marketing, direct marketing, marketing, retail

I’m cleaning out old files and came across some sample catalogues of a client of ours at O & M Direct.

In 1973 Peter Sheppard opend his first shoe store. He offered a unique range of brands from Europe and other parts. But his secret weapon was his mail-order business – his database. It was built mainly through his retail store(s).

PSSWeb_logo

In the 1980’s our agency wrote and designed his catalogue and mailings. The catalogue was called “Shop at Home” – he was way ahead of his time in the virtual shopping world. Not only did the catalogues offer deals on shoes, but also special offers from complementary third parties such as Sportscraft, David Cardigan, Gilchrist & Soames and others. Customers could shop from the comfort of their home, or visit a store.

He mailed two seasonal catalogues a year, usually at least 1 month before the retail season started. The reason was simple. The mail-order sales determined what shoes he should stock in his retail store. The brands and styles that sold well via mail, became the shoes that were featured in-store. This ensured good sales volume and minimal overstock of unpopular lines. It also meant he would have the right shoes on display as the new season started.

Peter Sheppard 2

His mailings followed all the rules. They were packed with multiple pages to make them tactile and encourage involvement by the recipient – now known in these digi-days as customer engagement. The mailings included a catalogue, inserts with special offers, extra order forms, introduce-a-friend offers, even a free calendar with its own special offer printed on the cover in the Christmas mailing.

Peter Sheppard 1

Peter Sheppard 3

I looked at his site today – it still follows the classic rules of direct marketing, has a digital catalogue, shoe bling and a mail-order service amongst other things. Online retailing is just a remote ordering service that delivers the products by mail or courier. The Peter Sheppard site is simply an evolution of its original offline mail-order business.

The site even has a separate brand www.slippersdirect.com.au so you can have your comfy foot warmers delivered direct to your door.

If you work in retail your customer database is your most valuable asset. It took Amazon years to make money, but once it had a sizable customer database it became profitable – because it’s cheaper and easier to sell to someone you know (your customer) than someone you don’t know. Repeat business is now the lifeblood of Amazon.

Their database drives repeat purchase

Their database drives repeat purchase

Through testing, your database can reveal insights that can mean the difference between profit and loss. And that goes for physical retail stores with online businesses, as well as pure online businesses that only sell via websites and other digital channels like email and social media.

The problem for many retailers is they don’t have a database of their customers – it’s stuck in the POS system, or the accounts software. And they rarely use their website to capture data and gain knowledge about their customers – even though it’s easy to do so.

These are often the businesses with managers complaining about sales or the economy. Yet if they just invested some time and money into creating a customer database they’d be in much better financial shape and minimise the peaks and troughs in their trade. And it only needs to be little data – not BIG data.

Peter Sheppard has been thriving for 40 years through smart use of customer data. And by adapting to technological changes he has continued to enhance his personal service. His business is still a hard core retail one and it still uses the way of direct marketing to succeed, even in the digital world.

What’s that adage again – what’s old is new again…again?

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