Australian retailers devising new methods to entice customers offline

Cara WatersJune 17, 20120 min read

Have you clicked and collected recently? Or shopped at a kiosk? Or popped into a pop-up shop?

If you have, you’ve experienced one of the new retail models which are changing the way consumers shop.

Innovative retailers are turning to these new models to fight back in the face of low consumer confidence and dismal growth forecasts in the retail sector.

1. Click and Collect

“Click and collect” is the solution for all those consumers whose joy of online shopping is tempered by the sheer inconvenience of queuing up at a post office with a missed-delivery card, or waiting at home for hours for a delivery truck to arrive.

Consumers purchase goods online by “clicking” and then “collect” the goods from a store or locker.

It’s a model that UK shirt retailer TM Lewin is planning to roll out in Australia, enabling consumers to order a shirt online and then pop into a store to pick it up.

Gerard Crawford, country manager for TM Lewin in Australia, toldSmartCompany click and collect has been gradually rolled out in TM Lewin’s UK stores over the last couple of years and has proved to be successful, particularly in the retailer’s London stores.

“It is just an added choice for the customer, with click and collect you have the convenience that saves you having to wait for something at home,” says Crawford.

“It is more prevalent now in the UK and we have developed it from testing and trialling and now have it in the majority of the stores and it does work.

“Some department stores have taken retail space in the UK purely to have the space as a click and collect depot.”

In the UK, catalogue chain Argos had led the way with click and collect stores that do not display any products and exist only for customers to collect orders.

It’s a strategy that has been a huge success for the catalogue chain, with half of its £4 billion sales now multi-channel.

Click and collect is not as widespread a retail model in Australia as it is in the UK, but that is set to change with TM Lewin’s move and retailers including JB Hi Fi, Australia Post and Coles adopting the concept.

Jim Cooper, spokesperson for Coles, says click and collect is popular with the supermarket’s online customers who do not want to lock in a time to be home for delivery.

“They like the fact that click and collect lets them shop online, but collect their order when it suits them. They also save money by not paying home delivery charges,” says Cooper.

“The click and collect option operates from 43 Coles stores around the country, and is already generating thousands of orders a week.”

Coles is also running a trial where click and collect customers can collect their orders from refrigerated lockers located at Coles Express fuel sites.

“The early results of the trial have been encouraging, but customers tell us it could be improved. For example, by using a pin pad door rather than a obtaining a key from the service assistant,” says Cooper.

Australia Post has started using click and collect parcel locker sites to store goods bought over the internet with those who subscribe to the service receiving a single use six-digit code via SMS and email each time one of their parcels is ready for collection.

“The 24/7 parcel lockers mean customers can pick up their parcels on the way to work, on the way home or even on the weekend,” says Mel Ward, media and communication manager at Australia Post.

“A small trial at a facility in St Kilda resulted in 1,500 customers signing up to use the parcel lockers.

“As a result, we are extending the trial to a further 10 locations in Melbourne, Sydney and Queensland, with plans for a national rollout to further expand this service.”

Brian Walker, retail expert at The Retail Doctor, says the click and collect model represents a move from web-only retailers to multi-channel sales that use “clicks and bricks” together.

“It is the merging of online and the physical store. So we know that research and buying online is increasing, but it is a way of providing a technical process and experience of an online order with an in-store example,” says Walker.

“I think we will see more and more of it in Australia, it will just become a standard play in its own right.

“Conceptually, it is not a lot different from days gone by, from having a telephone and getting a retailer to put something aside for you and then collecting it.”

Walker says click and collect is particularly attractive for commodities like basic apparel and groceries with time poor customers who want to control the point of pick up.

2. Kiosk retailing

Forget megastores and big box retailers; the new retail model is for smaller and smaller “kiosk” retail units.

Hairdressing franchise Just Cuts, founded by Denis McFadden, has unveiled a haircutting kiosk at a Westfield shopping centre in the Melbourne suburb of Doncaster, in a bid to attract time-poor consumers.

Luke Manning, Just Cuts business development manager, says the franchise would love to establish more kiosks over the next year.

Manning says the outlay for a normal Just Cuts site – which is typically 30 to 40 square metres – is anywhere between $160,000 and $260,000.  But for a kiosk site a franchisee could be up and running for $100,000, so it could be an ideal option for new franchisees with less capital.

“The kiosk was created for a niche market where an existing owner might want a second salon or for smaller shopping centres,” he says.

“It has been well received and my hope is that we see a lot of them in the next 12 months. We have people on the run coming in and we have had people from every demographic using them.

“For franchisees, it is cheaper. Start-up costs are less than half the initial start up costs of a salon and a kiosk is relocatable, so if it’s not working we can move it to another site.”

Dognation, a newly opened hotdog shop in central Melbourne, also operates a kiosk model with its three metre square shop.

Owner Seong-Lee Ang told SmartCompany he thinks Dognation is the smallest food shop in the city.

“Our leasing agents said they have never heard of anything as small as three square metres for a food shop,” says Ang.

Ang says the small format of Dognation creates interest from consumers with people walking past and taking photos of the store as it is “so unique”.

“The talking point of us being in such a tiny spot has been a really big thing, besides the product itself,” he says.

There are also practical advantages to Dognation’s small size, with Ang saving significant money on the lease.

“Per square metre the rent is not cheap, but obviously because we are only paying for three square metres as an overhead the rent is not that expensive,” says Ang.

“It is a big factor to us to say what is our productivity out of such a small space and there are definite advantages from a cost point of view.”

Ang says he is already in the planning process for more stores and will try to continue the kiosk model.

“I had a leasing guy call me today and he said we have another small kiosk space if you are interested. I think a lot of people are getting the idea that small spaces work well for certain types of businesses and ours is certainly one of them.”

David Gordon, partner in charge of the national retail advisory practice at WHK Group, says kiosks are attractive because they are cheaper.

“The cost of rental is less, the cost of fit-out is less, you need less staff because your security of product has a more physical framework,” says Gordon.

“There is a narrow range of stock sold in a kiosk. It is quite a category-based outlet, so you don’t need a vast range of stock and you don’t need to take the stock risk that a shop would take.

“Often you don’t need to take the long-term rentals that a shop has to take with landlords.”

However, Gordon warns kiosk retailing is not the panacea to all retail problems.

“It has its disadvantages and they are that your physical presence is not as enhanced as a shop would be. You don’t have the range so you essentially let customers down; the customer service isn’t as good.”

3. Pop-up shops

New products come and go, and now the stores that sell them do the same. Pop-up shops have taken off in the UK and USA and now in Australia as well.

Amy Malin, co-owner of Danish furniture importer Modern Times, has built her business on “one-off concept stores that blur the line between retail store and exhibition” and Modern Times is now onto its third pop-up shop in the Melbourne suburb of Collingwood.

Malin says having a pop-up shop was the ideal way to start Modern Times as a business and was a great way to generate publicity.

“For us, it was a way to see if it was something we wanted to do, because it was a new business for us. It allowed us to test the market, and to create buzz.

“I have a background in events and we felt confident that we could run it like an event and market it like an event,” says Malin.

“There is that sense of urgency because it is temporary; people want to come and have a look straight away. For a regular shop, there is no urgency for consumers or for publicity.

“People like something a little underground and they expect it to be something interesting – and we didn’t disappoint people.”

Malin hasn’t decided whether Modern Times will run a fourth pop-up or look to set up shop permanently.

“Because we sell furniture, it is quite intense to pack up and move. That was confirmation for us that we should do a permanent shop,” says Malin.

“But we could also go and do a pop-up in Sydney or pop-up in New York, and it’s a great way to market our website as well.”

Walker says pop-up shops are perfect for event style retailing and allow retailers to surprise consumers.

“Pop-up shops give you instant accessibility, instant wow factor if done well, and put you in environments that you might not be otherwise,” he says.

“The challenge is that it is not a cheap solution and that is the first thing some retailers do. They put up a cheap fitting and it is uninspired.

“A pop-up shop is an extension of the brand and should be treated that way – so investment of capital is key.”

This article originally appeared on SmartCompany.

Cara Waters

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