The future of bricks-and-mortar retail stores in a digital era of shopping

The Mitchell Street shop, at which five people were employed, shut its doors for the last time on Wednesday. 

The company listed increased competition, price discount fatigue, a decline in national consumer foot traffic, and new broadening technology platforms and online services as factors influencing customer buying practices.

Australian Retailers Association executive director Russell Zimmerman said retailers were facing all of the above pressures, and more.

“It’s a pretty tough time in retail in Australia,” he said.

But the sector has been changing for the past 150 years, and will continue to evolve.

Bendigo’s peak body for business, Be.Bendigo, said several principles remained as relevant as ever: providing a product people wanted to buy; and doing business in a manner consistent with, or exceeding, customer expectations.

“The innovative retail businesses in Bendigo are doing well because they see these challenges as ways to improve,” Be.Bendigo engagement manager Jayson Tayeh said.

In an industry increasingly dependent on online shopping, the cost of maintaining a bricks-and-mortar presence is one some retailers are deciding they can do without.

“Retailers are looking at their cost of doing business in Australia,” Mr Zimmerman said.

He said rent and wages were among the most significant expenses affecting how retailers were choosing to do business.

After closing all of its stores in Australia and New Zealand in 2016 – including one in Bendigo – electronics retailer Dick Smith was resurrected as an online-only vendor.

Pumpkin Patch followed a similar path after entering receivership later that year.

The children’s clothing brand closed all of its stores, including one in Mitchell Street, only to be bought by an e-commerce company.

Thomas Jewellers announced late last year it would close all its stores, including Bendigo.

Mr Zimmerman said shops, as we knew them, would change.

But an increasingly dominant virtual marketplace would not mean the end of physical stores.

“People will always want to come into a bricks-and-mortar store,” Mr Zimmerman said.

“Retailers will look at the size of their shops. They won’t have the big, vast ranges.”

Instead, he anticipated shops would stock a sample of the broader range available online.

Mr Zimmerman expected ‘click-and-collect’ type services to become a more prevalent part of retail business models.

“It’s about having a number of different touch points,” he said.

Click-and-collect purchases make up 22 per cent of orders from Myer, a spokesperson said.

Online sales comprised of 41 per cent of the company’s trade in the 2016-17 financial year, and 67.8 per cent in the first quarter of this year.

“We are focused on providing Bendigo customers with great experiences, products and brands - both in store and online,” the spokesperson said.

Myer commissioned new escalators at the Bendigo store prior to Christmas in response to customer feedback.

“These improvements have been received positively,” the spokesperson said.

In-store purchases still make up the bulk of business at Bendigo boutique stores The Meadow and Gathered, owner Kane Barri said.

“Not everyone wants to buy everything online,” he said.

But he said the business was benefiting from having a variety of options available, and creating strategies to leverage the strengths of each.

Boxing Day sales, for example, became available to the stores’ online users on Christmas Day.

Mr Barri said people following the shops’ social media would have been aware there was a whole extra day to grab a bargain.

“It’s our locals that are doing it,” he said.

He said many of the stores’ online followers had ties to the region.

There’s no denying shoppers are keen to snatch a bargain.

But it’s been Mr Barri’s experience that central Victorians are willing to pay a couple of dollars more if their purchase supports a local business. 

He said people would at least ask about the price of a product at The Meadow or Gathered before buying something similar online for cheaper.

That said, Mr Barri said his experiences of retail sector trends might differ from those of retail chains.

He had curated the range of products available at his boutique stores, most of which were not widely available elsewhere.

Whereas Mr Tayeh said market saturation could be a challenge faced by retail chains competing for customers in regional areas.

He said lack of familiarity with local markets might also be a challenge faced by metropolitan-based retailers.

“There needs to be a level of care for the business to really understand the market they’re working in,” Mr Tayeh said.

Be.Bendigo has implored businesses to be innovative and to engage with their customer base.

Mr Tayeh also urged people to continue to support local businesses.

“It literally does put food on the table for our business owners,” he said.