Saturday 7 December 2019

Your business: Retailers just have to be online to be relevant

Only 32pc of Irish retailers can process sales online. They must stop saying they can't afford to - they simply cannot afford not to

Only 32pc of Irish retailers can process sales online. Stock Image
Only 32pc of Irish retailers can process sales online. Stock Image

Alan O'Neill

Black Friday and Cyber Monday started out as American phenomena, aptly named due to the traffic jams that were caused by the weekend shopping frenzy which accompanies Thanksgiving. It has now become an annual retail norm around the world.

Consumers are now well-used to the discounting madness which it brings to online and bricks-and-mortar shopping. It is the springboard to the Christmas trading period and retailers around the world have jumped on the bandwagon. Many small retailers have also engaged and many more have bravely disengaged.

The discounting that is expected by consumers has huge implications on achieved margin. With costs continuing to rise, many small retailers can no longer afford the discounts.

It raises for me a bigger issue, however, and that is the online versus bricks-and-mortar argument. Yes, of course the share of retail sales now done online is growing. But the retail apocalypse that many misinformed commentators are flagging is fake news in my view.

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I presented a keynote at a Swedbank conference in London recently on this subject. To some surprise and much support, I outlined some of the inaccuracies about the demise of the High Street which don't stand up to scrutiny.

Sure, there are stores closing around the world and big iconic brands like Debenhams and House of Fraser are part of that story. But store closures are often less to do with online and more to do with other internal organisational challenges, like inflated debt, changing customer's expectations and poor leadership.

We are witnessing retail Darwinism, something which has been with us forever. We have seen many examples of retail disruption over the years. The growth of department stores, supermarkets, hypermarkets and German discounters have all threatened the small retailer.

It's a common narrative to blame store closures on online. I find it interesting to note that even with the ferocious might of Amazon, it has only recently started to make money after 25 years. Most of its $10bn profit comes from their B2B web and advertisement services business.

Online is not a low-cost model, and I don't believe it will ever eliminate bricks-and-mortar retailing. That said, I do of course believe that SME retailers should have an online presence to enable their customers to buy online.

I met Oonagh McCutcheon last week, the customer operations manager of the IE Domain Registry. She shared some highlights of the recent SME Digital Health Index, a comprehensive study of the digital behaviours of Irish SMEs. Here are three interesting points.

• 53pc of Irish consumers want their local retailers to have an online shopping service;

• Only 32pc of Irish retailers can process sales orders online;

• For those retailers who do have an online presence, they scored a C, at best, in an A-F rating scale.

I'm amazed and disappointed to still see such a low number of SMEs with an online presence. Quite bizarrely, many of these resisters are active online customers in their own lives.

SME retailers cannot ignore this and simply must have online sales processing ability. There are significant benefits to it and, rather than resisting it, see it as a way of keeping your doors open 24/7.

You will also increase your relevance to a customer whose buying habits are changing.

 

Tips to support retailers in developing an online trading presence

1 Change your mindset. Stop saying you can't afford to develop an online trading presence. You simply cannot afford not to. This is a psychological barrier, not a monetary one. The value in your business for when you go to sell it or pass it on to your children will be greatly reduced.

2 Develop a website, not just a Facebook page. The cost of developing a site has come down greatly over the years. There are many cost-effective ways of developing one, using pre-designed templates.

3 Show products online. If not your full product portfolio, at the very least show pictures of your best sellers online. Consider how you present those products. Be consistent, using good photography, concise product descriptions and clear pricing. See your website as a window from the outside looking in at your business, 24/7.

4 Enable sales at some level. Even if you don't have a fully operational website where the customer can transact fully online, make sure they can at least mail or call you to process their purchase.

5 Remove blockages to selling. Check for blockages which make it difficult for your customer to either buy from you or contact you. If you have a booking system, is it working? Do you have a visible telephone number that gets answered? Check that everything is working as it should.

6 Manage your time. Many SMEs say they don't have time to keep a website updated. What about using the quieter days, Tuesdays and Wednesdays, to update your products and special offers?

7 Seek training. There are Local Enterprise Offices (LEOs) all over the country that provide very cost-effective training to get you up to speed.

We have countless very successful independent retailers who have created a niche in their local community. But every one of them has changed their business model and has a traditional store and an online store.

There will be a cohort of resisters left behind. They will become much less relevant and will be lucky to get even a lifestyle income from their business. Which group will you be in?

The last word

Against a backdrop of Black Friday, my focus today has been on retailers. However, the Digital Health Index covers all SMEs. So take note, even if you're not a retailer.

When you do go online, be sure to have a .ie domain. The IE Domain Registry is the custodian and the manager of the .ie domain registry.

Unlike others, such as .com, it vets every application to ensure the applicant is an authentic entity doing business in Ireland.

Having a .ie domain means you are fully traceable and more relevant to an Irish customer.

Alan O'Neill, author of Premium is the New Black, is managing director of Kara Change Management, specialists in strategy, culture and people development. Go to www.kara.ie

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